USDA / Rural Development January/February 2013

Rural

COOPERATIVES COOPERATIVES

Rocky Ford

Renaissance 

Page 10
2 January/February 2013 / Rural Cooperatives

Commentary 

Raising the bar on safety

By William J. Nelson

Vice President, Corporate Citizenship and

President, CHS Foundation

Chair, ASHCA Board of Directors

griculture, with its decentralized nature and

diverse structure, lags other industries in

reducing the toll on its workers. Its fatality

rate is eight times that of the all-industry

average. In a typical year, about 500 workers

die while doing farm work in the

United States, and about 88,000

suffer lost-time injuries,

according to the National

Institute for Occupational Safety

and Health. The annual cost of

these injuries exceeds $4 billion.

If our agriculture industry is

going to feed the world

population, which is estimated to

reach 9 billion by 2050, we must

do it safely, humanely and

sustainably.

At CHS Inc., we see safety as

a vital issue. Not only is CHS

and each of its subsidiaries

committed to providing a safe

and healthy workplace, the CHS

Foundation provides grants to

support education programs that

help keep farm families, children

and agribusiness professionals

safe.

One way in which CHS

promotes a culture that makes personal health and

occupational safety a priority is through its membership in

Agricultural Safety and Health Council of America (ASHCA,

http://www.ashca.com.)

ASHCA, established in 2007 with support from the Farm

Foundation, is a consortium of agricultural producers, farm

associations and agribusinesses that has planned and

promoted strategies to make agriculture much safer and

healthier in the United States. We see ASHCA’s focus as

complementary to the efforts of the University of Minnesota

and DuPont, as described in the article, “Creating a safety

culture,” on page four of this issue. 

North American agricultural co-ops and others in the farm

industry have a unique opportunity to step up to help ensure

the safety of the agricultural workforce through public

communications, education and training. 

We are particularly excited about the “2013 North

American Agricultural Safety Summit” Sept. 25-27, 2013, at

the Marriott Minneapolis City Center Hotel. The Summit,

hosted by ASHCA with support from CHS and others, has

the potential to galvanize the

public and private sector in

forming a common vision on how

to update national agricultural

safety and health priorities. 

Committed speakers include

Carl Casale, president and CEO of

CHS, as well as John Howard,

director of the National Institute

for Occupational Safety and

Health. Tom Vilsack, U.S.

Secretary of Agriculture, is

among invited speakers.

The primary audience will

include leaders and influencers of

cooperatives and farm

organizations, industry executives

and their risk managers,

farm/ranch management advisors

and safety consultants, university

faculty and researchers,

agricultural educators,

agricultural association leaders,

and many others.

The Summit event will include interactive sessions and

innovative learning opportunities appealing to individuals and

businesses involved in food production and worker safety. To

learn more, go to www.ashca.com.

For another look at how agriculture can become safer and

remain sustainable, read the account of four ASHCA

members in the Journal of Agromedicine. Visit:

http://bit.ly/RHyCAF or http://www.tandfonline.com/

toc/wagr20/17/4. n

A

In a typical year,

about 500 workers

die while doing

farm work.
Features

Rural Cooperatives / January/February 2013 3

Volume 80, Number 1

January/February 2013

Rural Cooperatives (1088-8845) is

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Tom Vilsack, Secretary of Agriculture

Dallas Tonsager, Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or email:

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This publication was printed with vegetable oil-based ink.

p. 10

04 Creating a safety culture 

Garden City Co-op tragedy underscores need for co-ops to make employee safety priority No. 1

07 Here today, here tomorrow

Alabama co-op helps limited-resource growers process and market produce

By Fay Garner

10 Rocky Ford Renaissance 

Colorado cantaloupe growers rebound after crisis

By Lee Recca

14 USDA-supported programs help Mali farmers adapt in hard times 

By David Taylor

17 Bio-energy impact, base capital financing among 

topics at Farmer Co-op Conference

By Bruce J. Reynolds

22 Antitrust challenges facing farmers and their cooperatives

By Marlis Carson and Donald Frederick

28 Co-op conversions help bring security to manufactured 

housing owners

By Steve Varnum

32 The Co-op Nature of (the Affordable Care Act) CO-OPs

By Charles Ling

36 Most Co-op Network members say 2012 was 

a solid economic year 

By Mary Erickson

Departments

02 COMMENTARY

38 NEWSLINE

p. 14

ON THE COVER: On the cover: Although their cantaloupes were not

the cause, a food poisoning outbreak in 2011 badly hurt producers in the

Rocky Ford area of southeastern Colorado, including the Hirakata family

(pictured here). Under the umbrella of the Rocky Ford Growers

Association (RFGA), growers bounced back in 2012 with a marketing

campaign that helped restore consumer faith in their product. Photo by

Dave Klein, courtesy RFGA 

p. 28
Editor’s note: This article was provided by the University of

Minnesota, with additions by Rural Cooperatives staff.

wayne Seifried was the type of employee any

co-op manager or director would love to

have on staff. Well known as a “go getter”

and a “workaholic,” co-workers and members

say Seifried would always go the extra mile to

get a job done right because he was so totally committed to

serving the farmer-members of Garden City Cooperative in

southwest Kansas. Many of those members were also his

lifelong friends who he knew counted on the co-op as a

critical part of their success. 

When the co-op decided to form a safety committee, it

came as no surprise that Seifried, one of its longest-tenured

employees, was named as its chairman. Agriculture is one of

4 January/February 2013 / Rural Cooperatives

Garden City Co-op tragedy underscores need

for ag co-ops to make employee safety priority No. 1 

D

A deep reservoir of grain can act like quicksand, quickly pulling a person under and causing

suffocation. Here, workers learn rescue techniques at a CHS Inc. river terminal near Kennewick,

Wash. Photo by David Lundquist, courtesy CHS Inc.

Creating a safety culture
Rural Cooperatives / January/February 2013 5

the world’s most dangerous professions, which also presents

hazards for the men and women who provide goods and

services to farmers and ranchers. There are huge pressures to

get work done as expeditiously as possible in agriculture. So

when machines break down, grain bins

clog or inclement weather is approaching,

all too often safety corners are cut.

Even a knowledgeable, veteran hand like

59-year-old Seifried — whose meticulous

attention to detail and understanding of

safety procedures earned him the

leadership role on the co-op’s safety

committee — can sometimes drop his or

her guard when the pressure is on. It only

takes one such slip to end in tragedy.

That’s what happened in November

2009 when Seifried entered a grain bin to

break up some clogged milo. Although he

was wearing a safety harness, he did not

“rope off” from above, which is vital to

saving the life of a worker who gets pulled

under in a grain silo or bin. This proved

to be a fatal error. By the time the rescue

team pulled Seifried out, it was too late to

revive him. 

Seifried’s death rocked the community

and the entire co-op, where he knew and

worked with virtually every employee. His

story is told in a 25-minute video,

“Roberta’s Request,” which should be

mandatory viewing for all co-op managers, employees and

directors, says Michael Boland, Koller professor and director

at the University of Minnesota Food Industry Center. Boland

is now leading an effort to get more co-ops to promote

employee safety. The video is posted on YouTube at:

http://www.youtube.com/watch?v= kRhk2lougPw. 

Ramping up safety programs

Ironically, safety issues often intensify when employees

become comfortable in their work environment and develop

a false sense of security, feeling that they know the threats

and how to deal with them. Add to that the frequent pressure

of needing to get work done as soon as possible, and you

have an environment where safety corners sometimes get cut.

Saving a few seconds by letting a safety step slide can cost an

employee an arm, a leg or even their life, the video stresses. 

The antidote to such tendencies is for co-ops to build a

culture of safety in which managers, supervisors, directors

and all employees understand that safety is always the first

priority — one that never takes a back seat to any “rush”

assignment. At Garden City Co-op, people were promoted

into new positions to supervise and emphasize safety.

“The story we have of the tragedy here at Garden City

Co-op has to do with an incident that happened in a grain

elevator by an employee taking a short cut and getting into a

bin that he should have never gotten

into,” John McClelland, general manager

of Garden City Cooperative, says in the

video. “The message, though, is not

about a grain elevator vs. anything else

that we do. The message is that people

make bad decisions in surroundings that

they feel comfortable in when they are

under pressure. It’s kind of counterintuitive, but the better you train, the

more comfortable your people feel, and

the more likely it is for them to make a

bad decision.

“So, along with the training and

procedures, you have to make sure there is

a culture and commitment behind the

scenes,” McClelland continues. “That

culture and commitment extends, beyond

what happened to us with a bin entry

fatality, to every part of our operation. So

our story isn’t a grain elevator story or a

bin entry story; it’s about one of the best

trained people we had on staff who got

lost in the moment and took some

shortcuts that ultimately cost him his life.

That can happen if you are working in a

cotton gin in south Texas, or a potato farm in North

Dakota.” 

Goal: Outcomes-based culture 

“Moving from a compliance culture to an outcomes-based

culture is where we want to be in our regulatory

environment,” Boland stresses. “Building a safety culture is

an important link in an outcome-based culture.”

Todd Ludwig, CEO of Watowan Farm Services (WFS) in

Truman, Minn., spoke at the 2012 Farmer Cooperatives

conference in Minneapolis, Minn., in November about a

program his cooperative — and some other local co-ops —

are participating in through the University of Minnesota.

“We decided that more education on employee safety had to

be pushed throughout the organization,” Ludwig said. 

“This partnership with the University of Minnesota and

DuPont made this attractive to us,” added Mike Trosen,

CEO of Country Pride Cooperative in Winner, S.D., who

was in the audience. “We had recently hired Tom Malek as

safety director, and this was beneficial for him.”

“If someone had told me in February 2011 [prior to a

Learning the ropes: a safety training

session at United Farmers Cooperative

(UFC) near York, Neb. Photo courtesy UFC

The annual cost

of farm work accidents

exceeds $4 billion.
6 January/February 2013 / Rural Cooperatives

CEO Roundtable in March of that year, see below] that I

would be working with this group — and that one of my

doctoral students would be doing research on this topic, I

would have not believed it,” Boland says. “It was totally off

my radar screen. What made this program special for me are

the people and cooperatives in this safety education

program.”

Graduate student Corey Risch has worked on the project

as part of her dissertation. “CHS recently funded a graduate

student fellowship at several universities, including the

University of Minnesota,” Boland continues. “We received

matching funds for the fellowship, and the first student

funded happened to be Corey. She decided to take this

project on as part of her dissertation. It has been a good

program for the university, a good program for my

department and graduate students — and a good program for

me, personally and professionally.” 

CEO Roundtable sparks interest 

The University of Minnesota safety program had its roots

in a March 2011 CEO Roundtable, sponsored by CoBank

and Kansas State University, with cooperation from the

University of Minnesota. 

“My CEO went to the conference and came back talking

about a presentation by DuPont and Cargill on safety

culture,” says Phil Pelc, safety and compliance director at

United Farmers Cooperative, in York, Neb. “He said Michael

Boland from the University of Minnesota was going to try to

work out a program with DuPont that would be accessible to

local cooperatives and asked if I was interested. I said

definitely yes.” 

David Edwards, safety director at Farmway Co-op in

Beloit, Kan., adds, “My CEO was at that same workshop and

came back saying, ‘We need to do this.’ It sounded like an

excellent opportunity to me.”

Ultimately, 11 cooperatives agreed to be assessed using

DuPont’s program. The initial assessment used a 24-question

survey designed to obtain feedback from employees about

safety processes, structure and similar activities correlated

with safety culture. More than 4,500 senior managers, line

managers and employees from the 11 cooperatives

participated in the survey in the summer and fall of 2011. 

“The results from the initial assessment revealed that there

was a lot of room for improvement in building safety

culture,” notes Boland. “We worked with DuPont to create

an educational program for these cooperatives.”

“I did not know anything about this program,” says Ryan

Armbuster, safety director at Cooperative Elevator, Pigeon,

Mich. “My CEO saw the initial assessment from DuPont,

and we knew we needed to do better.” 

“We had recently gone through a merger, and it was clear

from the data that we had not yet merged our safety culture

to have one Trupointe safety culture,” says Brian Manges,

safety and risk coordinator at Trupointe Cooperative in

Piqua, Ohio. Ryan Janssen, the safety director at Key

Cooperative in Roland, Iowa, adds, “We had also gone

through a merger that essentially doubled us in size. We had

to take our safety culture into account.”

Workshops hone 

in on key topics

Over the next year, a series of workshops were held in

Omaha, Neb., Kansas City, Mo., and Fort Wayne, Ind., on

topics such as incident investigation, safety observations,

safety committee structure, leadership and other topics

related to safety. Participants included safety directors for

each cooperative and a senior line manager. 

Doran Burmood and Mark Hueftle, safety directors at CPI

(Cooperative Producers Inc.) in Hastings, Neb., notes that

their co-op operates 38 locations, including agronomy,

energy, feed and grain facilities. “But we also own a pizza

parlor, a tire store, a Midas dealership, and convenience

stores,” says Burmood. “Our employees are all over the board

with regard to tenure and knowledge of safety as applied to

their own location. This is a challenge.” 

“We had been doing incidence investigations and other

things,” says Joe Toporcer, safety director for Agland Co-op,

Canfield, Ohio. “But we really had no protocols for safety

observations. The role playing we did at our workshops

helped us a lot.” 

Thatcher Block of Innovative Ag Services in Monticello,

Iowa, says, “We have learned a lot. I was hired as safety and

Stepping or falling into a loaded grain truck can also be deadly for

employees, hence, this safety training exercise in Kennewick, Wash.

Photo by David Lundquist, courtesy CHS Inc.

continued on page 42
Rural Cooperatives / January/February 2013 7

By Fay Garner, Public Affairs Specialist

Alabama State Office

USDA Natural Resources Conservation

Service

n 2006, Al Hooks’

“Pick Today, Use

Today” philosophy of

marketing more than

met his planting and

harvesting needs. Fast forward six years

and you will see a completely different

operation.

Today, Hooks and the other

members of his small farmers co-op are

participating in Alabama’s “Buy Fresh,

Buy Local” campaign and USDA’s

“Know Your Farmer, Know Your Food”

effort. They regularly supply fresh

vegetables to restaurants, grocery stores

and farmer’s markets in and around

Macon County and as far away as

Birmingham.

Hooks, who farms near Milstead,

Ala., formed Al Hooks Produce in

2002, which today is a small marketing

co-op that includes his son, Demetrius,

and three other local growers.

In the summer of 2010, Al Hooks

Produce joined the Tuskegee University

Farmers’ Cooperative and is now

supplying fresh produce to Walmart,

the largest grocery retailer in the

United States, among other buyers. 

“When I started in the produce

business, I had a vision,” Hooks

explains. “I did not want something that

would be here today and gone

tomorrow.” His ownership of about 45

Here today, here tomorrow

I

Alabama co-op helps limited-resource growers process and market produce 

Al and Demetrius Hooks host field days to share success stories with others interested in expanding their small

farming businesses. Photos by Fay Garner, Courtesy USDA Natural Resources Conservation Service
8 January/February 2013 / Rural Cooperatives

acres of fertile land and his love for

farming fueled his vision of expanding

the operation to grow more produce

and to have a place to conveniently

process the crops for market.

The co-op pools produce — mostly

peas, cabbage and greens, including

collards and turnip greens — from the

four farms for distribution to

restaurants, grocery stores and nearby

farmer’s markets after it is washed and

packaged in Hooks’ processing facility.

USDA provides key assistance 

Use of modern farming technologies

is helping to greatly expand his

production. USDA’s Natural Resources

Conservation Service (NRCS) helped

Hooks install a micro-irrigation system

that delivers water and nutrients in

precise amounts directly to plant roots.

He also constructed a hoop house that

allows crops to be started earlier in the

spring and harvested later.

Hoop houses are easy and fairly

cheap to build, simply consisting of a

metal frame wrapped in plastic. Hoop

houses extend the growing season into

the cold months, helping to increase

productivity. They keep plants at a

steady temperature and conserve water

and energy. Hooks has been so pleased

with his hoop house that he plans to

expand with two more. 

Hooks has also participated in a

demonstration project with the MidSouth Resource Conservation and

Development Council using

“plasticulture” — the practice of

covering crop rows with sheets of

plastic to help regulate soil

temperature, slow loss of water from

evaporation and reduce soil erosion. 

The system worked so well for him

that Hooks has expanded his acreage in

the program. Both plastic and drip tape

are installed at the same time using a

special implement pulled by a tractor.

Hooks warns that using plastic is

very expensive and farmers need to be

selective regarding which crops and

land to use it for in order to ensure that

there is a net gain going back into the

operation. 

Al Hooks Produce has been

supplying the Kellogg Center in

Tuskegee with fresh produce for about

four years and also delivers to the

Whole Food Market in Birmingham.

The members supply Jim ‘n Nick’s BarB-Q in Prattville with cut greens and

plan to provide peas, okra and other

vegetables in the summer. They also

supply produce for special events. One

of the newest contracts is with Embassy

Suites in downtown Montgomery. 

Local farmers’ markets, including the

Tuskegee Farmer’s Market and the

Valleydale Farmer’s Market in

Birmingham, are also a big part of the

co-op’s marketing strategy. Hooks

sometimes works with as many as nine

farmers’ markets per week during the

summer.

Processing facility built 

The increase in demand allowed

Hooks to build a produce processing

facility. “I wanted to do something

beneficial for my family, as well as for

the community and the people who

want to be a part of it,” Hooks says. “At

the same time, I wanted to do it in the

right way. My vision was to build an

approved facility where we can process

the crops ourselves for a variety of

markets.”

To aid in this part of his plan, Hooks

researched the type, size, regulations

and available financing for such a

facility. After deciding on a design, he

turned to USDA’s Farm Service Agency

(FSA) for financing. (Editor’s note:

USDA Rural Development also has

programs, including the Value-Added

Producer Grant program, which can help

build such facilities. For more information,

visit www.rurdev.gov).

“There was a real need for this type

of facility,” FSA State Executive

Director Daniel Robinson said during a

recent tour of the farm. “There is

Demetrius Hooks, left, works with his father, Al Hooks, to sell produce to larger markets, 

such as Walmart. 
Rural Cooperatives / January/February 2013 9

always a demand for fresh products,

whether they are chopped greens or

some other vegetable. We envision that

this facility is going to increase his

acreage and allow more rural farmers to

get involved.”

When the word spread about his

processing facilities, Hooks realized

there were other producers who did not

have the funds to even rent a building,

much less build one. He discussed the

situation with the other co-op

members, and they decided to allow

others to use the building. 

Inside the processing facility, a cooler

holds the cut and packaged cabbage,

collards and other items for restaurants,

which want different types of cuts,

ranging from strips to squares. “We do

not machine cut our greens. I hand-cut

every pound of greens shipped,

sometimes 300-400 pounds a week,”

Hooks says. 

Supplying Walmart

In October 2010, Walmart started

the Heritage Agriculture Project to help

limited-resource farmers expand

markets and earn more income for their

produce. In turn, Walmart benefits

from having fresh, locally-grown

produce to stock the shelves of its

grocery stores.

The Alabama Small Farm Rural

Economic Development Center at

Tuskegee University has contracted

with Walmart for local growers to

supply two Alabama distribution centers

with seasonal produce. 

In July 2011, Al Hooks Produce

started selling peas and greens to

Walmart through the center. The pickup and delivery process is convenient

for both parties. Walmart trucks pick up

the produce — as little as one pallet —

and transport it to their distribution

centers.

Hooks’ son, Demetrius, a graduate

of Auburn University in Montgomery,

Ala., has been working full-time with

his dad for two years. Demetrius is in

charge of marketing and public

relations and helps with all other

aspects of the business. As a graphic

designer (a field he worked in for 12

years before going to work with his

father), Demetrius is instrumental in

designing logos, labels and packaging

for the business. He also works to

secure new agreements to supply fresh

vegetables to area restaurants and other

customers

“When we first started with

Walmart, it had never bought greens or

shelled peas from small farmers in this

area,” Demetrius says, adding that the

co-op’s products are entirely local. “We

even created the clam-shell plastic

container that holds the peas.”

NRCS State Conservationist

William Puckett sees great potential to

spread this business model. As he puts

it: “Al Hooks Produce is a prime

example of how limited-resource

farmers can help meet larger demands

for fresh produce.”

And in the true cooperative spirit of

co-ops helping other co-ops and their

communities, Hooks and his son host

field days on their farm to share their

story with others interested in

expanding small farming businesses. n

The Hooks family uses plasticulture and micro-irrigation to improve productivity. The latter helps target nutrients and 

water directly to the roots of the plants.
here are no better

cantaloupes than those

grown around Rocky

Ford, in southeastern

Colorado, most

consumers in Colorado and

surrounding states will tell you. They

say the melons are well worth waiting

for until they ripen, typically in August.

But the 2011 season was a departure

from the 125-plus seasons during which

this venerable brand has been

marketed. 

A cantaloupe Listeria bacteria crisis

in 2011 was traced to a single grower in

southeastern Colorado, 90 miles from

Rocky Ford, who allegedly transported

melons in contaminated trucks without

10 January/February 2013 / Rural Cooperatives

Rocky Ford Renaissance 

Colorado cantaloupe growers rebound after crisis

By Lee Recca

Editor’s note: The author is a

communicator based in Denver,

Colo., who has worked for Sunkist

Growers, CoBank and the Rocky

Mountain Farmers Union. 

T
Rural Cooperatives / January/February 2013 11

chilling. But some news media

inaccurately attributed the problem to

the Rocky Ford growing region, which

devastated the Rocky Ford Cantaloupe

brand that year. 

Consumer and retail confidence

needed to be restored quickly as the

2012 season approached. 

Michael Hirakata, the lead packer

and head of the Rocky Ford Growers

Association, recounted the way the

association was conceived. “The

growers came together to brainstorm

ideas to rebuild our name. We just

wanted to get the complete story out

about what we had done in the past and

the steps we were taking for the future,

without pointing fingers. We wanted to

tell our side of the story — that

growing Rocky Ford cantaloupe is not

just a job, it’s our livelihood.”

The growers had lots of help,

including guidance from the Colorado

Department of Agriculture and the

Produce Marketing Association,

Hirakata says. 

Growers invest in 

new packing shed 

Even though the Rocky Ford

cantaloupe has earned a reputation for

safety and quality, the Rocky Ford

Growers Association (RFGA), formed

in November 2011, decided to invest

$800,000 in a new packing shed with

the latest equipment for washing,

storing and packing. 

With help from Colorado State

University, RFGA researched best

practices in cantaloupe washing

techniques. It developed safety

protocols to upgrade all operations and

hired a safety manager and a

safety/quality tracking company. A

request was made to USDA to perform

announced and unannounced audits.

Michael Bartolo, who heads the Rocky

Ford Research station, provided

expertise.

To get the word out, the association

hired a marketing and public relations

agency, BrandWerks+Mulligan, to

develop and carry out branding,

advertising, media relations, events and

social media campaigns, all under

RFGA supervision. As the melons

ripened in the field, the growers filmed

and appeared in commercials that

appeared just a week or so before the

The Michael and Glenn Hirakata families are

key players in the Rocky Ford Growers

Association, which has helped area

cantaloupe growers bounce back from a crisis

in 2011, caused by a food poisoning outbreak

more than 90 miles away from their farms.

Photo by Dave Klein, courtesy RFGA 
12 January/February 2013 / Rural Cooperatives

crops rolled into markets, building

excitement. 

The Rocky Ford Cantaloupe and

Rocky Ford Growers Association names

were trademarked, and the growing

region was defined as Otero and

Crowley Counties, south of the

Colorado Canal.

Bar code-branded stickers were

developed for all cantaloupe produced

by Hirakata Farms, giving the ability to

trace a melon back to the field where it

was grown. All growers were required

to register with USDA’s Farm Service

Agency (FSA) and obtain current GAP

(Good Agricultural Practices)

certification or Global GAP training.

Growers accompany 

melons to market

Friday, July 13, was a lucky day for

RFGA, as the new crop rolled into

stores a couple of weeks early. Growers

went with the melons, standing in the

produce department of a King Soopers

(one of Colorado’s major supermarket

chains) to field reporters’ questions. 

Local news outlets in Colorado

enthusiastically covered the story, which

was picked up by news outlets

throughout the United States. A week

later, a packing shed tour was equally

well covered in the press. A cook-off

featuring four of Denver’s hottest chefs

and judged by local media stars brought

even more attention to all the social

networks and conventional media.

Appearances around the Rocky Ford

area by Colorado U.S. Senator Michael

Bennett, state Agriculture

Commissioner John Salazar and

Governor John Hickenlooper added to

the “pizazz.” The events culminated in

national media coverage about the

rebound of Rocky Ford cantaloupe,

including an article in the San Francisco

Chronicle. 

The public relations effort was

spearheaded by Diane Mulligan of

BrandWerks+Mulligan. The agency

monitored national news carefully

throughout the season, prepared for any

quality problems that might crop up. 

RFGA was rewarded for its proactive

approach: when Listeria outbreaks

occurred in other states, the media

called RFGA for background

information, which was freely given,

along with a reminder of Rocky Ford’s

reputation and recent upgrades. 

“This was really the first time that

the Department became this involved to

help support a specific segment of

Colorado’s ag industry,” says Tom

Lipetzky, Markets Division director for

the Colorado Department of

Agriculture. “But we really felt it was

necessary because of the high visibility

of Rocky Ford cantaloupe among

consumers and the potential impact to

other Colorado fruits and vegetables. 

“Rocky Ford cantaloupes, along with

Olathe sweet corn and Palisade peaches,

have been one of the products that have

helped define the image of Colorado

produce for many Coloradoans — we

couldn't just sit by and watch

Colorado's cantaloupe

industry disappear,” Lipsetzky

continues. “We knew a broad

communications effort to

restore consumer confidence

and promote Rocky Ford

cantaloupe was going to be

critical.”

“We were really pleased

with the way the growers

came together to form an

association and with all their

efforts to implement measures

aimed at increasing food

safety,” Lipetzky says. “They

did an excellent job and

demonstrated to consumers

that they are committed to

producing a high-quality and safe

product.”

Enduring commitment 

to growers’ brand 

Generations of growers since 1887

have dedicated themselves to Rocky

Ford and growing this special melon.

Their enduring commitment, often in

the face of adversity, is the “face”

behind the brand. 

Marketing materials, including

television and radio commercials,

billboards, posters and advertising

brought it all home for consumers: the

face of the growers, the heritage and

the simple pleasure of biting into a

sweet juicy melon that brings a smile to

your face. 

Stories about the comeback of the

Rocky Ford brand appeared on

television, radio and in newspapers and

magazines throughout the state.

Exceptional relationships with the

media led to balanced reporting, even

when Listeria concerns cropped up in

Billboards and ads played a key part in the association’s marketing campaign.
Rural Cooperatives / January/February 2013 13

other states. Rocky Ford kept its

unblemished reputation for safety

throughout the 2012 season, selling out

its crop early and earning a premium

price for its growers. 

What accounts for the amazing

rebound of the 2012 season?

“Everything fell into place,” says

Hirakata. “It took everybody pulling

together: the state of Colorado,

Colorado State University, the growers.

And we had outstanding support from

retailers, the media and the consumers.

The media reporters were a great help.

They were there from Day One helping

us tell our story.” There was also a

lively social media presence including

sites on Pinterest, Facebook, Twitter,

YouTube, and a web site that is still

going strong off-season.

What experience 

taught them

Hirakata’s advice to other

cooperatives and associations facing

similar challenges is: “Don’t wait until

something happens. We were caught

completely off guard. Plan for the worst

and hope for the best.” 

Added Lipetzky, “Be ever vigilant in

ensuring food safety and proactive in

telling your story to consumers and the

public. By doing so, should an issue

ever arise, you will have already

established appropriate channels for

communications and are more likely to

be viewed as credible in how you are

dealing with the issue.”

“The 2012 season, while quite

successful by all measures, marked only

the early stages of a recovery for

Colorado’s cantaloupe industry,” says

Lipetzky. “Support from the retailers

was key to getting cantaloupe back in

front of consumers in 2012, and their

continued support will be critical to

further expanding production and sales

in 2013.”

Although the future depends, as

always, on growing conditions, Hirakata

vowed that RFGA would keep moving

forward, expanding the cantaloupe

market while maintaining vigilance on

quality and safety. Plans are being made

for other melons to join the famous

Rocky Ford cantaloupe and brand

extensions are being conceived that will

use the seconds (melons with surface

imperfections) in processed products,

giving growers and consumers more of

the sweet, juicy Rocky Ford goodness. n

TV news reporters interview cantaloupe growers in a Kings Soopers grocery store in Denver as part of a marketing campaign to spread 

the word about the wholesomeness of their fruit. 
14 January/February 2013 / Rural Cooperatives

By David Taylor

Communications Officer, 

Aga Khan Foundation U.S.A.

Editor’s note: This article is provided

courtesy of the Aga Khan Foundation

U.S.A. It was written prior to the upsurge

in fighting in mid-January.

n the day before

Thanksgiving, Mary

Beth Leonard, the U.S.

ambassador to Mali,

took a trip to see how

the farm families and grower

cooperatives of Mopti, eight hours

northeast of Bamako, the capital, are

coping in the challenging conditions of

this west African nation. 

Making a living by farming is never

easy, but if you want a real test, try it in

Mali. The landlocked country on the

edge of the Sahara Desert ranks just 12

rungs up from the bottom of 187

countries listed on the 2011 Human

Development Index by the United

Nations Development Program. One

child in three here suffers from chronic

malnutrition. In the past year, a food

security crisis, caused by erratic rainfall

and spikes in food prices, has further

hurt Mali’s farm families. 

Following a coup in March 2012,

conditions got worse. Rebel and

Islamist groups took control of

northern Mali, claiming independence

for an area covering roughly two-thirds

of Mali’s land area. More than 300,000

people fled northern Mali in the face of

ethnic and religious persecution and

human rights violations. Many

displaced people sought refuge in the

Mopti region, pushing that area’s fragile

limits. 

Residents of the Mopti region face

an unpredictable climate, poor access to

markets and harsh seasons of food

insecurity. Nearly 79 percent of them

live in extreme poverty. So Ambassador

Leonard was visiting families tested by a

double whammy of a food crisis and

civil unrest.

She found glimmers of hope. In a

situation that requires a multi-pronged

response involving health, education

and livelihood training, USDA and its

partners are giving Malians a chance

O

USDA-supported programs help

Mali farmers adapt in hard times
Rural Cooperatives / January/February 2013 15

through better skills and opportunities. 

Season training

On Nov. 21, Ambassador Leonard

got a close-up look at programs that

provide crucial help to farmer co-ops

and other groups, including several

managed by the Aga Khan Foundation

U.S.A. (AKF USA), which has long

supported farm training and livelihoods

in Mopti. Its programs ensure that farm

families have the materials and skills for

off-season agriculture, while building

their resilience against future crises. 

With funding from USDA, AKF has

also scaled up efforts to prevent and

treat child malnutrition through

support of school-feeding programs, by

educating parents about nutrition and

by training community health workers.

With the threat of political unrest and

food insecurity, new funding from

USDA and the U.S. Agency for

International Development is helping

to respond to the area’s most urgent

needs. 

The ambassador’s convoy visited the

village of Soufouroulaye, where an

AKF-managed farmer field school

brings together women who grow

millet, sorghum and cowpeas. Farmer

field schools are essentially schools

without walls, where farmers learn from

each other through hands-on

experience in their own fields and find

answers to shared problems themselves. 

The USDA grant helps nearly

24,000 farmers of rice, millet and

sorghum (and 4,000 cowpea producers)

address shared problems and improve

food security during the “hungry

season,” before harvest. During a

morning meeting, they discussed how

intercropping cowpeas with millet and

sorghum improves soil fertility and

boosts yields for millet and sorghum.

Next stop: a livestock group in the

same village where women who breed

livestock were gaining field-based

instruction on how to best fatten their

animals when feed is scarce. The area

has 14 such women farmer groups.

“It really is wonderful to come on a

trip like this and see what this means

for people,” Ambassador Leonard said

in an interview with Catholic Relief

Services.

Facing page: The marketplace in Djenné, in the Mopti Region of Mali, features many items from farmer cooperatives. Photo by

Lucas Cuervo Moura, courtesy Aga Khan Foundation. Ambassador Mary Beth Leonard (below) greets participants in a farmer field

school who are learning ways to improve their yields of rice, millet and sorghum. Photo by Duden Yegenoglu
16 January/February 2013 / Rural Cooperatives

At the village of Sevare, she stopped

to visit rice farmers who received

market development training, funded

by a USDA Food for Progress grant.

The training helps them diversify their

production and increase farm revenues.

The training, organized by

ACDI/VOCA, improves the ability of

farmer co-ops and groups to get a

higher value from their crops and

improve their processes for marketing.

Making a business of farming

As the ambassador looked on,

farmers learned how to deal with

marketing obstacles and how

cooperatives can pool their members’

production to grow economies of scale. 

The USDA grant helps 20

cooperatives provide market guidance

to their members. Through this, 5,000

farmers around Mopti substantially

boost their income from millet,

sorghum, rice and vegetables. 

AKF instructors also teach another

popular course, Farming as a Business,

which features value-chain analysis,

business planning and how to establish

economic interest groups.

Making for healthier kids

Before leaving Soufouroulaye,

Ambassador Leonard spoke with

women growers who met to

improve their vegetable production

and marketing, which in turn helps

their family’s nutrition and food

security. Bintou Toulema, a 35-

year-old local farmer with a son and

a half dozen other family members

who depend on her, spoke a few

months before about how the

training and support helped her

family. 

“The training is a good thing,”

Toulema said, noting that the

program also helped provide the

group garden with a well and

protective fences. But the main

thing, she said, is that “we can build

on the training.” She now earns

twice as much from the group’s

vegetable garden as she made

during previous seasons from other

work. 

“There’s a marked improvement in

my income. The increase let me buy

two small goats this year and start other

ventures like trading in rice.”

The program also supports schooling

for children displaced by the unrest

further north, providing school supplies

for displaced children and their

teachers. It also supplies health supplies

for the students (such as mosquito nets

to protect against malaria) and their

classrooms (such as disinfectant). 

“I think this is a positive story,” said

Steve Mason, CEO for AKF Mali.

“AKF is committed to improving

people’s quality of life in Mopti

Region.”

Mason added that AKF’s approach to

reducing rural poverty, known as MultiInput Area Development, weaves

together basic education with health

and livelihood programs. The women’s

farmer groups build fundamental

literacy skills through more than two

dozen mini-libraries and classes

associated with the groups. The minilibraries get most use between July and

October, before the rainy season, when

most people work the crops. 

“In spite of the painful events, Aga

Khan Foundation is one of the few

non-governmental structures that is

working with rural populations on the

ground,” Levy Dougnan, a reporter

with Radio Jamana Djenne, wrote in an

article in Les Echos, a French-language

newspaper published in Bamako. 

New types of financing 

for farm groups

In her last visit of the day, the

ambassador stopped at the Sevare office

of Premiere Agence de Microfinance

(PAMF), an agency of the Aga Khan

Development Network. Through the

USDA grant, PAMF improves access to

financial services that smallholder

farmers would not otherwise get. PAMF

makes loans to farmers trained in the

AKF field workshops so that they can

obtain (for example) irrigation wells for

vegetable growing, equipment and postharvest financing.

Three-quarters of the loans are

group loans for farming and livestock

enterprises, many of them run by

women. PAMF has tested new types of

loans with these groups, including

“inventory credit group” loans. For

these loans, cooperatives trained in

post-harvest techniques can store

their harvest securely and each

member receives credit according

to his or her portion. This allows

farmers to save their harvest to sell

later when they can get a higher

price.

Ambassador Leonard returned

to the capital impressed. “The

assistance that the international

community gave did actually help

these people to come through this

period, and so now we can look

forward hopefully to a brighter

future,” she told CRS. Back in

Bamako, she looked forward “to

supporting the resilience, so that

there’s better agricultural

production and so they’re better

equipped to deal with such

challenges in the future.”

As the next day dawned, the

farmers of Mopti were back at

work. n

Women vegetable growers in Mopti have received

training in better production techniques and market

information, with USDA support. Photo by Lucas Cuervo

Moura, courtesy Aga Khan Foundation
By Bruce J. Reynolds, Ag Economist

Cooperative Programs

USDA Rural Development 

Bruce.reynolds@wdc.usda.gov

he annual Farmer Cooperative Conference,

organized by the University of Wisconsin

Center for Cooperatives (UWCC), provides

a forum for keeping up to date on major

economic and cooperative trends. The 15th

annual conference was held in Minneapolis Nov. 8-9. The

longevity of the event indicates a continuing interest in

farmer cooperative practices and developments. 

Previous conferences focused on specific topics, such as

risk management, governance and finance. This year’s

conference, “Leading Change: Envisioning the Future,” took

on a range of critical topics, reflecting the complex

interactions of issues in today’s economy. As in previous

years, UWCC has posted conference proceedings on its web

pages: www.uwcc.wisc.edu/outreach/FCC/Current/program.html. 

The conference, which opened two days after election-day,

featured appearances by two prominent national farm leaders:

Chuck Conner, president of the National Council of Farmer

Cooperatives and a former U.S. deputy secretary of

agriculture, and Dan Glickman, former congressman and

U.S. secretary of agriculture. Both added insights on the

political landscape in the wake of the election and what it

might mean for farmers.

Other conference highlights are described below.

Bio-energy growth foreseen

Bio-energy has contributed to the income of U.S. grain

farmers in recent years and is an important factor in the

development of a new farm bill. Gary Haer, a vice president

with the Renewable Energy Group, predicted continued

growth in bio-energy. 

Glickman and other panelists shared the view that bioenergy is reducing agriculture’s reliance on USDA’s

commodity support programs. Yet, farm income from bioenergy also increases the need for risk management.

Specifically, the recent expansion in U.S. petroleum and

natural gas was not generally predicted three or four years

ago. 

The shift of the United States from being a major

importer of energy to a significant producer of energy will

involve adjustments in the marketing of bio-energy. 

Government policy was also discussed as it pertains to

anti-trust and farmer cooperatives. Michael Lindsay, partner

in Dorsey & Whitney in Minneapolis, gave an overview of

recent court decisions that pose a potential threat to

maintaining the limited exemptions from anti-trust, as

legislated in the Capper-Volstead Act of 1922. 

A series of recent challenges have centered on fine points

of the law as applied in cases where a non-farmer-owned

business participates in market supply with cooperatives

(mushrooms), use of product certifications (eggs) and preRural Cooperatives / January/February 2013 17

Bio-energy impact, base capital financing

among topics at Farmer Co-op Conference

T

Several panelists shared the view that development of bio-energy (such as this ethanol plant) is reducing agriculture’s reliance 

on commodity support programs.
18 January/February 2013 / Rural Cooperatives

production coordination (potatoes). Editor’s note: for more on

this topic, see page 22.

Transitioning to base capital plans

Ways to improve cooperative operations is always a topic

of great interest at such gatherings. Financial experts have for

many years recommended cooperatives convert from

discretionary equity redemption programs to base capital

plans, yet the majority of co-ops have not made the change. 

Two managers discussed the transition of their

cooperatives to base capital plans. Foremost Farms USA has

recently had a surge in member turnover as older farmers

have retired. Michael Doyle, Foremost’s vice president for

finance, emphasized the importance of placing ownership and

financing into the hands of current members, in proportion

to their use. 

MGB Marketing is another cooperative that transitioned

from a traditional equity revolving program to a base capital

plan. As an international marketer for U.S. blueberry

growers, MGB has adopted aspects of new-generation

cooperatives, such as member delivery rights, but it has kept

the traditional practice of one member, one vote. 

Lorrie Merker, director of grower and industry relations

for MGB, pointed out the importance of member financing

for the co-op with its value-added marketing and frozen

blueberry operations. It participates in several joint ventures,

including fresh blueberry

marketing with Chilean

growers. This affords mutual

gains from seasonality

differences in the two

hemispheres. As often happens,

however, international partners

can also become competitors, as

occurs with Chile when it

markets frozen blueberries.

A “best practice” that has not

often been discussed is the

building of a safety culture in

cooperatives for the benefit of

employees and members. The

programs that several

cooperatives are implementing

were described by Michael

Boland of the University of

Minnesota and Todd Ludwig, President/CEO of WFS

(Working for Farmers’ Success) Cooperative. The distinctive

idea is to make safety more than a set of procedures, but also

a cultural change where employees and members are all

involved in finding safer and better ways to operate a

cooperative (see page 4 of this issue for more on this effort).

Ove Hansen and Quintin Fox of Gay Lea Foods gave a

presentation on developing member leadership. Their

cooperative has an extensive director and delegate education

program. In addition to pursuing best practices of

governance, the Gay Lea Foods directors are closely involved

with an ongoing dialogue with management on strategic

directions. Their process of both development and

engagement of the board is an excellent model for many

cooperatives to review.

International reach of co-ops

Many U.S. cooperatives are involved with both exporting

and with projects to improve agricultural productivity in

developing countries. Brett Stuart of Global AgriTrends

presented data indicating the severe pressure on the world’s

poor from the impact of food price inflation, and substantial

impacts in the demand for corn and other feeds from China’s

growing economy. Many U.S. farmers will benefit if increases

in corn and pork exports occur as predicted. U.S. farmers are

also benefiting from the involvement of their cooperatives in

the service economy of assisting foreign producers to

improve food quality and agricultural productivity.

Two cooperatives made presentations about their

international services and trade relations. Doug Wilson,

CEO of Cooperatives Resources International (CRI), a dairy

genetics, testing and livestock marketing cooperative,

described its successful ventures with foreign partners,

particularly cooperatives. Similar to MBG, CRI has partners

who are also competitors, but their involvement with

international cooperative dairy services is expanding the

global market for everyone’s benefit.

Land O’Lakes has for many years

both exported products and inputs as

well as worked on dairy

improvement projects throughout

the world. Carol Kitchen, senior vice

president and general manager for

the co-op’s Global Ingredients

division, gave a presentation entitled

“Linking Commercial and

Development Opportunities in the

Global Marketplace.” 

After she described projects in

several continents of the world, she

was asked how helping China’s dairy

industry helps U.S. farmers.

Kitchen’s answer amplified the title

of her presentation. She noted that

someone else will step in to improve

dairy production in China in any event. Those who will gain

future trade and business opportunities will be the ones who

were involved in building relationships there. 

Cooperative valuation

Valuations of cooperatives are often complex when

consideration is given to all the benefits they provide to

members. Ways to improve the accuracy of valuations in premerger studies and acquisition planning was the topic of a

panel discussion that included lawyers Mark Hanson of Stoel

The Farmer Cooperative Conference helps keep co-op

leaders up to date on issues that are vital to producers 

and their co-ops. 
Rural Cooperatives / January/February 2013 19

Rives and Michael Weaver of Lindquist & Vennum, and an

accountant, Timothy Muehler of CliftonLarsonAllen LLP, all

based in Minneapolis. 

About 70-80 percent of mergers fail to equal the combined

performance of each cooperative when they were operating

separately, it was noted. Excessive optimism in valuations

reflects a common fallibility, as witnessed by boom-bust

cycles in the economy. 

Pre-merger valuations of

a business often assume

that an increase in the size

of a business will result in

better market access, as

well as opportunities to

reduce staff duplication.

Such assumptions can too

easily be made without

thinking through the

consequences of changing

the ways these separate

cooperative business

operations evolved to

develop the distinctive

efficiencies with the

resources they have. 

It is unlikely anyone will

ever develop a fool-proof

check-list to prevent

excessive pre-merger or

pre-acquisition valuations.

But the panelists

recommended a strategic

approach of identifying

specific strengths that a merger would capture and

weaknesses that would be ameliorated. Focusing on specific

sources of new value is a better guide than easy assumptions

that bigger is better. 

Re-establishing a cooperative with a new value proposition

does not happen often, so it was especially interesting to

learn about the renewal of CBH, an Australian wheat co-op,

from Terry Cunningham, company secretarial services

manager. The gradual deregulation of its grain market over a

30-year period, starting about 1980, forms the backdrop of its

story. 

Initially the cooperative operated as a grain handling

business. Earnings were regulated by the Australian Wheat

Board. As the market began to deregulate, the co-op looked

at various corporate forms and merger possibilities, but the

membership was divided over the future direction of the

business. 

CBH staff and directors held extensive meetings with

members and traveled to Canada and the United States to

meet with other cooperatives, such as CHS Inc., and with

university economists as they studied alternative

organizational forms. By 2009, CBH completed its

cooperative re-organization which was based on a policy of

maximizing grain payments and reducing fees for members,

without distributing patronage dividends. CBH’s earnings are

entirely reinvested in its grain handling infrastructure to keep

increasing efficiency. 

As background to CBH’s “no patronage dividend” policy,

the Australian government had passed a tax exemption in

1972 for all earnings reinvested in grain

cooperatives. However, this

tax plan involved a fixed

payment to growers, as

determined by the Wheat

Board, and prohibited

distribution of dividends to

cooperative members. 

After deregulation, tax

policies changed but CBH

members chose to adhere

to a “no patronage

dividend” policy, instead

reinvesting all earnings in

the cooperative. This type

of policy raises enterprise

value and the incentive to

sell the cooperative.

However, in the event of a

sale or dissolution,

government taxation would

be sufficiently large that

little cash value would

remain for its former

members. 

The value of cooperatives was a major topic of conferences

throughout the world in 2012 as part of the International

Year of Cooperatives. Michael Cook, a professor at the

University of Missouri, pointed out some of the differences

in how U.S. and foreign co-ops create value for members. 

Similar to CBH, many non-U.S. cooperatives do not

distribute patron dividends. Cook pointed out that many

non-U.S. cooperative members believe that patron dividends

would diminish the solidarity of their cooperatives. 

An objective of the International Year of Cooperatives was

to increase public awareness of all types of cooperatives.

Much of the lack of awareness about cooperatives can be

remedied with better collection of co-op data. Cook noted

the collection of U.S. cooperative data by the University of

Wisconsin Center for Cooperatives (UWCC), and its report

— Research on the Economic Impact of Cooperatives

(http://reic.uwcc.wisc.edu/default.htm) — is helping to

address this need. The 2013 conference will again be held in

Minneapolis, with the date still to be determined. For

updates, check the UWCC website for updates:

http://www.uwcc.wisc.edu/. n

CRI representatives visit a Russian dairy farm, which participates 

in a dairy genetics joint venture with the U.S. co-op. 
CI

Co-ops 101

An Introduction to 

Cooperatives

Cooperative 

Information 

Report 55

United States Department of Agriculture

Co-ops 101: An Introduction to 

Cooperatives (CIR 55)

Probably the most-read co-op primer 

in the nation, this report provides a 

bird's-eye view of the cooperative 

way of organizing and operating a 

business. Now in an exciting new

full-color format. 

Assessing Performance and Needs

of Cooperativce Boards of Directors

(CIR 58)

This report helps directors assess

a) their individual abilities and areas

needing improvement; b) how well the 

board performs and how it can improve;

of board meetings.

Understanding Cooperative Bookkeeping and Financial Statements 

(CIR 57)

 

All co-op board members should 

understand bookkeeping and be able

provides the basics in bookkeeping 

Directory of Farmer Cooperatives

(SR-22)

Contains a listing, by State, of over 

1,200 farmer-owned marketing, 

bargaining cooperatives. Includes 

each cooperative’s contact information, type of cooperative, and products 

sold. This directory has been updated 

every four years but now will be updated 

yearly and revised on our Web page 

(www.rurdev.usda.gov) whenever 

information in an individual listing 

changes. 

Strategic Planning Handbook 

for Cooperatives (CIR-48)

Presents a method for facilitating 

the strategic planning process. 

Facilities, personnel, and equipment associated with the process 

strategic planning are described 

in detail–agreeing to plan, gathering facts, evaluating facts, 

results. Hints for success are

 provided throughout.

The Circle of Responsibilities for 

Co-op Board Members (CIR 61)

All boards of directors are under 

increasing pressure to perform well 

and justify their decisions. 

Cooperative boards are no exception. 

This series of articles, originally 

printed in USDA's Rural

Cooperatives magazine, lays out 

fundamental guidelines for 

cooperative directors to follow. 

une Tupyour

Co-op
Cooperative Statistics 2011 

(SR 72)

Want to know how your co-op

measures up? Need to know the 

latest co-op production and 

Annual Audits – Board 

Responsibilities (CIR-41)

Directors, managers, and advisers 

of new and developing cooperatives 

need to be well informed about the 

importance of an annual audit. This 

publication summarizes information 

concerning audits and reviews of 

accounting systems in four areas: 

(1) Reasons for an audit; (2) auditor 

selection; (3) audit procedures and 

audit report; and, (4) other accounting services.

Managing Your Cooperative’s

Equity (CIR 56)

Do you manage your co-op’s equity, 

or does it manage the co-op? Here’s 

equity capital while adhering to 

cooperative principles.

Packages for Cooperatives (SR 36) 

Attracting and keeping productive

employees is a major challenge for

co-ops. Here’s a guide to building

compensation packages that help 

do that while keeping the balance 

sheet in the black.

Inventory Management Strategies

for Local Supply Cooperatives

(SR 41)

Presents vital strategies for farm

supply cooperatives to use during

everyday management of inventory. 

Can help co-op managers make 

better inventory management 

decisions by using those strategies

as part of an organized plan.

Base Capital Financing of 

Cooperatives (CIR 51) 

Successful management of equity 

requires a responsive and objective 

capitalization program. A base 

capital plan is an ideal way to meet 

this requirement. This guide provides 

capital method of capitalization, and 

guidelines for implementing and 

operating such a plan.

request copies of any of the publications on these pages. Or download them from the Web. Either way, there is no cost.

For hard copies (please indicate title, publication number and quantity needed), e-mail: coopinfo@wdc.usda.gov, 

or call: (202) 720-7395. Or write: USDA Co-op Info., Stop 0705, 1400 Independence Ave., SW, Washington DC 20250. 

To download from the Web, visit: http://www.rurdev.usda.gov/RDPublications.html.
22 January/February 2013 / Rural Cooperatives

By Marlis Carson and Donald Frederick

Editor’s note: Carson is general counsel with the National Council

of Farmer Cooperatives in Washington, D.C. Frederick is former

program director, Law, Policy and Governance with Cooperative

Programs of USDA Rural Development (retired).

his article reviews antitrust law as it impacts

agricultural producers who market their

products on a cooperative basis and brings

readers up to date on related challenges to

cooperatives. The story begins with the

enactment of our nation's basic antitrust law, the Sherman

Act of 1890. 

The Sherman Act

For the first three quarters of the 19th Century, most

American businesses were small, organized as a sole

proprietorship or a partnership of a few people, managed by

their owners, required little capital, produced a single

product and served local markets.

By 1890, a new industrial structure was taking shape. A

relative handful of large corporations were gaining

dominance in many key industries. In these organizations,

management was separate from ownership, large amounts of

capital were used to acquire machinery and other fixed assets,

and many products were produced and sold in a national or

international market. Farmers and their cooperatives were

caught up in this change and influenced by the public and

government responses to it.

Some of these large corporations were organized as

business trusts. Competing companies would place their

assets in a trust and the organization would be run by a board

of trustees. A backlash developed among smaller businesses

that had difficulty competing with the trusts and customers of

these trusts, and it became known as the “antitrust

movement.”

Critics of trusts gained a valuable ally in Senator John

Sherman, widely recognized as the ablest financial expert in

public service at the time. Legislation enacted in 1890 to

limit the power of trusts is commonly known as the Sherman

Act because it would not have passed without his support.

Section 1. The Sherman Act has only two brief provisions.

Section 1 provides:

 Every contract, combination (trust or otherwise), or

conspiracy that restrains trade is illegal and

 Every person who signs a contract or participates in a

combination or conspiracy that restrains trade in

interstate or foreign commerce is guilty of a felony.

As written, Section 1 of the Sherman Act sets a very tight

standard. It says every contract, combination, or conspiracy

that reduces competition is illegal and every person who

participates in such conduct is guilty of a felony.

The word “person” is highlighted because in the eyes of

the law, every individual or entity is a “person.” A small

family dairy farmer is on the same footing as global

conglomerates.

So, if it is illegal under the Sherman Act for large

companies to agree on the prices they will charge for their

products, it is also illegal for two family dairy farmers to

agree on the prices they will charge for their products.

Section 2. Section 2 provides that every person who

monopolizes, or attempts to monopolize, or combines or

conspires with any other person to monopolize any part of

interstate or foreign commerce is guilty of a felony.

Section 2 also sets a tight standard. Not only is every

person who monopolizes any part of commerce guilty of a

felony, but so is anyone who attempts to establish a

T

Antitrust challenges facing

farmers and their cooperatives
Rural Cooperatives / January/February 2013 23

monopoly, even if that person isn’t successful.

Rule of Reason. Early court decisions applied the Sherman

Act in a literal manner, holding even modest restraints of

trade illegal.

In 1911, the Supreme Court issued a landmark decision

interpreting the Sherman Act. In deciding that Standard Oil

and American Tobacco were illegal conspiracies to restrain

trade, the Supreme Court moved away from this literal

reading of the Sherman Act and established the test that is

still the basic standard for applying the Sherman Act: the

Rule of Reason.

Under the Rule of Reason, only agreements that

unreasonably restrain trade are illegal. This is a very

subjective test that requires judges and juries to interpret

often complex facts in deciding whether certain conduct

violates the Act or not.

The standard most often applied is conduct is generally

found to be reasonable (and therefore legal) if the benefits to

society as a whole (including the firms involved) outweigh the

harm to competition. This is hardly a bright line test offering

clear guidance to businesses and their leaders trying to plan

future conduct.

Rule of Per Se Illegality. The Court also adopted a

corollary rule to the Rule of Reason: the Rule of “Per Se”

illegality. Under this standard, some conduct is so inherently

unreasonable that it is illegal whenever undertaken,

including:

 Price fixing;

 Territorial allocations (as when one person, for example,

agrees not to do business in Illinois if a competitor won’t

do business in Indiana);

 Group boycotts (no one will sell to Joe Smith until he

agrees to pay our price);

 Tying arrangements (example: if you want to buy my

butter, you also have to buy my ice cream). 

At the top of the list of activities that the courts have held

to be illegal “per se” is price fixing. And what do farmers do

when they market their products on a cooperative basis?

They agree on prices and other terms of trade, “per se”

violations of antitrust law.

Clayton Act, Section 6

In 1914, two additional laws to curb anti-competitive

business conduct were enacted.

The Federal Trade Commission Act created the Federal

Trade Commission to investigate and order an end to “unfair

methods of competition.”

The Clayton Act prohibits certain business practices when

the effect may be to substantially lessen competition,

including price discrimination among customers, tying

agreements and mergers and acquisitions.

Section 6 of the Clayton Act was the first legislative

recognition of the unique needs of farmers and their

cooperatives. It states that the antitrust laws shall not forbid

the existence and operation of labor or agricultural organizations without capital stock and not conducted for profit.

While Section 6 of the Clayton Act was a step in the right

direction for farmer marketing associations, it fell short of

providing necessary protection for a couple of reasons:

 While it says producers can form co-ops, it doesn't say

what collective conduct they can engage in; 

 Section 6 only protects cooperatives without capital

stock, and many marketing associations were organized

as stock-issuing companies.

Cooperatives and their supporters asserted that Section 6

of the Clayton Act might be adequate for labor unions, but it

was not enough protection for producer marketing

associations.

President Herbert Hoover (seventh from left) meets with a contingent of Kansas farmers and Arthur Capper

(next to Hoover, in dark coat) in December 1929. 
24 January/February 2013 / Rural Cooperatives

Capper-Volstead Act 

In 1922, Congress responded to producer concerns by

passing the Capper-Volstead Act. While it has a technical

name, like the Sherman Act it became known by the names

of its primary supporters, Senator Arthur Capper and

Representative Andrew Volstead.

Capper-Volstead includes co-ops that issue capital stock

and goes beyond just saying qualified producer associations

are exempt. It provides a positive statement that producers

can engage in several types of collective marketing activity. It

also contains safeguards to protect the public from abusive

conduct by farmers.

Section 1. Like the Sherman Act, Capper-Volstead contains

two relatively brief provisions. Section 1 describes the scope

of the limited antitrust protection provided.

Under Section 1, persons engaged in the production of

agricultural products may:

 Act together in associations, corporate or otherwise, with

or without capital stock;

 Collectively process, prepare for market, handle, and

market their farm products.

Producers have a great deal of flexibility under CapperVolstead in deciding how they will market their production.

Some cooperatives, called bargaining associations, limit their

activity to negotiating prices and other terms of the contracts

that govern the sale of their members’ products directly to buyers.

Other cooperatives, such as Land O’Lakes and Ocean

Spray, have integrated forward to the point that they put

processed versions of their members’ product right on the

grocery store shelf.

There are numerous degrees of value-added activity that

fall between these two extremes. These include selling raw

product on a collective basis and producing finished goods

for the institutional and private-label markets. All levels of

collaborative activity are protected.

Section 1 also authorizes collaboration among

cooperatives. Such associations may:

 Have marketing agencies in common (federated co-ops,

LLCs, partnerships, etc.);

 Enter into contracts and agreements to coordinate their

collective marketing activity.

Several court decisions have indicated that producers may,

through a single cooperative or in combination with other

cooperatives, obtain monopoly power if it is achieved

through natural growth, voluntary confederations and

without resort to abusive practices. Thus, obtaining a large

market share does not, absent unprotected conduct,

compromise Capper-Volstead’s antitrust shield. 

Section 1 also provides the organizational and operational

rules co-ops must follow to be eligible for its protection.

They must:

 Limit membership to agricultural producers;

 Operate for the mutual benefit of their members as

producers (conduct not directly related to marketing

agricultural products is not protected);

 Either use one-member, one-vote or limit dividends on

equity to 8 percent per year, and

 Do a majority of their marketing for members, measured

by value.

A couple of points to remember:

 All voting members must be producers. Even one nonproducer in the membership (especially if that nonproducer happens to be a buyer or competitor) may

revoke the antitrust protection.

 The amount of non-member business permitted is quite

liberal; almost 50 percent of the products handled may

be from non-members. This allows co-ops to seize

Senator Arthur Capper Representative Andrew Volstead
Rural Cooperatives / January/February 2013 25

business opportunities requiring product beyond what

the membership can produce.

Section 2. Section 2 of Capper-Volstead provides another

check on cooperatives. It authorizes the U.S. secretary of

agriculture to order an association that monopolizes or

restrains trade to cease any anti-competitive conduct that

unduly enhances the price of an agricultural product. If a coop does not abide by any such order, the U.S. Department of

Justice is empowered to enforce the order.

Rationale for Capper-Volstead. From well before 1922 and

continuing into the foreseeable future, individual farmers are

at a severe disadvantage in the marketplace when dealing

with typical entities buying their products. Co-ops level the

playing field.

Some argue antitrust protection for agricultural producers

is no longer justifiable. They point to some larger

commercial farmers and farmer cooperatives and say these

entities shouldn’t be allowed to agree on prices and other

terms of trade.

Given the increasingly concentrated and global economy,

however, large buyers are — if anything — increasing their

market power. They can negotiate down prices paid to

farmers, even playing farmers in one country against those in

other countries that produce the same products. Cooperative

leaders thus view Capper-Volstead as being as vital to

producers today as it was at the time of enactment.

In summary. Under Capper-Volstead, producers may:

 Agree among themselves on the prices they will accept

for their products and all reasonable terms of trade;

 Limit their collective activity to establishing a floor price

or integrate forward throughout the food marketing

chain;

 Collectively market their products with producermembers of other co-ops by having the firms use a

common marketing agency, form a federated

cooperative, or simply work together to accomplish their

marketing objectives.

Unprotected Conduct. Capper-Volstead is not applicable

when producers engage in other collective activity. This

doesn’t mean such activity is illegal under the antitrust laws

because it is not protected by the Act. If challenged in the

courts, it will be judged under the same “rule of reason” and

“rule of per se illegality” standards applied to similar conduct

between non-cooperative firms. 

Conduct not protected by Capper-Volstead includes:

 Contracts and other agreements with persons who are

neither producers nor associations of producers;

 Mergers, acquisitions and other combinations with noncooperative firms;

 Actions that are “predatory” in nature (anti-competitive

and without business justification or solely aimed at

eliminating competition, such as blocking the door to a

competitor’s warehouse);

 “Unduly” enhancing prices. (To date, no cooperative has

been found to have “unduly enhanced” prices.)

Fishermen's Collective Marketing Act

In 1934, a law was enacted that provides essentially the

same antitrust protections for fishermen and their

cooperatives as Capper-Volstead does for agricultural

producers.

 Section 1 authorizes fishermen to engage in collectively

catching, producing, preparing for market, processing,

handling and marketing aquatic products. It also

contains the same organizational and operational rules as

section 1 of Capper-Volstead.

 Section 2 contains similar enforcement provisions as

Capper-Volstead, but authority is placed with the U.S.

secretary of commerce.

This law is obviously important to cooperatives that

operate in the fishing industry. And since the laws are similar

in many ways, legal interpretations of this law can be valuable

in assessing how the courts will judge certain types of

conduct by agricultural cooperatives.

Current challenges

The antitrust protection accorded farmers and their

cooperatives by Capper-Volstead is seldom free from

investigation and challenge. Next we look at a recent

government study that included Capper-Volstead and four

ongoing civil suits that could impact the cooperative system.

Antitrust Workshops. In 2010, the U.S. Department of

Justice, Antitrust Division, and the U.S. Department of

Agriculture held five workshops around the country to

explore competition in agriculture. Arguments for and

against Capper-Volstead as currently written and interpreted

were raised at several of these workshops.

In May 2012, the Department of Justice released a 24-

page report summarizing the testimony but not

recommending any additional legislation or regulatory

oversight. However, Justice has made it clear that it will

continue to challenge in court cooperative activity that it

believes to be outside the protection of Capper-Volstead. And

if the courts sanction cooperative conduct that it believes is

harmful to competition, it will pursue legislative changes in

the law. 

Mushroom Case. We next focus on civil suits that challenge

agricultural producer conduct as a violation of antitrust law.

The first involves a mushroom producer cooperative.

Beginning in 2001, the Eastern Mushroom Marketing
26 January/February 2013 / Rural Cooperatives

Cooperative (“EMMC”) purchased several properties that

had been mushroom farms. EMMC then resold the

properties after placing restrictions in the deeds which

prohibited future use of the land to grow mushrooms.

The U.S. Department of Justice Antitrust Division

notified the co-op that it believed the deed restrictions

violated antitrust law and were not protected by CapperVolstead. In 2005, to avoid protracted litigation, EMMC

settled with Justice and removed the restrictions from the

deeds. 

The producers hoped this would be the end of their

problems. However, in early 2006, several firms that

purchased mushrooms filed lawsuits against EMMC, several

members and several non-members in a Federal District

Court in Pennsylvania. Issues raised include:

 Was Capper-Volstead protection compromised by (1) the

inadvertent sign-up of a non-grower entity as a member

and (2) the membership of vertically integrated grower

entities?

 Was the co-op’s supply management program (deed

restrictions) conduct protected by Capper-Volstead?

In 2009, the trial court judge said that one non-producer

entity that became a voting member in the co-op through a

bookkeeping error voided the co-op’s Capper-Volstead

protection. The U.S. 3rd Circuit Court of Appeals said it

won’t review that ruling until the case is decided. 

The case is still in pre-trial proceedings.

Egg Case. In 2008, several purchasers filed lawsuits in the

same Pennsylvania court against numerous companies that

produce eggs and processed egg products, including one coop, United Egg Producers. These suits allege defendants

engaged in illegal supply management by: 

 Increasing the size of chicken cages and thus reducing

the number of egg-producing chickens;

 Exporting eggs at a loss to increase domestic egg prices.

The defendants have filed motions to dismiss the case on

several grounds. Discovery and other proceedings have been

stayed awaiting a ruling on various motions to dismiss.

Potato Case. In 2005, several potato marketing associations

formed United Potato Growers of America (UPG) to manage

the supply of potatoes reaching the market and thereby raise

prices above the cost of production. Members contributed

funds to UPG which used the money to pay growers not to

raise potatoes. 

In 2010, several purchasers of potatoes sued UPG in an

Idaho Federal District Court claiming the membership

illegally:

 Agreed to reduce the supply of potatoes to raise prices;

 Included vertically integrated potato producers.

In December 2011, the trial court issued a nonprecedential memorandum opinion that Capper-Volstead

does not protect pre-production supply control activities such

as acreage reductions and production restrictions. The judge

also questioned whether vertically integrated members are

permitted under the Act. Additional motions to dismiss are

pending, and the Capper-Volstead issues have not been

resolved as yet.

Dairy Case. Cooperatives Working Together (CWT) is a

voluntary, producer-funded program developed by the

National Milk Producers Federation (NMPF). One of

CWT’s programs was designed to strengthen and stabilize

milk prices by paying dairy farmers to reduce herd sizes.

In 2011, animal rights groups sued the NMPF and several

large dairy co-ops in a

California Federal

District Court

alleging that the

CWT program

illegally increased

milk prices to

consumers and that

the defendants aren’t

protected by CapperVolstead.

The defendants

filed motions to dismiss on several grounds, including

asserting that the court lacks subject matter jurisdiction

because the Capper-Volstead Act vests the U.S. secretary of

agriculture with exclusive jurisdiction over the issues in

dispute. In October 2012, the court rejected the defendants’

argument and denied the motions to dismiss. The case is

continuing with pre-trial proceedings.

Issues under review

These cases raise three issues that are important not only

to the producers and co-ops involved but also to the

agricultural industry as a whole.

1. Are pre-production supply controls agreed to by co-op

members protected as “preparing for market” or

“marketing” farm products as those terms are used in

Capper-Volstead? A strong case can be made that at the heart

of the marketing function of any company, including farmer

cooperatives, is the ability to estimate demand in the

marketplace and set production capacity to provide adequate

supply. For instance, a car company — based on consumer

research, industry trends and other proprietary information

— estimates the presumed yearly demand for a new model. If

the target is 100,000 cars, it is obvious the auto company can

These cases raise issues

that are important

not only to the producers

and co-ops involved, but also

to the ag industry

as a whole. 
Rural Cooperatives / January/February 2013 27

limit the supply produced to 100,000 cars.

Farmer cooperatives must be just as responsive to

consumer demands. A cooperative marketing more of a

product — whether a bulk commodity or a value-added

product — than can be sold will quickly become

economically unsustainable.

Two existing decisions seem to support the cooperative

position.

 In Re Washington Crab — Federal Trade Commission

Chair Paul Rand Dixon held fishermen can agree not to

fish to limit supply and raise prices (1964).

 Alexander v. NFO — The U.S. 8th Circuit Court of

Appeals said a two-week voluntary withholding action by

milk producers is protected by Capper-Volstead (1982).

2. Is the term “producer” broad enough to include entities

that have integrated forward into food processing and

marketing? In a U.S. Department of Justice case against

integrated broiler producers that reached the U.S. Supreme

Court, both parties made this the central issue of their

arguments. However, a majority of the Justices determined

one or more members of the co-op, the National Broiler

Marketing Association, did not have any broiler production

activity and decided the case against the co-op on the nonproducer member issue (1978).

Justice Byron White wrote a dissenting opinion arguing

that integrated firms with some production activity were

allowed in a Capper-Volstead protected cooperative. In

response to Justice White, Justice William Brennan, Jr. wrote

a concurring opinion stating integrated firms in the

membership voided Capper-Volstead. Thus the issue was far

from resolved.

Two subsequent events failed to clarify the issue.

 Texas Produce Marketing Association — A Department of

Justice Business Review Letter provided upon request to

the Association concluded that firms that handle, pack

and store agricultural products for themselves and other

members are “producers” and eligible under CapperVolstead to be members (1988).

 Hinote — In the early 1990s, the Department of Justice

brought criminal antitrust charges in a Federal District

Court in Mississippi against Samuel Hinote, the

president of Delta Pride Catfish Cooperative. Hinote

was charged with conspiring with other catfish

processors and marketers to fix the wholesale price of

catfish.

While most of the other firms involved were, like Delta

Pride, owned entirely by catfish producers, two were

subsidiaries of ConAgra and Hormel. The trial court judge

rejected Hinote's motion to dismiss the charges on the

grounds that his conduct was protected by Capper-Volstead.

The judge said that whomever Capper-Volstead was designed

to protect, it didn't include ConAgra and Hormel.

The case went to trial and Hinote was acquitted of all

charges by the jury. The case died and no appeals were taken

on the issue of whether large firms with catfish production

could be members of a Capper-Volstead protected

cooperative.

3. Is the concept “association of producers” flexible enough to

allow a co-op that inadvertently accepts a non-producer as a

member to correct the error without having lost its antitrust

protection in the interim? Again we have conflicting

guidelines in this area.

 National Broiler Marketing Association — The Supreme

Court seems to take a hard line stance that one nonproducer voids protection (1978).

 Alexander v. NFO — In its subsequent opinion, the 8th

Circuit Court of Appeals finds a few non-producers

"sloppily" admitted as members do not void protection

(1982).

Possible outcomes

As mentioned earlier, antitrust litigation is complex, costly

and time consuming. Results are difficult to project. Here

are three possible ways these cases could end and how each

might impact farmer cooperative marketing.

1. Some or all of these cases could be settled. Managing

these cases is a serious drain on the resources of all parties

and takes management time away from the issues of day-today operations. When the fight is between buyers and sellers

in the same industry, they can poison otherwise cordial and

vital business relationships. So it is quite possible some or all

of these cases will be settled before a definitive judicial

opinion is issued and no meaningful guidelines for future coop conduct will be established.

2. The co-ops may lose on some or all of these issues. This

may limit the protection provided producers by CapperVolstead. 

3. The co-ops may prevail on some or all of these issues.

While this would sanction the co-op conduct under review, it

could lead to the proposal of amendments to CapperVolstead that could amend, or even override such decisions.

As these cases are moving through the judicial process,

only time — perhaps a great deal of time — will reveal what,

if any, impact they have on cooperative marketing by

agricultural producers. It is important that all managers with

and advisors to agricultural marketing cooperatives keep

informed about these and other challenges to CapperVolstead. n
28 January/February 2013 / Rural Cooperatives

By Steve Varnum

Director of Communication and Marketing

New Hampshire Community Loan Fund

ike many powerful

social movements, New

Hampshire’s first

manufactured-home

cooperative began at

the intersection of survival and justice.

Bob Sirles was a can-do, determined

kind of guy. A school groundskeeper, he

was used to hands-on problem solving.

By late 1983, he had lived for 10 years

with his wife and two sons in Meredith

Trailer Park, in the Lakes Region of

central New Hampshire.

At the time, real estate sales in New

Hampshire were booming, especially

around nearby Lake Winnipesaukee, a

magnet for boaters and well-heeled

vacationers. The blue-collar residents of

Meredith Trailer Park, however,

reflected little of the area’s prosperity.

Its owners, an elderly couple, were

increasingly unable to keep up with the

13-home-park’s needs. Its gravel roads

were rutted and potholed, the septic

system leaked into a nearby brook and

refuse littered some lawns.

In 1983, one of the owners was

admitted to a nursing home. His wife

needed to sell the park, but feared

having to leave her own home, which

was located on the same plot. Land for

condos and summer homes in the area

was selling quickly and fetching top

dollar. It wasn’t hard to predict what

would happen if the park was sold. 

Co-op conversions help bring security

to manufactured housing owners

L

Cooperative ownership of manufactured-home communities boosts the pride of residents — such as Sheila Dickerson of Soda Brook Cooperative in

Northfield, N.H. — in their homes and neighborhoods. Geoff Forester Photography; all photos courtesy N.H. Community Loan Fund
Rural Cooperatives / January/February 2013 29

“Most of us just figured we’d be

thrown out, so we were looking for

solutions — moving, buying something

else, renting somewhere, just hanging

in and hoping for the best,” Sirles told a

newspaper reporter.

“A couple of us tried to go to the

bank to buy it as individuals, but we

don’t have that kind of credit,” Sirles

said. Neither did any resident have the

owners’ $42,000 asking price, or even a

significant down payment.

In the meantime, a potential buyer

appeared who wanted to close the park,

send its residents packing and build

apartments.

Co-op seed planted 

Enter Rebecca Storey, who was on

the steering committee of a brand-new

organization: the New Hampshire

Community Loan Fund. A graduate

student of community economic

development, she also shared classes

with Sirles’s sister.

Bob Sirles needed help saving his

home and those of his neighbors.

Storey needed a project to complete her

master’s degree. As a Native American,

she also felt a deep connection with the

plight of the families in the park. 

“I identify with people being pushed

off their land. These people had been

there a long time,” she told a reporter.

“I had a real strong feeling they

shouldn’t be pushed off, that they must

help themselves.”

Storey, Sirles and a few of his

neighbors began meeting around his

kitchen table. They developed a “whatif” scenario, based on New Hampshire

having passed a law the previous year

that recognized consumer cooperatives.

What if, instead of trying to buy the

park as individuals, the Meredith

Center families bought it together? 

They formed Meredith Center

Cooperative in January 1984, as Storey

pulled together financial plans and

documents.

Local banks weren’t persuaded that

the co-op was viable. At least one loan

officer didn’t know what a cooperative

was.

Some said that even as a co-op, the

families didn’t have sufficient credit.

They still didn’t have a down payment.

Every bank in the surrounding towns

turned them down.

So, the co-op leaders turned to the

New Hampshire Community Loan

Fund, which had incorporated as one of

the country’s first community

development financial institutions

(CDFIs strengthen communities by

providing financial services to

populations and markets that otherwise

lack them) the previous September. 

The Community Loan Fund

comprised one part-time person, one

desk and a bank account containing less

money than the residents needed to buy

the park. But the Community Loan

Fund’s founders had connected with the

Sisters of Mercy, who wanted to invest

some of their retirement savings where

it would be used for public good.

The sisters loaned the money to the

Community Loan Fund, which in turn

loaned it to the cooperative to buy the

park on June 1, 1984. Meredith Center

Cooperative became New Hampshire’s

first resident-owned community.

The new owners wasted little time

showing how proud they were. They

hauled away three truckloads of debris.

They installed a new water pump so

showers wouldn’t stall when a neighbor

flushed a toilet. Before long, they’d

begun replacing the septic system.

A pause, then concept explodes

It would be 21⁄2 years before the next

New Hampshire manufactured-home

park converted to cooperative

ownership, but then the concept

exploded. During the next 10 years, 35

parks in the state converted to co-op

ownership; 46 converted during the

following decade. 

As interest grew, the Community

Loan Fund expanded and refined the

services it offered the co-ops to include

community organizing, training for coop boards of directors and other

leaders, financing for purchase and

improvements, and technical assistance

for planning infrastructure projects.

New Hampshire’s 100th

manufactured-home co-op converted in

February 2012. There are now 103 such

resident-owned communities in the

state, containing about 5,700 homes.

About one in five manufactured-home

communities in N.H. is a cooperative;

nearly all are in rural areas.

The spread of these communities

Greg MacIntosh tends his vegetables at

Barrington Oaks Cooperative in Barrington,

N.H. Cooperative ownership and management

of manufactured-home parks encourages

community projects. Jay Reiter photography 
30 January/February 2013 / Rural Cooperatives

was greatly supported by loans and

grants from USDA Rural Development,

because some park owners became

willing to sell when faced with large

infrastructure repairs. To date, USDA

Rural Development has provided more

than $9 million for critically needed

water and wastewater projects in 13

New Hampshire co-ops. 

The Community Loan Fund and

three other national nonprofits — the

Corporation for Enterprise

Development (CFED), NCB Capital

Impact program and NeighborWorks

America, with significant investments

from the Ford Foundation and the

Fannie Mae Foundation — formed

ROC USA LLC in May 2008 to make

resident ownership viable nationwide. 

Through November 2012, ROC USA

had converted an additional 27

communities containing 2,122 homes in

31 states.

Affordable and secure

In New Hampshire, as in many rural

areas across the United States,

manufactured homes are one of the

most affordable housing choices. In

small towns that lack multi-family

apartment buildings, they’re usually the

only affordable option. 

That choice becomes even more

affordable in manufactured-home

communities, because the need to buy

land is eliminated. Instead, a

homeowner leases the small lot beneath

the house.

Still, homeownership in a traditional

investor-owned park is risky.

Homeowner-residents have no say in

how much they pay for lot fees or

whether that money goes to upgrade

the community or to profit. Likewise,

they have little say in the creation or

enforcement of rules. 

At any time the landlord may decide

to close the park, evict the homeowners

and develop the land. As noted earlier,

park owners motivated by profit may

ignore failing water, septic and

electrical systems, then sell or abandon

the property.

Tenants in these parks are captive to

any of all of these conditions and

uncertainties. Those who object to

rents or conditions can be evicted, and

those facing park closure have no legal

protection — they must move. 

In either case, they’re likely to lose

their homes and all they’ve invested in

them. Gone are the days of being able

to hitch a mobile home to a pickup

truck and wheel it away; today’s

manufactured homes are factory-built

to the U.S. Department of Housing and

Urban Development’s national housing

code and are anything but mobile. 

Moving a home — if it can be moved

— costs several thousand dollars. Some

towns further limit mobility by

restricting the age of manufactured

homes that can be moved in.

The experience of New Hampshire’s

resident-owned communities is that

cooperative ownership of the land

removes most of those risks and

insecurities. The co-ops’ members

democratically decide the bylaws they’ll

all live under, what to charge for lot

rents, and how that money will be used. 

A co-op community cannot be sold

without a vote of its residents, and the

Community Loan Fund/ROC USA

model eliminates a profit motive.

Because the communities are

incorporated as nonprofit consumer

cooperatives, the assets from any sale of

the property— after the co-op’s bills are

paid and members are refunded their

shares (usually $500 to $1,000) — have

to go to another co-op or charitable

organization.

Other economic benefits of co-op

ownership include access to grants and

loans from USDA and other public

agencies for needed infrastructure

Lawrence Shuman, president of Sandy Ridge Estates Cooperative, and other residents

purchased an Ossipee, N.H., manufactured-home community, saving the homes of 35 families.

The previous owner had been ordered by the state to close the park and evict the families due to

substandard water and wastewater systems. Matthew Lommano Photography
Rural Cooperatives / January/February 2013 31

upgrades and access to fixed-rate home

loans with relaxed credit terms and low

down payments, offered in New

Hampshire by the Community Loan

Fund and two partner banks. 

Last July, USDA Rural Development created a homeownership pilot

program making residents in a

Belmont, N.H., co-op eligible for its

502 Single-Family Housing loans.

Those loans offer 100-percent home

financing at a 3.25 percent interest rate;

four other USDA-approved co-ops in

New Hampshire are also eligible.

Social benefits

With the stroke of a pen, a

cooperative’s purchase of its community

turns organizers into managers, tenants

into co-owners and homeowners into

neighbors. 

While security is one of the greatest

benefits residents enjoy, observers are

often struck by the pride and sense of

personal investment they experience in

the cooperatives. 

George McCarthy, director of

Metropolitan Opportunity at the Ford

Foundation, has listened to co-op

residents in their kitchens and living

rooms. “The transformation of the

people in those communities is

profound,” he says. 

The physical transformation is easy

to see. Homeowners, confident that

they won’t be displaced, plant gardens

and flowerbeds, paint their homes and

pave their driveways. Some even

replace their old homes with newer

models.

The common goal of buying,

owning and managing a community

also creates a greater sense of

community.

Florence Quast was a key organizer

of the Souhegan Valley Manufactured

Housing Co-op in Milford, N.H.,

when it converted to resident

ownership in 1985.

“My proudest accomplishment is

helping us become a co-op and buying

the park because it’s something people

said we couldn’t do,” she says. After the

purchase, the co-op made major

From the start, the New Hampshire Community Loan Fund’s goals

in encouraging cooperative ownership of manufactured-home

communities were to create permanent and stable affordable

housing, to maximize resident control of their communities and to

make co-op membership available regardless of income.

In New Hampshire’s resident-owned communities and those

using the ROC USA model in other states, status as nonprofit

consumer cooperatives makes it very unlikely that the land will be

sold out from under any of the manufactured homes. 

Secondly, says ROC USA’s Paul Bradley, “Resident control puts

people most affected by the decisions in charge of making them.

In a cooperative park, each homeowner owns his or her home

and one share in the cooperative corporation that owns the land.

Most co-ops require that one must both own a home and reside in

that home in order to become a member.”

The third point, affordability of co-op membership, drove the

Community Loan Fund’s choice of what type of cooperatives these

would be. ROC-NH and ROC USA communities are zero-equity

cooperatives with low membership share prices. If a resident

can’t afford to buy a share when the co-op is established, he or

she may make a very small down payment on that share, then

make affordable monthly payments while enjoying all of the rights

and responsibilities of membership. 

People who buy a home (or move one into) in a cooperative

park pay their membership fee up front, often rolling it into their

house financing. n

Loan fund boosts ownership

through co-ops

Lois Parris, left, of Lakes Region MHP Cooperative in Belmont, N.H., and

Florence Quast of Souhegan Valley MH Cooperative in Milford, N.H., are

powerful advocates for the rights of manufactured-home owners. Geoff

Forester Photography

continued on page 42
32 January/February 2013 / Rural Cooperatives

By Charles Ling, Ag Economist

Cooperative Programs

USDA Rural Development 

he Affordable

Care Act (section

1322) created the

Consumer Operated and Oriented

Plan Program (CO-OP Program) to foster

the creation of new, consumer-governed, private, nonprofit

health insurance issuers (referred to as CO-OPs). These COOPs will promote integrated care and improve health plan

accountability. 

Through the loans authorized by the Act, the goal of the

Program is to create at least one new CO-OP in every state

to enhance competition in the Affordable Insurance

Exchanges (also established under the Act) and provide

additional plan choices in the individual and small group

markets. The Program is administered by the U.S.

Department of Health and Human Services (HHS). The

statute and the rules and regulations implementing the

Program can be found at http://www.healthcare.

gov/law/features/choices/co-op/.

The Program-qualified CO-OPs are supposedly modeled

on existing health insurance cooperatives and other business

cooperatives. The acronym “CO-OP” (note: all letters

capitalized) has the same spelling as “co-op,” the abbreviation

of the term “cooperative” in common usage. 

There is strong interest in the co-op community (and

doubtless outside of it as well) to see where these new health

CO-OPs lay in the continuum of cooperative business model

variations (Ling). Based on the Program’s CO-OP standards

and related requirements, this article looks into the structure,

organization, governance, equity financing, and operation of

the CO-OPs to shed some light on their similarities with and

differences

from other types of

cooperatives. The economic

analysis is through the lens of

industrial organization, taking the law

and regulations governing the Program as

given. It is not intended to be an interpretation

of the Program, which is under the purview of

HHS Centers for Medicare and Medicaid

Services (CMS).

Economic structure

A CO-OP is an organization of health insurance

policy subscribers who are individuals or individuals with

dependants. All insurance-covered persons are counted

as members of the CO-OP.

The CO-OP makes decisions regarding how to

maintain and improve the quality of health care delivered to

members, while keeping insurance premiums affordable.

Subscribers are free to choose whether to join a particular

CO-OP, or how — and how much — they may use the

services provided by the CO-OP as members. 

Therefore, the CO-OP fits the economic definition that a

cooperative is an aggregate of economic units, which are

capable of independent economic functioning (Emelianoff). It

is also useful to note that a dictionary defines aggregate as:

T

The Co-op Nature of 

(the Affordable Care Act) 

CO-OPs 
Rural Cooperatives / January/February 2013 33

“Any

total or

whole

considered with

reference to its

constituent parts; an

assemblage or group of

distinct particulars massed

together.”

Organization

A CO-OP is a Program-qualified, nonprofit

health insurance issuer organized under state

law as a private, nonprofit, member

corporation.

The creation of a CO-OP relies on the

effort of its sponsors. A sponsor may be an

organization or individual that is involved in

the development, creation or organization of the

CO-OP or provides 40 percent or more to the

CO-OP’s total funding (excluding funds from

Program loans). However, no state or local

government or political subdivision (or their

instrumentalities) can be a sponsor of the

organization or contribute 40 percent or more

to its total funding. Furthermore, no

organization excluded by CMS can be a sponsor

or contribute 25 percent or more to the COOP’s total funding.

After the CO-OP is organized, it will sign

up health insurance subscribers and they and

their covered dependents will be members of

the CO-OP. The CO-OP will become a

centralized member organization when its

operational board of directors elected by

members is in place.

The CO-OP Program has the goal of

having at least one CO-OP in each state and

gives priority to CO-OPs that offer qualified

health plans on a state-wide basis. Therefore, COOPs are most likely local (in-state) organizations that

do not cross state lines. When circumstances warrant it, a

CO-OP may cover more than one state. States may have

more than one CO-OP if Program funds are available. 

CO-OPs are to remain nonprofit, consumer-operated and

-oriented insurance issuers after they have received Program

loans and even after they have fully repaid their loans. They

are not permitted to convert or sell to a for-profit or nonconsumer-operated entity at any time, undertake any

transaction that would result in the CO-OP implementing a

governance structure that does not meet the stipulated COOP standards, or do things to harm its consumer orientation.

CO-OPs may join together to establish a private

purchasing council to enter into collective purchasing

arrangements for items and services that increase

administrative and other cost efficiencies, including claims

administration, administrative services, health information

technology and actuarial services. But the private purchasing

council is not allowed to set payment rates for health care

facilities or providers participating in health insurance

coverage provided by the CO-OPs. Further, the antitrust

laws continue to apply to any private purchasing council.

Governance

A CO-OP is required to be governed by an operational

board with all of its directors elected by a majority vote of a

quorum of the CO-OP’s members who are age 18 or older.

Elections of the directors on the CO-OP’s operational board

are contested: the total number of candidates for vacant

positions on the operational board exceeds the number of

vacant positions. In the case of resignation, death, or

removal, the CO-OP may fill vacant director positions for

the remainder of the relevant term without conducting a

contested election.

Positions on the board of directors may be designated for

individuals with specialized expertise, experience or

affiliation. But the designated directors cannot constitute a

majority of the operational board.
34 January/February 2013 / Rural Cooperatives

No government (federal, state, local, political subdivision

or instrumentality) representative or representative of an

organization excluded by CMS can be a board member.

The majority of the voting directors on the operational

board must be members of the CO-OP (not counting

designated directors who are also members). Each director

has one vote unless he or she is a non-voting director.

However, in the initial stage of forming the CO-OP and

before it has begun

accepting enrollment

of insurance

subscribers and has an

election by the

members of the

organization to the

board of directors, a

formation board is to

steer its development.

The first elected

directors of the

organization’s

operational board must be elected no later than one year after

the effective date on which the organization provides

coverage to its first member; the entire operational board

must be elected no later than two years after the same date.

Equity financing

The initial funding of a CO-OP is supplied by its sponsors

and supporters. To help overcome the difficulty of obtaining

adequate capitalization for start-up costs and state insurance

reserve requirements, CO-OPs may borrow two kinds of

low-interest loans offered by the CO-OP Program

specifically for these critical activities:

• Start-up loan to provide assistance in meeting the costs of

establishing a CO-OP. The repayment period of the loan is

five years following each drawdown of loan funds.

• Solvency loan in meeting state insurer solvency and reserve

requirements. The repayment period of the loan is 15 years

following each drawdown of loan funds.

A CO-OP may borrow joint start-up and solvency loans,

or only borrow a solvency loan. By receiving the loans, the

CO-OP must adhere to the standards and fulfill all

requirements established by the CO-OP Program. It must

meet the required CO-OP standards no later than five years

following initial drawdown of the start-up loan or three years

following the initial drawdown of the solvency loan.

Net savings or surplus funds (revenue in excess of expenses

or “profit”) of the CO-OP must be used to lower premiums,

to improve benefits or for other programs intended to

improve the quality of health care delivered to its members.

In addition, net savings may be used to conduct marketing,

repay Program loans, and meet state solvency requirements.

They may also be used to provide for enrollment growth,

financial stability and stable coverage for members.

CO-OPs are forbidden to ever convert or sell to for-profit

or non-consumer operated entities.

Operations

CO-OPs develop healthcare provider networks to provide

services that meet members’ healthcare needs. They have to

compete for health insurance subscribers in the relevant

markets. Therefore, their operations are the same as any

other health insurance issuers in the relevant markets.

CO-OPs are required to meet certain standards and

requirements for the issuance of health insurance plans to

achieve Program objectives.

For example:

• At least two-thirds of qualified health insurance policies or

contracts for health insurance coverage issued by a COOP in each state in which it is licensed must be in the

individual and small group markets.

• In every market where the CO-OP operates, it must offer

a qualified health plan at the Silver Level (defined as the

level of coverage that is equivalent to 70 percent of the

full actuarial value of benefits provided) and at the Gold

Level (equivalent to 80 percent of full benefits).

• Meet certification requirements in order to participate in

the Affordable Insurance Exchanges.

The incentive (trade-off) for CO-OPs to meet these and

other plan standards and requirements is the privilege to use

start-up loans and solvency loans at below-market interest

rates to achieve the goals of the organizations.

Conclusions

The impetus for creating CO-OPs is by Congressional

mandate to address certain public policy healthcare issues. A

major portion of initial funding of CO-OPs is low-interest

government loans to help overcome the difficulty of

obtaining adequate capitalization. Legislative mandates

effected with government loans have precedents such as the

initial organizations of rural electric cooperatives and the

Farm Credit System. As exemplified by these precedents,

CO-OPs must be self-sustainable in order to be economically

viable over the long term.

To ensure the CO-OPs created under the Program are

viable, sustainable and stable, and to make certain they can

repay the loans and thereby protect federal investment in the

Program, they are required to meet CO-OP standards and

health plan standards and fulfill many other requirements. As

a result, CO-OPs are somewhat unique in the spectrum of

cooperative business model variations as shown in table 1

(adopted and modified from Ling, table 2). n

CO-OPs are forbidden

to ever convert or sell

to for-profit or 

non-consumer 

operated entities.
Rural Cooperatives / January/February 2013 35

Type of cooperatives

Dairy

cooperatives1

Agricultural marketing

cooperatives

New-generation

cooperatives

Purchasing

cooperatives2

Affordable Care Act

CO-OPs3

Multi-stakeholder

cooperatives4

Farm production

cooperatives

Cooperatives with nonpatronage members

Structure

Aggregates of

economic units

Aggregates of

economic units

Aggregates of

economic units

Aggregates of

economic units

Aggregates of

economic units

(health insurance

subscribers)

Aggregates of

economic units

Aggregates of

economic units that are

not independent in

production operation

Mixture of patron and

non-patron members

Organization

Centralized member

organizations

Mostly centralized

member organizations;

some are federated

Centralized member

organizations

Local (retail)

cooperatives are

centralized; many

federated with other

locals; federated

cooperatives may have

direct members

Organized by sponsors;

then become local (instate) centralized

member organization

Centralized member

organization

Centralized member

organization

Defined by state laws

Governance

Member-governed

Member-governed 

Member-governed

Member-governed

Initially formation

board; then membergoverned

Member-governed

Member-governed

Defined by state laws

Source of equity

Members

Members

Members; tied to

delivery rights

Members

Sponsors and

supporters;

accumulated surpluses

Members

Members

Defined by state laws

Operation

Members' exclusive

marketing

agent―unique

economics

Unique economics if

exclusive marketing

agent; otherwise, like

other firms

Business volume

defined by delivery

rights

Sourcing supplies or

services for sale to

members and patrons

Operations are the

same as other

insurance issuers in the

relevant markets; must

meet CO-OP Program

standards and

requirements 

A framework for multiparty, multi-stage

credible contracting

among members

A vertical integration

between members and

the cooperative in

production

Defined by state laws;

most likely memberpatrons’ business

Table 1―Variations on the cooperative business model

1 Separately listed and used as the standard bearers of traditional cooperative business model.

2 Include farm supply cooperatives, utility cooperatives, service cooperatives, consumer cooperatives, credit unions, etc.

3 Qualified Nonprofit Health Insurance Issuers under the Consumer Operated and Oriented Plan (CO-OP) Program.

4 Defined as cooperatives having, for example, farmers, final customers and intermediaries in the supply chain as members.

References

• Emelianoff, Ivan V. Economic Theory of Cooperation: Economic Structure of Cooperative Organizations, Washington,

D.C. 1942 (litho-printed by Edwards Brothers., Inc., Ann Arbor, Michigan), 269 pages. (A reprint by the Center

for Cooperatives, University of California, 1995, may be accessed at:

http://cooperatives.ucdavis.edu/reports/index.htm.)

• Ling, K. Charles. “The Many Faces of Cooperatives,” Rural Cooperatives, Volume 79, Number 6, November/

December 2012, pp.24-29.

• American Heritage Dictionary of the English Language, New College Edition, Houghton Mifflin Company,

Boston, 1976.
36 January/February 2013 / Rural Cooperatives

By Mary Erickson, field editor

Wisconsin Energy Cooperative News, Cooperative Network

Editor’s note: This article is condensed and adapted from several

articles that appeared in a recent issue of 2012 Annual Meeting

Recap, a Cooperative Network newsletter.

he year 2012 was a better than average year

for a majority of cooperatives in Wisconsin

and Minnesota, according to the results of a

straw poll conducted during the annual

meeting of Cooperative Network in La

Crosse, Wis., Nov. 13. About 56 percent of the delegates said

the economic performance of their cooperative was better

than average last year, while 27 percent rated the year as

average. Only 16 percent said their co-op had a below

average year.

One in four delegates said they expect to hire additional

employees during the coming year, while 68 percent said they

would maintain their existing workforce. Only 6 percent of

co-op representatives said they expected to reduce staff in

2013.

Nearly 200 members participated in the instant-response

survey, using transponders to answer 14 multiple-choice

questions projected on a screen. Cooperative Network

represents a cross-section of cooperatives in Wisconsin and

Minnesota.

About 92 percent of delegates said they had contacted

their state legislator or member of Congress during the past

five years, either on their own or in conjunction with

Cooperative Network. Another 60 percent said lobbying on

legislative or regulatory issues is the most important service

Cooperative Network provides for its members.

Other responses to the inquiry about the organization’s

most important functions included 29 percent who identified

“educating the public and promoting the cooperative business

model,” while 9 percent cited director and staff education,

and 2 percent chose development of new cooperatives as the

most important functions. 

Asked, “What is the greatest threat to the success of your

cooperative?” 65 percent identified “government regulation

and/or legislation.” Trailing far behind were “talent

retention” (12 percent); “competition” (12 percent); “growth”

(9 percent); “safety” (2 percent); and “litigation” (1 percent).

Aging population poses major challenges

Two events occurred in January 2008 that are leading to a

new set of challenges and opportunities for the nation, Tom

Gillaspy, of Gillaspy Demographics, told delegates. A former

Minnesota state demographer, Gillaspy said the recession

that hit in January 2008 left the nation in an economic hole

that will take a long time to recover from. Jobs no longer

exist where they once did, Gillaspy explained, and many

Americans have stopped searching for employment

opportunities.

Second, the first wave of the Baby Boom generation

turned 62 in January 2008. With this massive Baby Boom

generation entering retirement over the next two decades —

and a much smaller Generation X to replace it — Gillaspy

said the nation is facing demographic trends that will have a

huge impact on the economy for many years. 

For the next 20 years, almost all growth in U.S.

households will be in the “empty-nest” sector, and the labor

force will be at record low levels by the end of this decade.

This could make the challenges of paying for health care

today seem mild compared to the much bigger challenge in

20 years, he said. An aging population is a global trend,

Gillaspy said. Other countries, such as Greece and Japan, also

are struggling with the same issues. Even China, whose

T

Most Co-op Network members say

2012 was a solid economic year

“This is one of the most wonderful times 

for opportunity in my lifetime,” says

demographer Tom Gillaspy. 

continued on page 43
Rural Cooperatives / January/February 2013 37

Blue Diamond marks 

record, $1 billion sales year

Blue Diamond Growers’ sales

catapulted to a record $1 billion for

fiscal 2011-12. The almond co-op’s

two-year sales growth of $300 million

has been driven by demand for valueadded almond products, President and

CEO Mark Jansen said in is his address

to the cooperative’s grower-owners at

their 102nd annual meeting in

Modesto, Calif.

“We are winning in the marketplace

by executing our superior business

model, enhancing margins and growing

our value-added businesses,” Jansen

said. “We added $13 million in savings

to the $14 million we achieved last year,

and we will continue to invest in new

technologies that will lower costs and

increase processing yields for higher

levels of profitability year after year.”

Board Chairman Clinton Shick told

growers they received record payments

of $670 million on the 2011 crop, for a

return that was 18 cents per pound

higher than on the 2010 crop.

“Revenue per acre also exceeded the

previous (2005) record by 19 percent,”

Shick said. 

Blue Diamond will open phase one

of its new, 88-acre almond processing

plant in Turlock, Calif., in May 2013,

where it will hire up to 100 employees.

The co-op already operates the world’s

largest almond processing facilities, in

Sacramento and Salida, Calif. 

“Our balance sheet is investment

grade, which allowed us to finance our

new plant over the next 15 years at a

record-low rate that will earn growers

who deliver to Blue Diamond several

cents more on their 2013 annual returns

and for many years to come,” said

Jansen. 

Adding processing capabilities to

Blue Diamond’s existing operations is

part of a plan to expand its brand

globally, he added. This is a strategy

that is already paying off, as the

cooperative’s global value-added

ingredient business leaped 69 percent

over the past two years and global

consumer-branded businesses increased

45 percent. 

A new North American advertising

campaign, designed to inspire a healthy

lifestyle among consumers, was

launched during the 2012 London

Olympic Game. Blue Diamond snack

almond sales jumped 21 percent during

Newsline

Send co-op news items to: dan.campbell@wdc.USDA.gov

Co-op developments, coast to coast

Blue Diamond CEO Mark Jansen, left, greets members during the co-op’s 102nd annual meeting,

which marked the first time sales topped $1 billion.
38 January/February 2013 / Rural Cooperatives

the fiscal year ending Aug. 31, with

sales during the Olympic Games alone

leaping 43 percent.

Cunningham succeeds Rice as

CEO of Farm Credit of Florida 

Gregory Cunningham is the new

CEO of Farm Credit of Florida, a

cooperative of 2,300 members and with

a $925 million loan portfolio. He

succeeds Don Rice, who has retired

after a career spanning more than 30

years with the Farm Credit System. 

“Greg comes to our association with

26 years of financial experience and a

strong agricultural background,” says

Woody Larson, the co-op’s board

chairman. “We anticipate our members

will benefit from his experience in the

commercial banking industry, combined

with his 22 years of Farm Credit

service.”

Cunningham was previously CEO of

Legacy Ag Credit. He started his career

as a loan officer with the Federal Land

Bank Association of Lake Providence,

Louisiana, then became branch

manager/corporate loan manager for

Carolina Farm Credit and worked for

several other farm lenders.

Cunningham grew up in Louisiana on a

cattle ranch and was an avid 4-H and

FFA participant. He is an alumnus of

Louisiana Tech University and served

for 21 years in the Army National

Guard in North Carolina and

Louisiana. 

As one of the largest agricultural

lenders in Florida, Farm Credit of

Florida’s portfolio includes many of

Florida’s leading agribusinesses.

Headquartered in West Palm Beach,

the cooperative has 11 service centers

throughout the state and has 140

employees.

Ocean Spray sets sales record 

Ocean Spray had net sales of $1.66

billion for fiscal 2012, the highest net

sales in the cooperative’s history. It was

a 3.2-percent increase from the

previous year. 

“Our fiscal 2012 financial results

reflect strong performance amid a

sluggish economy and volatile

marketplace and continue a trend,”

Randy Papadellis, Ocean Spray’s

president and CEO, says in the co-op’s

annual report for 2012. “Over the past

four years, Ocean Spray has delivered

record highs in sales and profits, as well

as in returns for our grower-owners.”

Ocean Spray is owned by more than

700 cranberry growers and 35 Florida

grapefruit growers. It has become

North America’s leading producer of

bottled juices and juice drinks.

The company attributed its success

to the strength of the Ocean Spray

brand, continued product innovation,

in-store marketing and promotions,

ongoing focus on operating efficiency

and risk management and the pursuit of

strategic business partnerships.

Spackler succeeds 

Reagan as AGP Inc. CEO 

Keith Spackler is the new chief

executive officer and general manager

of Ag Processing Inc., in Omaha, Neb.

He takes over

from retiring

Marty Reagan.

Spackler had

been the

cooperative’s

chief financial

officer and group

vice president. 

AGP, the

largest farmerowned soybean

processor in the

world, is owned

by 180 local and regional cooperatives

representing more than 200,000

farmers from 16 states. 

“Keith Spackler is a seasoned

professional in agribusiness,” says Board

Chairman Brad Davis. “His in-depth

knowledge of AGP and its business

operations will serve him well in his

new role. We are confident that under

Keith’s leadership, AGP will continue

to fulfill its commitment to serve our

cooperative members and their

producer-owners.” 

“At AGP, building on the existing

strengths, while creating and capturing

new opportunities, has resulted in a

great history of success,” says Spackler. 

Spackler is a native of Clinton, Mo.,

where he grew up on a dairy and row

crop farm. He holds BS and MS

degrees in agricultural economics from

the University of Missouri at Columbia,

and an MBA from the University of

Nebraska at Omaha.

Prior to joining AGP, Spackler

served as an economic analyst for FarMar-Co (a subsidiary of Farmland

Industries) in Kansas City, Mo., and as a

research analyst at Clayton Brokerage

Co., St. Louis, Mo. He joined AGP in

1985 as manager of business analysis.

During the past 27 years, he has held

various positions of leadership at the

cooperative. 

Florida’s Natural 

celebrates best year

The 2011-12 season was the greatest

year in the history of Florida’s Natural

Growers cooperative, board Chairman

Dick Fort said at the co-op’s 79th

annual meeting, which coincided with

the 25th anniversary of the launch of

the Florida’s Natural orange juice

brand. 

“By all measures, the cooperative has

experienced a record year in grower

returns, sales, market share and

customer loyalty,” Fort said. “The

success of our cooperative is

inextricably linked to the success and

growth of the Florida’s Natural brand.” 

Gross sales for 2012 were a record

$624.8 million. New records were also

Keith Spackler
set with a return to growers of $1.90

per pound for oranges and $1.55 per

pound for grapefruit, according to Chip

Hendry, the co-op’s chief financial

officer 

“The addition of our 14th member,

Southern Gardens Grove Corporation,

will help address our fruit needs for the

foreseeable future,” said CEO Steve

Caruso. The launch of the Florida’s

Natural Brand changed the cooperative

from a private-label packer to a

consumer-brand marketer, said Walt

Lincer, vice president of sales and

marketing. 

The co-op is comprised of 14 grower

organizations representing almost 1,000

individual growers who own about

60,000 acres of citrus in Florida.

Florida’s Natural Growers operates a

processing plant in Lake Wales, which

employs 670 people, and a juicepackaging plant in Umatilla, with 101

more workers. In addition to Florida’s

Natural, its brands include Florida’s

Natural Growers Pride, Donald Duck

and Bluebird.

California Dairies acquires

Security Milk Producers 

California Dairies Inc. (CDI), the

largest dairy processing cooperative in

California, has acquired assets of

Security Milk Producers Association

(SMPA), a California milk marketing

cooperative, and added SMPA members

to CDI’s membership, effective Jan. 1. 

The SMPA and CDI boards of

directors determined that the memberowners of both cooperatives would be

better served by promoting efficiencies

gained by combining their

memberships. SMPA members voted to

dissolve the current management

contract and to submit applications for

membership in CDI, which is adding 33

dairies owned by 25 SMPA members. 

“The addition of SMPA members to

the CDI membership fits well with

CDI’s growth strategy,” says Andrei

Mikhalevsky, CDI president and CEO.

“Increasing milk supplies will

strengthen CDI’s market position to the

benefit of its member-owners, both old

and new, through a continued positive

return on investment.”

“For the last several years, the SMPA

board of directors had been looking to

better balance its milk supply to its fluid

sales with the goal of increased returns

to its member-owners,” said SMPA

Chairman Ed Haringa. “As options

were explored, it became clear that

aligning SMPA’s successful fluid milk

sales business with CDI’s extensive

processing capacity provided an

opportunity for SMPA and CDI to

better balance milk supplies in the

state.” 

CHS initiative to foster 

co-op university education

CHS Inc., one of the nation’s leading

farmer-owned cooperatives, has

launched the CHS University Initiative

on Cooperative Education. This $2

million program represents a major

investment in building understanding of

Rural Cooperatives / January/February 2013 39

Hispanic and women

farmers and ranchers who

believe that the U. S.

Department of Agriculture

(USDA) improperly denied

them farm loan benefits

between 1981and 2000

because they are

Hispanic or female, may

be eligible to apply for

compensation if:

1) You sought a farm loan

or farm-loan servicing

during that period;

2) The loan was denied,

provided late, approved

for a lesser amount

than requested, approved with restrictive conditions or USDA

failed to provide appropriate loan service; and

3) You believe these actions were based on your being Hispanic or

female. 

To receive a claims package, visit: www.farmerclaims.gov, or

call 1-888-508-4429. 

For further guidance, you may contact a lawyer or other legal

services provider in your community. USDA cannot provide legal

advice. 

If you are currently represented by counsel regarding

allegations of discrimination or in a lawsuit claiming discrimination,

you should contact your counsel regarding this claims process. n

Hispanic, women farmers 

may seek compensation 
the cooperative business model through

education, development and practical

experience. Partner organizations that

will help roll out this program include

the Federation of Southern Cooperatives

and 10 universities, including Cornell,

Kansas State and the University of

Wisconsin.

Designed to foster the integration of

cooperative education into agribusiness

curriculums, cooperative development

and farm business studies across the

country, the CHS University Initiative

on Cooperative Education will also

support graduate-level cooperative

education programs, soil, water and

environmental studies and technologybased learning programs.

The program builds on more than 80

years of work with agricultural,

cooperative and education entities, says

William Nelson, president, CHS

Foundation and vice president, CHS

Corporate Citizenship. 

“As a farmer-owned cooperative,

CHS is committed to investing in the

future of the cooperative system,” says

Jerry Hasnedl, CHS board chairman

and a farmer. “This exciting new

initiative will enable the next generation

to achieve new levels of success as

farmers and ranchers in the global

marketplace, as employees with

challenging careers in agriculture and as

contributing citizens of rural

communities.”

Some 350,000 farmers and ranchers

own CHS either directly or indirectly

through more than 1,000 smaller coops.

United Cooperative purchases

Auroraville grain facilities

United Cooperative, Beaver Dam,

Wis., has purchased a new grain-storage

facility in Auroraville, Wis., from

Willow Creek Grain LLC, Berlin, Wis.

The Auroraville facility has 1.25 million

bushels of grain storage, 26,000 bushels

per hour of receiving capacity, 1,000-

and 500-bushel unloading pits, and a

4,000-bushel-per-hour grain dryer.

David Olsen, who has more than 40

years of experience in grain

procurement and origination, is

managing the Auroraville location. 

In other news, the United

Cooperative’s Pulaski feed and grain

location has completed construction of

a new receiving pit, a new receiving leg,

a new dryer and additional storage

space. 

Jill Long Thompson to chair

Farm Credit Administration 

President Obama has designated Jill

Long Thompson as chair and CEO of

the Farm Credit Administration (FCA).

She succeeds Leland A. Strom, who had

served as

chairman and

CEO since May

2008. Long

Thompson has

served as a

member of the

FCA board since

her appointment

by President

Obama in March

2010. 

As FCA chair,

Long Thompson

will be responsible for policymaking,

adopting regulations and overseeing the

examination and regulation of the

institutions that comprise the Farm

Credit System (System), including the

Federal Agricultural Mortgage

Corporation (Farmer Mac). The System

has $239.7 billion in assets. As of

September 2011, it held about 43

percent of the nation’s farm business

debt. 

Strom will remain a member of the

board, pending future action by the

President and the U.S. Senate. Kenneth

A. Spearman, who was appointed to the

board by President Obama in 2009,

serves as the third member. He also

serves as chairman of the Farm Credit

System Insurance Corporation. 

Long Thompson represented

northeast Indiana in the U.S. House of

Representatives from 1989 to 1995. She

was under secretary for USDA Rural

Development during the Clinton

administration. 

California dairy co-op leader 

Brian Pacheco honored by UC 

Brian Pacheco, board chairman of

California Dairies Inc. (CDI), the

nation’s second largest dairy co-op, was

honored in October with the Award of

Distinction from the College of

Agricultural and Environmental

Sciences at the University of California

(UC), Davis. Pacheco is also a member

of the Nisei Farmers League, Sun-Maid

Raisin Growers and Western United

Dairymen.

The award is presented annually to

those whose contributions and

achievements enhance the college’s

ability to provide cutting-edge research,

top-notch education and innovative

outreach. Pacheco, a fourth-generation

dairyman from Kerman, Calif., earned

his Bachelor’s degree from UC in 1991,

with a major in agricultural and

managerial economics and a minor in

rhetoric and

communications.

His Pacheco

Dairy Inc., with

1,300 Holstein

cows and an elite

group of

purebred Brown

Swiss cows, is a

model of

environmental

stewardship and

has been

recognized as a top-producing herd in

Fresno County every year since 1998.

Pacheco is also president of the

Fresno County Farm Bureau and serves

on boards for the Community Regional

Medical Center and the Fresno Dairy

Herd Improvement Association and is

board president of the Kerman Unified

School District. 

NCBA Veterans Initiative 

offers job opportunities 

The National Cooperative Business

Association has launched an initiative

that will support transitioning disabled

veterans. According to the Small

Business Administration, veterans are at

least 45 percent more likely to be self40 January/February 2013 / Rural Cooperatives

Jill Long Thompson

Brian Pacheco
Rural Cooperatives / January/February 2013 41

employed than those with no activeduty military experience. NCBA’s

Veterans Initiative will offer

transitioning service members the

opportunity to learn about the

cooperative business model as they

consider entrepreneurial civilian career

opportunities.

NCBA’s Veteran’s Initiative will

initially focus on introducing veterans

to two types of cooperatives: workerowned and purchasing/shared services

co-ops. Worker cooperatives create

long-term, stable jobs and provide their

members with an ownership stake in a

business enterprise without all the risk

associated with going into business as a

sole proprietor. Purchasing and sharedservices cooperatives enable those who

choose to start a small business with the

price advantages of group buying

power.

The November 2012 issue of

Entrepreneur magazine touts the

benefits of purchasing cooperatives,

noting that cooperatives such as Ace

Hardware and CarpetOne offer

independent business owners the

benefits of group buying and a brand

identity without the rigidity of a

franchise.

NCBA’s Veterans Initiative also will

celebrate what the cooperative

community already is doing to hire

veterans and encourage cooperatives to

hire transitioning service members

whose skills are well suited to their

businesses. Through the program,

cooperative staff will have the

opportunity to learn to mentor

transitioning service members who

choose to become member-owners of

cooperative enterprises. For more

information, visit: www.ncba.coop.

Wisconsin dairy 

co-ops merge 

Family Dairies USA, Manitowoc

Milk Producers Cooperative and

Milwaukee Cooperative Milk Producers

have voted to merge, establishing

FarmFirst Dairy Cooperative. The

merger of the three Wisconsin dairy coops became effective Jan. 1, following a

mid-December vote by the members of

the co-ops. 

“Our members made history,”

Dennis Donohue, general manager of

the new co-op, says in a statement on

the new co-op’s website. “This

membership vote to merge the three

cooperatives affirms our members’ goals

for industry success through

collaboration. Collectively, the strength

of our three organizations becomes one

unified and powerful voice.”

FarmFirst Dairy Cooperative will

serve around 5,100 producers in

Wisconsin, Michigan, Illinois, Iowa,

Minnesota, and North and South

Dakota. The co-op will become the

third-largest dairy co-op in the country,

based on member milk volume. 

The new co-op, which will have its

headquarters in Madison, will include

the 2,300 members of Family Dairies

USA, the 2,650 member-producers of

Manitowoc Milk Producers

Cooperative and the 500 producers of

Milwaukee Cooperative Milk

Producers. The three co-op boards had

previously given the merger unanimous

support. 

“The combined size and strength of

the new cooperative will provide all of

our members with a deeper and broader

voice in policymaking decisions, both

locally and nationally,” says David

Cooper, general manager for Family

Dairies USA. “And by combining the

resources of three independent

organizations, we will be able to

improve efficiencies and effectiveness.” 

“The timing of coming together

could not be better,” adds Donohue,

who had been general manager of

Manitowoc Milk Producers

Cooperative. “The current, individual

financial status of all three cooperatives

is outstanding. This allows the new

organization to start out on very strong

footing, so that we can immediately

focus on growing and improving

member benefits.” 

Under the new cooperative, the

combined member representation will

be divided into nine districts. The

current 20 directors from each of the

three cooperatives will transition into

the new organization, helping ensure

consistency in leadership and

membership voice. 

NMPF seats new 

board members 

The National Milk Producers

Federation’s (NMPF) board of directors

seated two new members at the

organization’s 2012 annual meeting in

Orlando, Fla. Donald De Jong from

Dalhart, Texas, was elected to represent

Select Milk Producers Inc., while Larry

Webster from Buffalo, N.Y., was elected

to represent Upstate Niagara

Cooperative.

In other news, Jim Mulhern, a

veteran public affairs professional with

three decades of government policy and

communications experience in

Washington, D.C., joined the NMPF

staff Jan. 1 as chief operating officer, a

new position for the association of dairy

co-ops. He will have direct oversight of

the communications, government

relations and membership functions of

the organization. n
42 January/February 2013 / Rural Cooperatives

compliance director after the first

assessment, so this was new to me. But

we are looking forward to seeing if we

pushed the bar with the reassessment

coming in the summer of 2013.” 

“This has been a great program for

me and WFS,” says DeAnn Miller,

environmental health and safety

director at the co-op. “We have learned

so much. And more importantly for me,

I have met others like me who work in

safety in other cooperatives. We share

experiences and learn from each other.”

“We think of firms with a strong

safety culture as being nuclear power

plants, oil refineries, chemical plants

and similar industries,” notes Boland.

“Farm supply and grain and oilseed

marketing cooperatives are all different.

There are no cookie-cutter type

operations. We have remote locations,

seasonal employees and locations, and

we have traditionally placed a high

value on employees with a ‘get it done’

attitude. Getting it done safely is the

critical part.”

For more information about this

program, please contact Boland at (612)

625-3013, or via e-mail at:

boland@umn.edu. 

Editor’s note: Cooperatives in Iowa

working with the Ag Cooperative Safety

Directors of Iowa (http://acsdia.org/) have

formed a consortium of safety directors for

cooperatives in their states and have started

offering an educational program. In

addition, the Grain Elevator and

Processing Society, known as GEAPS

(www.geaps.com), offers safety topics at its

meetings. The Agricultural Safety and

Health Council of America (ASHCA)

(www.ASHCA.com) will hold its 2013

Summit Sept. 25-27 in Minneapolis,

Minn. n

improvements to the roads and water

lines. Other co-ops hold community

cleanup or beautification days, or start

rewriting community rules.

Participation in the co-op not only

reduces costs, it builds vibrant

neighborhoods. That participation can

include everything from baking cookies

for a summer barbecue or helping plan

a glow-stick sledding night to operating

the well system or serving on the

volunteer board of directors. 

Residents also learn that they belong

to a community much larger than their

neighborhood. They are connected to

other resident-owned communities in

New Hampshire through the

Community Loan Fund’s ROC-NH

program and across the country

through ROC USA, both of which

create opportunities for education,

collaboration and networking.

Co-op members also have access to

training and education sponsored by

ROC-NH, and some have been

appointed or elected to leadership

positions in their towns. Graduates of

its community leadership training also

earn college credit they can use toward

a degree.

Swift transition

None of the leaders of New

Hampshire’s 103 manufactured-home

co-ops will say managing a community

is easy. 

“People and a system are needed to

collect the rents and keep the books,

approve new members, maintain the

infrastructure, enforce park rules,

mediate disputes and endlessly

communicate,” says ROC USA

President Paul Bradley. “Effective

operations rely upon good information

and frequent communication — both

challenges in volunteer organizations

run by busy people.”

Although many smaller communities

are run completely by their volunteer

members, most use a portion of their

rental income to hire companies for

services that include rent collection and

financial management. One large co-op,

192-unit Greenville Estates in

southwestern New Hampshire, has

always relied upon paid staff — an

office manager, a bookkeeper and

maintenance workers.

An additional challenge is that

roughly 75 percent of New Hampshire’s

manufactured home co-op residents

qualify as low-income. While all bring

valuable and varied life experience, few

have previously had the opportunity to

serve on a nonprofit board of directors,

much less run a multi-million-dollar

corporation. 

Nevertheless, not one New Hampshire

co-op has failed since the Meredith

conversion 29 years ago. That’s a

testament to the hard work and

dedication of the volunteers in these coops; to the training, support and

technical assistance provided by ROCNH; and to the crucial support of

programs like USDA-RD.

Regardless of a co-op’s management

system, all residents — even those who

choose not to become members of the

co-op (which usually means they pay a

higher lot rent and have no voting

rights) — enjoy the benefits of

ownership. Some economic benefits

were documented in a 2006 study by

the Carsey Institute at the University of

New Hampshire. 

The study found that the advantages

enjoyed by homeowners in co-ops over

those in investor-owned communities

included higher average home sales

prices, faster home sales, access to

fixed-rate home financing and,

eventually, lower lot fees.

And through ROC USA, the ripples

flow over the state border. The national

nonprofit is providing connections with

co-ops in other states through

aggregated opportunities such as

leadership conferences and online

training, marketing and joint

purchasing. n

Co-op conversions help bring

security to manufactured

housing owners

continued from page 31

Creating a safety culture

continued from page 6
Rural Cooperatives / January/February 2013 43

economy is predicted by some longrange forecasters to surpass the United

States’ economy sometime between

2016 and 2020, will be shifting to an

aging population in about 10 years. 

However, Gillaspy said China is

pushing up worker productivity now,

before its population begins to age.

“There are only two ways to grow an

economy,” he pointed out. “Increase the

workforce, or increase worker

productivity.”

This dilemma will have repercussions

that Gillaspy said will result in a “new

normal,”characterized by slower

economic growth, rising interest rates, a

shift in the home ownership/rental

gradient and talent becoming the most

scarce resource. 

However, Gillaspy said the new

challenges also make for new

opportunities.

“This is one of the most wonderful

times for opportunity in my lifetime,”

he said.

Innovation is a key to increasing

productivity, he said, referring to

examples such as the development of

rust disease-resistant wheat to help

meet the growing world demand for

food, and new cures for diseases.

Gillaspy predicted these trends would

lead to a third industrial revolution

characterized by advances in robotics,

materials and software.

Cooperative Network is a leading

Wisconsin business association. It serves

more than 600 member-cooperatives, owned

by more than 6.1 million Minnesota and

Wisconsin residents, by providing

government relations, education,

marketing, and technical services for a wide

variety of cooperatives including farm

supply, health, dairy marketing, consumer,

financial, livestock marketing,

telecommunications, electric, housing,

insurance, worker-owned cooperatives, and

more. For more information about

Cooperative Network, visit

www.cooperativenetwork.coop. n

Most Co-op Network 

members say 2012 was 

a solid economic year

continued from page 36

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44 January/February 2013 / Rural Cooperatives

An old favorite has a new look! 

USDA’s popular educational tool, Co-ops 101− 

used as textbooks in many high school and 

even college-level courses − has been extensively updated, with expanded content and 

full color illustrations in an exciting new 

format.

39

12

After the fiscal year is over, a cooperative computes its earnings 

on business conducted on a cooperative basis. ose earnings are 

returned to the patrons — as cash and/or equity allocations — on 

the basis of how much business each patron did with the cooperative during the year. ese distributions are called patronage refunds.

For example, if a cooperative has earnings from business conducted on a cooperative basis of $20,000 for the year, and Ms. 

Jones does 2 percent of the business with the cooperative, she 

receives a patronage refund of $400 ($20,000 x .02).

is allows the cooperative to return margins to members on an 

annual basis, consistent with standard accounting conventions and 

13

without regard to how much was earned on 

each transaction.

Limited Return on Equity Capital

Members form a cooperative to get a service—source of supplies, market for products 

or performance of specialized functions—not 

a monetary return on capital investment.

Many cooperatives don’t pay any dividends 

on capital. Others pay a modest return, in line 

with state and federal statutes that bar substantial payments.

Limiting returns on equity supports the 

principle of distributing benefits proportional 

to use. It also discourages outsiders from trying to wrest control of a cooperative from its 

members and operate it as a profit-generating 

concern for the benefit of stockholders.

Cooperation Among Cooperatives

Many cooperatives, especially local associations, are too small to gather the resources 

needed to provide all the services their members want.

tives—through federated cooperatives,

 By working with other coopera-

 joint 

ventures, marketing agencies in common, and informal networks—

they pool personnel and other assets to provide such services and 

programs on a collaborative basis at lower cost.

owning and managing fertilizer plants, food manufacturing facilities, power plants, national financial institutions, wholesale grocery 

and hardware distribution programs, and so forth. Benefits flow 

back through the local cooperatives to the individual members. 

through 150 years of continuous evolution in the business world. 

tive method of doing business.

40

Centralized cooperatives have individuals 

and business entities (including partnerships and family corporations) as members. Virtually all locals are centralized. 

Regional cooperatives may also be centralized.

A centralized cooperative has one central office, one board of directors elected by its 

members, and a manager (or chief executive officer) who supervises all operations. Business may 

be conducted through numerous branch stores or 

offices staffed by employees responsible to the central 

management team.

Federated

members. Each member of a federated is a separate coop-

 cooperatives have other cooperatives as their 

erative that owns a membership share entitling it to voting 

rights in the affairs of the federated. Local cooperatives commonly form federated regional cooperatives to perform activities too complex and expensive for them to do individually, 

such as manufacturing production supplies, tapping major financial 

markets and marketing on a national or international scale. 

Each local cooperative member of a federated cooperative typically has its own board of directors, manager, employees and facilities to serve its members. e federated has its own hired management and staff and a board of directors elected by and representing 

its member cooperatives.

Mixed cooperatives have both individuals and other cooperatives as 

members. Individuals have voting rights and the cooperatives usually do also.

Functions Performed

Cooperatives may perform one or more of three core functions: 

marketing products, purchasing supplies and providing services.

Many marketing cooperative brand names are familair 

sights on grocery market shelves

41

Marketing cooperatives help members maximize 

the return they receive for crops and goods they produce. Most cooperative marketing activity involves either agricultural products or producers in related industries, such as forestry, 

aquaculture and horticulture. New marketing ventures are developing in such diverse industries as handicrafts, professional services 

and information technology.

Some marketing cooperatives limit their activity to negotiating 

prices and terms of sale with buyers. Dairy farmers and producers 

of fruits, nuts and vegetables grown for processing are primary users of these cooperatives, often called bargaining associations.

Other marketing associations assemble member production 

Many marketing cooperative brand names are familair 

sights on grocery market shelves

Introducing

New

a

Look for it online at:

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

supportdocuments/

cir55.pdf

Or get your free

hard copies by

e-mailing

coopinfo@wdc.usda.gov,

calling (202) 720-8381, 

or writing:

USDA Co-op Info

Stop 0705

1400 Independence Ave, SW

Washington, DC 20250

Chapter 6

Classifying Cooperatives 

by Structure Cooperatives are described by a number of clascategorize them are based on the geographical 

territory served, the governance system and the 

functions they perform.

Geographic Territory Served

One factor determining cooperative structure 

is the size of the area served. Cooperatives are 

loosely categorized as “local” or “regional.”

Local cooperatives typically operate within a 

single State, often within 

which to serve members.

one or two counties. 

Regional cooperatives usually serve an entire State 

that are nationwide or cover major portions of 

the United States. Some regional cooperatives 

also have international operations with sales and 

members in more than 

Governance System

one country. 

Cooperati

membership structure,

ves can also be classified based on 

 as “centralized,” “federated” or “mixed.”

Old Friend