R

u

r

a

l COOPERATIVES

Business

blooming for

new crop of

co-ops

CO-OP MONTH SPECIAL

SECTION / page 18

September / October 2013
2 September/October 2013 / Rural Cooperatives

By Bob Wagner,

Senior Policy and Program Advisor

American Farmland Trust

“No matter how big our economy grows, no

matter how technology advances, no matter

how global our society, we need people to till

the land, produce our food, harvest timber,

produce our paper and conserve our most

basic and precious resource: Wisconsin’s productive working

lands.” Those words were penned in 2006 by co-op

champion Rod Nilsestuen, now deceased, but at the time

secretary of the Wisconsin Department of

Agriculture, Trade and Consumer

Protection.

Nilsestuen thus set in motion a

comprehensive effort to overhaul and

expand Wisconsin’s commitment to

preserving and conserving the state’s

farmland under the Wisconsin Working

Lands Initiative. As he crisscrossed the

state promoting the initiative, Nilsestuen

would often note that Wisconsin’s

agriculture industry contributed more

than $50 billion to the gross state product

while 30,000 acres of farmland were being

lost each year to development and

fragmentation (land parcels too small to

farm and too large to mow).

With then-population growth projections of more than 1

million additional people in the state by 2030, he could see

that accommodating this new growth with the same old landuse patterns was unsustainable and that the state’s agriculture

industry, landscape and environment would suffer.

Co-op commitment to the land,

sustainable communities

As founder of Cooperative Development Services,

longtime head of the Wisconsin Federation of Cooperatives

and a member of the National Cooperative Hall of Fame,

Nilsestuen’s vision to connect the future economic health of

the agricultural industry in Wisconsin to the health and wellbeing of its soils reflected his commitment to the cooperative

principle of sustainable community development. Spurred by

his leadership and the clear synergy between the environment

and the economy, the Working Lands Initiative, not

surprisingly, benefited from the support and participation of

cooperative entities and their members across the state.

Adopted in 2009, the Working Lands Initiative combined

reforms to the state’s existing farmland preservation planning

and zoning programs with new opportunities to promote

farming enterprises and activities through the establishment

of Agricultural Enterprise Areas and to preserve farmland

with a state-funded agricultural conservation easement

purchase program.

Cooperative Resources International, Cooperative

Network, Wisconsin Farmers Union, CHS

Inc., CHS Foundation and Organic Valley

were among the broad coalition of

farmers, farm organizations, community

leaders, land trusts and conservation

organizations that came together to

support the initiative.

American Farmland Trust (AFT)

was honored to be a partner with Secretary

Nilsestuen and the cooperatives in framing

a new relationship between land

protection, conservation and farm viability

in Wisconsin. As the national, nonprofit

organization dedicated to reversing and

stopping the loss of our nation’s

agricultural lands to non-farm

development, AFT appreciated the recognition by

cooperatives of the impacts of farmland loss on their

members and businesses, and the opportunity to work with

them on an issue of mutual concern.

The package of policies and programs pursued in

Wisconsin was pragmatic, respectful of local decisionmaking, sensitive to property rights and, above all, designed

to promote farm viability and stability — a true complement

to the missions and objectives of cooperatives.

Preservation issues national in scope

The issues facing farmers and farmland that inspired

cooperatives to join Secretary Nilsestuen to act are by no

means unique to Wisconsin. According to the USDA’s

National Resources Inventory, the United States lost

Rod Nilsestuen

Commentary

Co-ops have a role in farmland preservation

continued on page 43
Features

Rural Cooperatives / September/October 2013 3

Volume 80, Number 5

September/October 2013

Rural Cooperatives (1088-8845) is

published bimonthly by USDA Rural

Development, 1400 Independence Ave.

SW, Stop 0705, Washington, DC. 20250-

0705.

The Secretary of Agriculture has

determined that publication of this

periodical is necessary in the transaction

of public business required by law of the

Department. Periodicals postage paid at

Washington, DC. and additional mailing

offices. Copies may be obtained from the

Superintendent of Documents,

Government Printing Office, Washington,

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

send address change to: Rural

Cooperatives, USDA/RBS, Stop 3255,

Wash., DC 20250-3255.

Mention in Rural Cooperatives of

company and brand names does not

signify endorsement over other

companies’ products and services.

Unless otherwise stated, articles in this

publication are not copyrighted and may

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

necessarily reflect those of USDA or its

employees.

The U.S. Department of Agriculture

(USDA) prohibits discrimination in all its

programs and activities on the basis of

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

status, familial status, parental status,

religion, sexual orientation, genetic

information, political beliefs, reprisal, or

because all or part of an individual’s

income is derived from any public

assistance program. (Not all prohibited

bases apply to all programs.) Persons

with disabilities who require alternative

means for communication of program

information (Braille, large print, audiotape,

etc.) should contact USDA’s TARGET

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

To file a complaint of discrimination, write

to USDA, Director, Office of Civil Rights,

1400 Independence Avenue, S.W.,

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

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

USDA is an equal opportunity provider

and employer.

Tom Vilsack, Secretary of Agriculture

Doug O’Brien, Acting Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or email:

coopinfo@wdc.usda.gov

This publication was printed with vegetable oil-based ink.

p. 6

04 Grain, farm supply sectors lead way as ag co-ops set sales,

income records

08 Top 100 ag co-ops set sales, income records

By Sarah Ali and David Chesnick

18 Co-ops: an engine for rural progress

Departments

02 COMMENTARY

06 CO-OPS & COMMUNITY

37 NEWSLINE

p. 18

ON THE COVER: Kim Krajicek Millikin, wrapping bundles of lilacs, is

sales manager for Z Callas/Oregon Coastal Flowers, one of the founding

members of the Seattle Wholesale Growers Market, a farmer-owned

floral cooperative. See the Co-op Month special section, beginning on

page 18, for more on this and other new cooperatives around the nation.

Photo by David E. Perry

p. 40

CO-OP

MONTH

S P E C I A L S E C T I O N
4 September/October 2013 / Rural Cooperatives

Grain,farmsupply sectors leadway

as ag co-ops set sales,income records

Against the backdrop of United Cooperative’s South Beaver Dam grain and agronomy facility, one of the co-op’s applicators works on a member’s

field near Beaver Dam, Wis. Photo by David Lundquist, courtesy CHS and United Cooperative

U.S. Farmer, rancher and fishery cooperatives set new

records for sales, income and assets in 2012, buoyed by

strong prices for grain, farm supplies and many other ag

commodities. Sales by agricultural co-ops of nearly $235 billion

surpassed the previous record, set in 2011, by $18 billion, an 8.3-

percent gain. Net (pre-tax) income of $6.1 billion was up nearly 13

percent over the $5.4 billion recorded in 2011.

“Agricultural cooperatives are a driving force in the nation’s thriving

farm economy, and because they are farmer owned and operated
businesses, the sales dollars and income

generated are much more likely to be

returned and spent in rural areas and

communities,” says U.S. Agriculture

Secetary Tom Vilsack. “Ag cooperatives

are also vital to the rural economy

because they support 185,000 full- and

part-time jobs and are often the major

employer in many rural towns.”

Net assets owned by farm co-ops —

including everything from grain

elevators and farm supply stores to

major food and beverage processing

plants — also showed a dramatic

increase in 2012, rising to $82.9 billion,

up 4.4 percent from $79.4 billion in

2011 (Table 1). Co-ops range in size

from a small handful of farmers or

fishermen who join forces to market

their crops and catch, to federated

cooperatives (a cooperative for

cooperatives) with many thousands of

members.

USDA’s annual survey of the nation’s

2,238 agricultural and fishery

cooperatives shows that grain and

oilseed sales by co-ops increased more

than $7 billion last year, more than

offsetting a drop of $500 million in

dairy products marketed (Table 2).

Bean and pea, fruit and vegetable, nut,

poultry and sugar sales all increased at

least 3 percent over 2011 levels.

Sales by cotton, fish and tobacco coops all registered double-digit declines

in 2012.

Farm and ranch supply sales were up

by $7 billion, primarily due to rising

energy prices. Widespread drought also

increased feed ingredient prices.

Fertilizer, feed and petroleum sales by

co-ops all increased by at least $1

billion.

While 31 cooperatives recorded

more than $1 billion in sales, almost 34

percent of ag cooperatives (749) had

less than $5 million in sales (Figure 2).

The overall farm economy saw sales

increase by at least 4 percent for feed

grains, oilseeds, fruits and nuts,

tobacco, livestock, and poultry and

eggs. Sales declined at least 5 percent

Rural Cooperatives / September/October 2013 5

Figure 1 — Cooperatives’ Gross and Net Business Volumes, 1979 –2012

Billion dollars

1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

1 Includes inter -cooperative business.

2 Excludes inter -cooperative business.

250

225

200

175

150

125

100

75

50

25

0

Gross1

Net2

Table 1

U.S. cooperatives, comparison of 2012 and 2011

Item 2012 2011 Change

Number Percent

Sales (Gross, Billion $)

Marketing 138.1 131.0 5.42

Farm supplies 91.9 81.4 12.95

Service 4.7 4.4 6.38

Total 234.8 216.8 8.27

Balance sheet (Billion $)

Assets 82.9 79.4 4.43

Liabilities 53.0 51.3 3.30

Equity 30.0 28.2 6.50

Liabilities and net worth 82.9 79.4 4.43

Income Statement (Billion $)

Sales (Gross) 234.8 216.8 8.27

Patronage income 0.9 0.6 46.56

Net income before taxes 6.1 5.4 12.89

Employees (Thousand)

Full-time 129.2 130.8 -1.25

Part-time, seasonal 56.0 52.8 6.20

Total 185.2 183.6 0.89

Membership (Million) 2.1 2.3 -7.39

Cooperatives (Number) 2,238 2,299 -2.65

continued on page 42
6 September/October 2013 / Rural Cooperatives

Editor’s note: This article is provided

courtesy Dairy Farmers of America. The

“Co-ops & Community” page spotlights coop efforts that fulfill the mission of

commitment to community. If you know of

a co-op, a co-op member or co-op employee

whose efforts deserve to be recognized on

this page, please contact:

dan.campbell@wdc.usda.gov.

Dairy Farmers of

America (DFA)

recognizes the power of

bringing people

together. Through its

nonprofit DFA Cares Foundation, the

cooperative demonstrates its

commitment to community, a core coop value that members and employees

strive to fulfill every day.

The DFA Cares Foundation has

operated since 2005 to assist DFA

members and others in the

communities DFA serves. Initially

created in response to Hurricane

Katrina to provide disaster relief, the

foundation has since expanded to

encompass all of the cooperative’s

giving initiatives.

Through the DFA Cares

Foundation, members and staff have

come together to create neighborhood

gardens, provide disaster relief to the

agricultural community, advocate for

nutrition policy, partner with food

banks and invest in the future of the

dairy industry with scholarships to

students pursuing careers in dairy.

The foundation also offers services

to its members in times need, including:

The DFA Cares Hotline, which offers

referrals for financial and legal

guidance; the Member Assistance

Program, which offers professional

Co-ops & Community

DFA Cares Foundation expands

co-op’s community focus
resources in a variety of areas; and

financial assistance in the aftermath of

natural disasters, among other services.

“With our plants and regional

offices, DFA has a presence in

communities throughout the country,”

says Kristi Dale, the co-op’s director of

public affairs. “Through the DFA Cares

Foundation, we are able to make

tangible contributions to improve

people’s lives in the areas where we

work and live.”

Fighting hunger

One of the largest DFA Cares

Foundation events is an annual fight

against hunger. In partnership with

Feeding America, DFA celebrates June

Dairy Month with food drives and

volunteer events at food banks

throughout the country. Each year, the

effort results in more than 100,000

meals for those in need.

This year, the cooperative’s fight

against hunger was especially

meaningful, as volunteer and

fundraising efforts helped answer the

needs of those affected by tornadoes in

Moore, Okla.

“As a farmer-owned cooperative, we

understand the impact severe weather

can have, especially on agricultural

communities,” Dale says. “When

tragedy strikes, food is directed where it

is needed most. But that may leave food

banks elsewhere in even greater need.

That’s an opportunity for staff at our

DFA plants and offices across the

country to help fill a void.”

Other special projects and events

benefit various charities throughout the

year. At the annual Team Development

Conference, DFA staff and members

participate in a community volunteer

event. Last year, with the help of The

Leader’s Institute, 50 bikes were built

and handed out to children in the Boys

and Girls Club of St. Louis, Mo.

Previous events have included work

for a youth development program in

Baltimore, Md., and creating

community gardens in New Orleans,

La. In addition, DFA Cares service

projects have become a staple during

the cooperative’s annual board strategy

retreat, which includes a dedicated

program for DFA’s farmer leader and

management spouses.

Last year, a group dedicated an

afternoon to sorting, packaging and

preparing donated goods to be shipped

to various parts of the world.

In August, nearly 60 DFA volunteers

assembled 2,000 lunch bags filled with

nutritious, non-perishable foods for the

Roadrunner Food Bank of New

Mexico’s mobile food pantry. The

volunteers were in the area for the

Cooperative’s annual July Board

Meeting and Strategic Information

Conference.

“During the past several years, we’ve

put an increasing focus on helping

others through the DFA Cares

Foundation,” Dale says. “Our

cooperative spans a wide geographic

area, but service like this helps ensure

that we’re continually doing more to

deliver on our core value of

community.” n

Rural Cooperatives / September/October 2013 7

The DFA Cares Foundation has been active since 2005, helping to support numerous community

projects, such as turning out nearly 300 co-op members and employees to build 50 bikes for the

Boys and Girls Club of St. Louis, Mo. Photo courtesy Dairy Farmers of America
By Sarah Ali and David Chesnick

Agricultural Economists

Cooperative Programs

USDA Rural Development

The nation’s 100

largest agricultural

cooperatives reported

record sales revenue of

$162 billion in 2012, an

increase of almost 9 percent over 2011,

when revenue totaled $148 billion

(table 1). Net income for the 100 top

co-ops also set a new record in 2012,

reaching $3.5 billion, up from $3.1

billion in 2011. The previous records

for sales and income were set in 2011.

Iowa is home to 16 of the top 100 ag

co-ops, the most of any state. It is

followed by Minnesota with 13,

Nebraska with 9, Wisconsin with 5, and

California with 4 top 100 ag co-ops.

Farm supply and grain sales showed

some of the largest gains for the year,

the latter due to higher grain prices

resulting from widespread drought in

2012. Dairy, fruit and vegetable, and

mixed (co-ops that sell grain and farm

supplies) co-ops saw sales decline in

2012. Higher corn and soybean prices

contributed to higher input prices for

animal feed.

The Top 100 co-op sales represent

about 68.9 percent of the $235 billion

in sales made by all agricultural co-ops

in 2012 (see related article, page 4).

Kansas co-op

makes biggest jump

Farmway Co-op Inc., a grain co-op

based in Beloit, Kan., made the largest

Top100 ag co-ops

set sales, income

records

8 September/October 2013 / Rural Cooperatives USDA graphics by Stephen A. Thompson
Rural Cooperatives / September/October 2013 9

upward jump on the Top 100, rising

from 114 in 2011 to 62 on the 2012 list.

The next biggest “gainer” was West

Central Cooperative, Ralston, Iowa, a

mixed co-op that handles grain and

farm supplies, which climbed from 69

to 41 in 2012. As a sector, the biggest

upward jumps on the list were made by

grain and mixed co-ops, due largely to

high grain prices as a result of the

drought.

CHS Inc. in Saint Paul, Minn. — an

energy, farm supply, grain and food coop — was once again the nation’s

largest ag co-op, with $40.6 billion in

revenue in 2012. It was followed by

Land O’ Lakes Inc., also based in St.

Paul, with sales of $14.1 billion, while

Dairy Farmers of America, Kansas City,

Mo., ranked third with $11.9 billion in

revenue.

Cost of goods sold by the Top 100 ag

co-ops was up 9 percent in 2012,

mirroring the increase in total sales.

With marketing cooperatives — such as

dairy, fruit and vegetables, cotton, sugar

and grain co-ops — the cost of goods

sold usually represent payments to

members for their product.

Gross margins increased by 10

percent, to $13 billion in 2012.

However, gross margins as a percent of

total sales remained fairly steady at 8

percent for both 2011 and 2012.

Service revenues were up 3 percent,

to $1.5 billion in 2012, with mixed

grain/supply co-ops accounting for

nearly half of that increase.

Interest costs add

to higher expenses

Total expenses for the top 100 ag coops increased by 6 percent from 2011 to

2012. The largest cost increase was

interest expenses, which increased by

$300 million in 2012, to $3.8 billion.

Labor expenses also increased $200

million from 2011, totaling $5.2 billion

in 2012.

Nearly every cooperative type had to

deal with higher expenses in 2012. The

only exception was the “other” category

(those cooperatives that do not fit in the

other classification sectors used by

USDA for this report). Again, mixed

grain/farm supply cooperatives

accounted for nearly half of the total

increase.

The top 100 ag co-ops paid $336

million in income taxes in 2012, $137

million more than in 2011.

Net margins climb

Net margins increased by more than

13 percent ($429 million) in 2012. Most

of the increase came within the mixed

grain/farm supply and farm supply coop sectors. Dairy and fruit/vegetable

co-ops had lower net margins compared

to 2011.

The asset base for the top 100 grew

by $3.5 billion between 2011 and 2012,

with a total of $53.4 billion in total

assets in 2012 (table 2). Nearly half of

the increase was from mixed grain/farm

supply cooperatives.

The largest 100 co-ops ended 2012

with $34.5 billion in current assets, up 4

percent from 2011. Mixed grain/farm

supply co-ops, which include some of

the largest farmer co-ops, accounted for

more than 50 percent of the total

amount of current assets. Fixed assets

also showed an increase of $1.2 billion,

pushing the total asset value for the top

100 co-ops to $12 billion.

Current liabilities increased by $874

million for the largest 100 ag co-ops. At

the end of 2012, total current liabilities

for these co-ops was almost $25 billion.

Total liabilities increased by $2.2

billion, ending the year at $36.2 billion.

Equity allocated to members jumped 11

percent in 2012, to $12.3 billion.

Retained earnings also showed an

increase of 2 percent, ending the year at

$4.8 billion.

Financial measures

show little change

Table 3 provides the combined

financial ratios for the largest 100 ag

co-ops. These ratios are the average

values for all 100 co-ops and provide a

more accurate reflection on the

performance of the co-ops, without

being skewed by the largest of the

group. For example, the largest five coops represent 50 percent of total

business volume. Therefore, they will

have more influence on the combined

values in table 1 and 2.

Figure 1 — Total Business Volume, Top 100 Ag Co-ops
The debt-to-asset ratio illustrates what percentage of

business assets are financed by debt. The ratio did not

change for 2012, remaining at the 2011 level of 0.68. Of all

of the cooperative types, only the fruit/vegetable co-op

sector had a lower debt-to-asset ratio than in 2011. Overall,

the top 100 ag co-ops used more debt in 2012. However,

some types — such as grain and farm supply co-ops — used

relatively more short-term debt to finance operations while

dairy, mixed grain/supply and sugar co-ops relied more on

long-term debt for financing. As indicated above,

fruit/vegetable co-ops were the only type to lower the

amount of debt used.

The current ratio provides a view on how well the liquid

assets of a business cover its current liabilities. Between

2011 and 2012, the current ratio increased slightly, from

1.36 to 1.38. This would indicate that a majority of the coops were more liquid in 2012 than in 2011.

Long-term debt and equity are generally used to finance

a business’ long-term assets. The long-term debt-to-equity

ratio focuses on this long-term financing. The ratio jumped

from 0.62 in 2011 to 0.65 in 2012. The higher long-term

debt financing was caused mostly by the dairy, mixed

grain/farm supply and sugar co-op sectors.

The times-interest-earned ratio shows how much a

business can cover its interest expense on a pre-tax basis.

The higher the ratio the better, as a low value could indicate

trouble paying obligations. In 2012, the ratio was 6.89, a

slight decrease from 2011’s value of 6.93.

As a general rule, those co-ops with high amounts of

fixed capital — such as processing co-ops — will have a

lower fixed-asset-turnover ratio than some of those that

provide mostly marketing services.

10 September/October 2013 / Rural Cooperatives

Figure 3 — Sales Revenue of Cooperatives By Function

for Top 100, 2012

Figure 2 — Net Income Top 100 Ag Co-ops

Sugar

3%

Other

5%

Mixed

49%

Dairy

22%

Fruit & Vegetable

3%

Grain

6%

Supply

12%

Figure 4 — Assets of Cooperatives By Function

for Top 100, 2012

Sugar

5%

Other

4%

Mixed

54%

Dairy

15%

Fruit & Vegetable

5%

Grain

6%

Supply

11%
Rural Cooperatives / September/October 2013 11

Profitability ratios show

slight improvements

Profitability ratios are important for

any business; an unprofitable business

will obviously not survive very long.

However, co-ops are in a unique

position in that they try to operate as

close to cost as possible. For example,

gross margins will usually be somewhat

lower than a non-cooperative business

of the same industry.

Between 2011 and 2012, co-op gross

profit margins increased slightly, from

7.9 to 8 percent, while net operating

margins held steady at 2 percent during

the two years. There was not much

change among the co-op types for

either of these two ratios.

Return on total assets measures

business earnings before interest and

taxes against its total net assets. The

average return on total assets for the

top 100 ag co-ops slightly increased

between 2011 and 2012, from 7.8

percent to 8.5 percent.

Return on members’ equity

measures net earnings after taxes

against total equity. This examines the

returns to members. In 2012, the

return on members’ equity was 29.1

percent. This is up slightly from 2011

when it was at 28.4 percent.

Ranking of top 100 co-ops

Table 5 lists the rank, name, revenue

and assets for the nation’s 100 largest

agricultural co-ops. These co-ops have

been identified by type as defined in

table 4. The co-op types (and the

number of cooperatives in each) are:

farm supply (8); mixed farm supply and

grain (32); grain (15); dairy (22); sugar

(7); fruit and vegetable (7); and other

marketing (9).

Historical comparison

Comparing total gross business

volume of the top 100 co-ops from

2006 to 2012 shows that there was a

peak in 2008, then declining in 2009

and 2010 before hitting new highs

again in 2011 and 2012 (figure 1). Total

business volume increased by almost 9

percent between 2011 and 2012. (Editor’s

Table 1

Top 100 Ag Co-ops Combined Operating Statement

2012 2011 Difference Change

............... $ billions ......................... Percent

Total Sales 162.095 148.676 13.419 9.0%

Cost of Goods Sold 148.987 136.817 12.170 8.9%

Gross Margins 13.108 11.859 1.249 10.5%

Service Revenue 1.519 1.472 0.047 3.2%

Wages 5.256 5.027 0.229 4.6%

Depreciation 1.289 1.220 0.069 5.6%

Interest Expense 0.665 0.565 0.100 17.7%

Other Expense 3.884 3.595 0.289 8.0%

Total Expenses 11.094 10.406 0.687 6.6%

Net Operating Margins 3.534 2.925 0.609 20.8%

Patronage Funds Received 0.297 0.192 0.105 54.4%

Non-Operating Revenue/

Expenses 0.086 0.232 -0.146 -63.0%

Net Margins Before Taxes 3.916 3.349 0.567 16.9%

Taxes 0.336 0.198 0.137 69.3%

Net Margins 3.580 3.151 0.430 13.6%

Table 2

Top 100 Ag Co-op Combined Balance Sheet

2012 2011 Difference Change

............... $ billions ......................... Percent

Current Assets 34.522 33.028 1.494 4.5%

Investments in Other Co-ops 1.868 1.613 0.255 15.8%

Property, Plant, & Equipment 11.838 10.617 1.220 11.5%

Other Assets 5.215 4.607 0.609 13.2%

Total Assets 53.443 49.865 3.578 7.2%

Current Liabilities 25.100 24.226 0.874 3.6%

Long-Term Liabilities 11.197 9.811 1.386 14.1%

Total Liabilities 36.297 34.037 2.260 6.6%

Allocated Equity 12.289 11.067 1.222 11.0%

Retained Earnings 4.857 4.761 0.096 2.0%

Total Equity 17.146 15.828 1.318 8.3%

Total Liabilities and Equity 53.443 49.865 3.578 7.2%
12 September/October 2013 / Rural Cooperatives

note: when making comparisons of data over a

five-year period, it should be noted that the

makeup of the top 100 changes between the

various years.)

Net income hit a new peak in 2008,

dipped in 2009 (figure 2) and then surged

in 2011 and 2012, reaching a record high

of $3.5 billion in 2012. Net income (after

taxes) grew by 13.6 percent, or $430

million, between 2011 and 2012. The value

of crop and livestock production had a

major impact on the increase in net income

during 2012. Patronage income (income

from other co-ops) increased by $105

million (or 54.4 percent) in 2012.

Figure 3 shows that mixed grain and

supply cooperatives account for 49 percent

of the revenue of the top 100 while

comprising only 32 percent of the number

of cooperatives on the list (the largest

group). The mixed grain and supply group

also accounted for 54 percent of the assets

of the top 100 ag-co-ops (figure 4).

Dairy (representing 22 of the top 100

co-ops) accounted for 22 percent of the

revenue, and 15 percent of the assets. Last

year’s figures were 13 percent and 16

percent, respectively.

Changes in the size of the type groups

between 2003 and 2012 are shown in figure

5. Dairy co-ops were the most numerous

(28 percent) in 2003, while mixed co-ops

were most numerous (32 percent) in 2012.

g

Table 3

Combined Average Ratios, Top 100 Ag Co-ps

2012 2011

Current Ratio 1.38 1.36

Debt To Assets 0.68 0.68

Long-Term Debt-To-Equity 0.65 0.62

Times Interest Earned 6.89 6.93

Fixed Asset Turnover 13.69 14.00

Gross Profit Margin 8.09% 7.98%

Net Operating Margin 2.21% 2.12%

Return On Total Assets 8.57% 7.85%

Return On Member Equity 29.14% 28.47%

Table 4

Criteria used for sorting co-ops by segment

Type of cooperative

Supply

Mixed

Grain

Dairy

Sugar

Fruit and Vegetable

Other

Cooperative defined

Derive at least 75% of their total revenue from farm supply sales.

Derive between 25% and 75% of total revenue from farm supply sales; remainder from marketing.

Derive at least 75% of total revenue from grain marketing.

Market members’ raw milk; some also manufacture products such as cheese and ice cream.

Refine sugar beets and cane into sugar; market sugar and related by-products.

Generally further process and market fruits or vegetables, rather than marketing raw products.

Includes co-ops that market livestock, rice, cotton and nuts.

Figure 5 — Distribution of Cooperatives by Function

for Top 100, 2003

Sugar

8%

Other

18% Mixed

12%

Dairy

28%

Fruit & Vegetable

13% Grain

18%

Supply

3%
Rural Cooperatives / September/October 2013 13

Table 5—Top 100 Agriculture Cooperatives

Note: Names withheld by request for the cooperatives ranked 43, 51, 69, 83, 90.

2012

RANK

2011

RANK

NAME

CHS Inc.

Saint Paul, MN

Land O'Lakes, Inc.

Saint Paul, MN

Dairy Farmers of America

Kansas City, MO

GROWMARK, Inc.

Bloomington, IL

Ag Processing Inc.

Omaha, NE

California Dairies, Inc.

Artesia, CA

Northwest Dairy Association

Seattle, WA

United Suppliers, Inc.

Eldora, IA

Southern States Cooperative Inc.

Richmond, VA

South Dakota Wheat Growers Assn.

Aberdeen, SD

Associated Milk Producers, Inc.

New Ulm, MN

Countrymark Cooperative Holding Corp.

Indianapolis, IN

Ocean Spray Cranberries Inc.

Lakeville-Middleboro, MA

Prairie Farms Dairy Inc.

Carlinville, IL

Foremost Farms USA, Cooperative

Baraboo, WI

Dairylea Cooperative Inc.

Syracuse, NY

MFA Incorporated

Columbia, MO

American Crystal Sugar Company

Moorhead, MN

Innovative Ag Services Co.

Monticello, IA

Farmers Cooperative Company

Ames, IA

Mixed (Energy,

Supply, Food, Grain)

Mixed (Supply,

Dairy, Food)

Dairy

Supply

Mixed (Supply,

Grain)

Dairy

Dairy

Supply

Supply

Grain

Dairy

Supply

Fruit & Vegetable

Dairy

Dairy

Dairy

Mixed (Supply,

Grain, Livestock)

Sugar

Grain

Mixed (Grain,

Supply)

2011

ASSETS

2012

ASSETS

2011

REVENUE

2012

REVENUE

TYPE

$ Billion

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

1

3

2

4

5

6

8

10

7

18

9

15

13

14

12

21

19

16

27

23

40.624

14.138

11.917

10.150

4.937

3.241

2.465

2.375

2.294

1.829

1.776

1.737

1.673

1.660

1.639

1.588

1.483

1.479

1.435

1.329

36.936

13.079

12.924

8.742

4.372

3.651

2.071

1.949

2.075

1.376

1.979

1.566

1.566

1.612

1.664

1.336

1.366

1.544

1.028

1.243

13.423

6.357

2.860

2.763

1.395

0.812

0.548

0.942

0.517

0.679

0.312

0.670

1.363

0.726

0.423

0.186

0.506

0.899

0.329

0.416

12.217

5.438

2.295

2.631

1.332

0.809

0.579

0.887

0.545

0.584

0.324

0.551

0.555

0.715

0.466

0.181

0.408

0.878

0.250

0.546
14 September/October 2013 / Rural Cooperatives

2012

RANK

2011

RANK

NAME

MFA Oil Company

Columbia, MO

Maryland & Virginia Milk Producers

Coop Assoc., Reston, VA

Heartland Co-op

West Des Moines, IA

Staple Cotton Cooperative Assn. Greenwood, MS

Producers Livestock Marketing Assn.

Omaha, NE

Co-Alliance, LLP

Avon, IN

Riceland Foods Inc. Stuttgart, AR

Aurora Cooperative Elevator Company

Aurora, NE

United Producers Inc.

Columbus, OH

Blue Diamond Growers

Sacramento, CA

Sunkist Growers Inc.

Sherman Oaks, CA

Farmers Cooperative

Dorchester, NE

Snake River Sugar Company

Boise, ID

Lone Star Milk Producers

Windthorst, TX

Agri-Mark Inc.

Lawrence, MA

Cooperative Regions of Organic Producer

Pools (CROPP/ Organic Valley), La Farge, WI

Michigan Milk Producers Assn.

Novi, MI

NEW Cooperative Inc.

Fort Dodge, IA

Select Milk Producers Inc.

Artesia, NM

Tennessee Farmers Cooperative

La Vergne, TN

Supply

Dairy

Grain

Other (Cotton)

Other (Livestock)

Mixed (Supply,

Grain)

Other (Rice)

Mixed (Grain,

Supply)

Other (Livestock)

Other (Nut)

Fruit & Vegetable

Mixed (Grain,

Supply)

Sugar

Dairy

Dairy

Dairy

Dairy

Grain

Dairy

Supply

2011

ASSETS

2012

ASSETS

2011

REVENUE

2012

REVENUE

TYPE

$ Billion

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

22

20

30

29

24

26

25

32

17

38

28

43

35

34

31

42

36

48

33

41

1.310

1.298

1.284

1.258

1.199

1.112

1.108

1.061

1.016

1.007

1.004

0.946

0.936

0.896

0.884

0.858

0.854

0.840

0.839

0.827

1.307

1.356

0.962

0.963

1.153

1.042

1.109

0.892

1.473

0.828

1.019

0.716

0.876

0.879

0.899

0.716

0.871

0.637

0.888

0.726

0.386

0.163

0.350

0.251

0.131

0.378

0.613

0.453

0.036

0.310

0.168

0.240

0.826

0.100

0.319

0.216

0.168

0.271

0.110

0.278

0.381

0.159

0.483

0.354

0.115

0.382

0.574

0.427

0.040

0.297

0.183

0.265

0.699

0.097

0.316

0.180

0.167

0.257

0.107

0.278

Table 5—Top 100 Largest Agriculture Cooperatives
Rural Cooperatives / September/October 2013 15

2012

RANK

2011

RANK

Table 5—Top 100 Largest Agriculture Cooperatives

NAME

West Central Cooperative

Ralston, IA

Plains Cotton Cooperative Assn

Lubbock, TX

Name withheld by request.

United Dairymen of Arizona

Tempe, AZ

Trupointe Cooperative

Piqua, OH

Central Valley Ag Cooperative

O'Neill, NE

North Central Farmers Elevator

Ipswich, SD

Frenchman Valley Farmers

Cooperative Inc., Imperial, NE

Upstate Niagara Cooperative, Inc.

Buffalo, NY

United Farmers Cooperative

York, NE

Name withheld by request.

United Sugars Corporation

Bloomington, MN

National Grape Cooperative Assn Inc.

Westfield, NY

United Cooperative

Beaver Dam, WI

Heritage Cooperative, Inc.

West Mansfield, OH

Citrus World Inc. (Florida Natural

Growers), Lake Wales, FL

Farmers Grain Terminal Inc.

Greenville, MS

Sunrise Cooperative Inc.

Fremont, OH

Watonwan Farm Service Company

Truman, MN

Equity Cooperative Livestock Sales Assn

Baraboo, WI

Mixed (Grain,

Supply)

Other (Cotton)

Dairy

Mixed (Supply,

Grain)

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Dairy

Grain

Sugar

Fruit & Vegetable

Mixed (Supply,

Grain)

Grain

Fruit & Vegetable

Grain

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Other (Livestock)

2011

ASSETS

2012

ASSETS

2011

REVENUE

2012

REVENUE

TYPE

$ Billion

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

69

11

37

44

46

58

73

39

49

63

47

57

52

50

67

53

55

51

0.813

0.803

0.785

0.766

0.748

0.725

0.723

0.719

0.716

0.674

0.657

0.653

0.637

0.626

0.620

0.616

0.612

0.605

0.445

1.843

0.830

0.713

0.672

0.529

0.432

0.772

0.633

0.481

0.640

0.546

0.583

0.615

0.473

0.577

0.555

0.591

0.361

0.185

0.130

0.221

0.259

0.252

0.223

0.251

0.227

0.039

0.376

0.440

0.150

0.333

0.172

0.253

0.222

0.031

0.381

0.265

0.131

0.229

0.251

0.201

0.287

0.217

0.213

0.037

0.362

0.365

0.170

0.313

0.174

0.224

0.195

0.033
16 September/October 2013 / Rural Cooperatives

2012

RANK

2011

RANK

Table 5—Top 100 Largest Agriculture Cooperatives

NAME

Michigan Sugar Company

Bay City, MI

Farmway Co-op Inc.

Beloit, KS

Landmark Services Cooperative

Cottage Grove, WI

Key Cooperative

Roland, IA

Ag Valley Cooperative Non-Stock

Edison, NE

NFO Inc. Ames, IA

River Valley Cooperative

Eldridge, IA

First District Association

Litchfield, MN

Name withheld by request.

Western Sugar Cooperative

Denver, CO

Tillamook County Creamery Assn

Tillamook, OR

Pacific Coast Producers

Lodi, CA

Hopkinsville Elevator Company Inc.

Hopkinsville, KY

Five Star Cooperative

New Hampton, IA

Frontier Ag, Inc.

Oakley, KS

Horizon Resources

Williston, ND

Producers Rice Mill Inc.

Stuttgart, AR

Southern Minnesota Beet Sugar

Cooperative, Renville, MN

Alabama Farmers Cooperative Inc.

Decatur, AL

West Central Ag Services

Ulen, MN

Sugar

Grain

Mixed (Supply,

Grain)

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Dairy

Mixed (Grain,

Supply)

Dairy

Sugar

Dairy

Fruit & Vegetable

Grain

Mixed (Grain, Supply)

Grain

Mixed (Supply, Grain)

Other (Rice)

Sugar

Mixed (Grain, Fish,

Cotton)

Mixed (Grain,

Supply)

2011

REVENUE

2012

ASSETS

2011

REVENUE

2012

REVENUE

TYPE

$ Billion

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

56

114

62

66

93

54

75

65

78

64

61

113

82

80

86

59

60

68

76

0.595

0.587

0.575

0.570

0.549

0.541

0.541

0.524

0.518

0.516

0.504

0.502

0.496

0.493

0.484

0.479

0.478

0.472

0.466

0.549

0.305

0.500

0.474

0.369

0.568

0.424

0.477

0.401

0.479

0.502

0.308

0.391

0.396

0.385

0.528

0.510

0.463

0.408

0.267

0.202

0.217

0.137

0.169

0.028

0.133

0.126

0.276

0.326

0.305

0.157

0.103

0.205

0.146

0.244

0.349

0.246

0.253

0.256

0.285

0.166

0.116

0.237

0.035

0.155

0.095

0.230

0.295

0.304

0.161

0.153

0.241

0.116

0.206

0.360

0.232

0.194
Rural Cooperatives / September/October 2013 17

2012

RANK

2011

RANK

Table 5—Top 100 Largest Agriculture Cooperatives

NAME

Western Consolidated Cooperatives

Holloway, MN

Premier Cooperative, Inc.

Champaign, IL

Name withheld by request.

Viafield

Marble Rock, IA

New Vision Cooperative

Worthington, MN

Farmers Cooperative Society

Sioux Center, IA

Gold-Eagle Cooperative

Goldfield, IA

Harvest Land Co-op

Richmond, IN

Ray-Carroll County Grain Growers

Inc., Richmond, MO

Name withheld by request.

Pro Cooperative

Pocahontas, IA

Mid-Kansas Cooperative Assn

Moundridge, KS

Alliance Grain Company

Gibson City, IL

North Central Cooperative Inc.

Wabash, IN

Bongards Creameries

Bongards, MN

NORPAC Foods Inc.

Stayton, OR

Gateway FS Inc.

Red Bud, IL

Swiss Valley Farms Cooperative

Davenport, IA

MaxYield Cooperative

West Bend, IA

Producers Livestock Marketing Assn

N. Salt Lake, UT

Mixed (Grain,

Supply)

Grain

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Mixed (Supply,

Grain)

Grain

Mixed (Grain,

Supply)

Mixed (Grain,

Supply)

Grain

Dairy

Dairy

Fruit & Vegetable

Mixed (Grain,

Supply)

Dairy

Grain

Other (Livestock)

2011

ASSETS

2012

ASSETS

2011

REVENUE

2012

REVENUE

TYPE

$ Billion

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

74

70

72

84

81

90

85

88

106

107

77

103

94

98

124

79

136

102

0.466

0.465

0.459

0.454

0.453

0.453

0.452

0.451

0.442

0.439

0.428

0.428

0.420

0.417

0.414

0.404

0.401

0.392

0.431

0.444

0.433

0.387

0.394

0.375

0.387

0.381

0.330

0.326

0.405

0.338

0.367

0.356

0.281

0.397

0.251

0.338

0.237

0.145

0.126

0.143

0.199

0.170

0.145

0.136

0.141

0.209

0.097

0.164

0.098

0.265

0.120

0.118

0.178

0.040

0.199

0.153

0.152

0.125

0.182

0.096

0.163

0.103

0.157

0.302

0.112

0.160

0.091

0.249

0.056

0.119

0.175

0.043
U N I T E D S TAT E S

D E PA RT M E N T O F A G R I C U LT U R E

Office of the Secretary

Washington, D.C. 20250

NATIONAL COOPERATIVE MONTH

October 2013

By the Secretary of Agriculture of the United States of America

A P R O C L A M AT I O N

WHEREAS cooperative businesses—arising from a sense of community and common cause—are

the ultimate economic self-help tool, helping member-owners market and process their crops and

other products, obtain needed services, and acquire high-quality, affordable supplies; and

WHEREAS more than 130 million people own the Nation’s 30,000 cooperatives, which generate

$650 billion annually in economic activity and provide a wide variety of goods and services

ranging from electricity and telecommunications to credit and other financial services; and

WHEREAS farm, ranch, and fishery cooperatives had record sales of $235 billion in 2012, and

cooperatives, which create 185,000 full- and part-time jobs annually, are a key reason why the

Nation’s agricultural sector continues to thrive; and

WHEREAS USDA is proud to issue Rural Cooperatives magazine, now in its 80th year, and many

other publications to promote understanding and use of cooperatives and to support the

cooperative business sector;

NOW, THEREFORE, in recognition of the vital role that cooperatives play in improving

economic opportunity and the quality of life in rural America, I, Thomas J. Vilsack, Secretary of

the U.S. Department of Agriculture, do hereby proclaim October 2013 as National Cooperative

Month.I encourage all Americans to learn more about cooperatives and to celebrate cooperatives’

accomplishments with appropriate ceremonies and activities.

IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2013, the

two-hundred thirty-eighth year of the Independence of the United States of America.

THOMAS J. VILSACK

Secretary
Rural Cooperatives / September/October 2013 19

ON A WEEKEND this

past summer, I

attended the wedding of a friend’s

daughter. The setting was beautiful,

looking out over Alaska’s Kachmak Bay

to the snow-covered mountains

beyond. The flowers used for the

ceremony were also beautiful — big

red, white and pink peonies.

For those knowledgeable about the

cut flower industry, it might come as a

surprise that these Alaska-grown

flowers were available for a wedding on

Co-ops: Growing rural progress From Alaskan flower farmers to

new food hubs and brewpubs in Wisconsin; from a yoga studio in Montana to aquaculture

operations in Virginia, new cooperative businesses are helping to build a stronger rural

economy, creating jobs and providing needed services and products for their members. You

can read about these and many other innovative co-op businesses on the following pages in

our annual Co-op Month salute. Each of the articles has been submitted by a rural cooperative

development center, which USDA Rural Development is proud to help support through the Rural Cooperative

Development Grant (RCDG) program.

This past year, USDA awarded $6.5 million under the RCDG program, with a maximum grant amount of

$200,000. The primary objective of the program is to improve the economic condition of rural areas by assisting

individuals or entities in the startup, expansion or operational improvement of rural cooperatives and other

business entities. Grants are awarded competitively to co-op development centers, which in turn provide

technical assistance.

While cooperatives can be formed for a nearly endless variety of reasons, one thing they all have in common

is that they exist to meet the needs of their member-owners, rather than distant shareholders who may never

even set foot in the community a cooperative serves. Those who benefit from a co-op are those who use it.

Building more and stronger cooperatives is thus one of the best ways to build a better world.

To find out more about the RCDG program and other USDA programs that assist cooperatives, visit:

www.rurdev.usda.gov.

Alaskan peonies are produced on a schedule

that allows them to fill a “window” in the

marketplace.

Peonies rising star of Alaskan agriculture

By Andrew Crow, Director, Alaska Cooperative Development Program

CO-OP

MONTH
20 September/October 2013 / Rural Cooperatives

Aug. 10. But peonies are one

of the rising stars of Alaska

agriculture.

In 2007, when the

University of Alaska Center

for Economic Development

made its first presentation

about marketing cooperatives

to the state’s peony growers,

you could not have bought

peonies in August. Not here

in Alaska, not in the lower

states and not even in the

world’s biggest cut flower

market in Amsterdam.

Alaska peonies fill

market gap

Peonies, like most cut

flowers, are a worldwide

commodity. Israeli growers

supply the market from midSeptember to December.

New Zealand fills in from

December to March, and U.S.

growers supply the market from

March until late July. There has

traditionally been no supplier

from late July to September.

Around 2004, researchers at the

University of Alaska noticed that this

gap in supply occurs just when peonies

bloom here. So, they set about learning

how to grow peonies commercially in

Alaska, then to convince people to get

into the business.

It has been a slow process, but there

are now several dozen growers in

Alaska, all with plants at different

stages. It takes three years from

planting the first roots to making the

first commercial harvest. Alaska’s first

commercial harvest was in 2011, with

volume rising steadily ever since.

Growers could see early on that a

cooperative might help them, but they

were unsure of what exactly they

wanted from a co-op. Many did not

want to give up any control over their

flowers or their farm brands.

Some growers thought that they

would just do everything — planting,

weeding, cutting, sorting, marketing,

shipping and billing — all themselves.

As time went on, the pioneers in the

business have started to see the

advantage of marketing together.

Few farms have all the varieties that

brides want. And it was an extra burden

to have to call around to neighboring

farms to fill orders. By taking on such

duties, a co-op would let growers focus

more on their farms.

Dutch growers advise

forming co-ops

The Dutch farmers who were selling

flower roots to the growers also started

to explain how the wholesale flower

market works. They pointed out two

things: first, that the cut flower business

is extremely competitive; second, that

the most successful flower farmers in

the world, the Dutch, use cooperatives.

“If you want to stay in control, you

need to form a co-op,” the Dutch

flower growers stressed.

After six years of talking and

meetings, the first Alaska peony

growers’ cooperative was registered this

past spring. The co-op has a central

inventory and order desk.

Two other groups are at different

stages of formation, and the state peony

growers association is talking about

ways to form a statewide federated coop. So, if you are planning an August

wedding, and want peonies, you can

now get them in Alaska. And soon, you

will be able to buy them conveniently

from a producer-owned co-op. n

Rita Jo Shultz checks on her flower crop, near Homer, Alaska.

“If you want to stay in control, you need to form a co-op.”
FOOD HUBS are popping up across the

country as communities strive to

rebuild their regional food systems.

Over the past few years, the University

of Wisconsin Center for Cooperatives

has worked with two new food hubs

that are using the cooperative business

model in unique ways to aggregate,

distribute and market local foods.

Fifth Season Cooperative

Fifth Season Cooperative is a multistakeholder cooperative headquartered

in Viroqua, Wis. It was established in

2010 to provide the infrastructure and

coordination needed to move locally

grown products into local institutions,

such as hospitals, universities and

school systems.

The co-op includes six different

membership classes: producers,

producer groups, processors,

distributors, buyers and co-op workers.

Each class has a representative on the

seven-member board of directors. The

founders hoped that including

representatives from the entire supply

chain would facilitate the trust and

dialogue needed to negotiate difficult

issues such as pricing, seasonality and

shared risk.

Now in its second full year of

sourcing regional foods, Fifth Season

has 41 voting members and is on track

to hit its sales goals for 2013. Fifth

Season was launched with a $40,000

Buy Local, Buy Wisconsin grant from

the Wisconsin Department of

Agriculture, Trade and Consumer

Protection and support from Organic

Valley, the nation’s largest organic food

cooperative.

Since then, however, nearly all of the

co-op’s capital has been raised through

the sale of preferred stock to

community members. One of the keys

to the co-op’s success so far has been

through the use of existing

infrastructure.

Thus, instead of purchasing trucks to

distribute co-op products, Reinhart

Foodservice was recruited to be the

primary distributor member. Instead of

investing in food processing equipment,

Fifth Season has built relationships with

several existing processors. The glue

that holds all of this cooperation and

coordination together is the

combination of a strong manager and

the co-op’s set of core values that stress

openness, honesty, fairness and

sustainability.

Wisconsin Food

Hub Cooperative

The Wisconsin Food Hub

Cooperative, headquartered in

Madison, incorporated in 2012 and is

currently in its first year of sales. Like

Fifth Season, the Food Hub has

different types of members that

represent a range of stakeholders in the

food system and have different equity

requirements and board representation.

The four membership classes are:

producers, founders, organizational

partners and community supporters.

Producers elect seven directors,

founders elect two directors and the

remaining groups each elect one

director. The goal of this structure was

to include outside expertise and support

while maintaining grower control of the

business.

The original idea for the project

emerged from Dane County’s

Institutional Food Market Coalition

(IFM), an effort by the county to

connect local farmers and food

processors with institutions, such as

hospitals, schools and other largevolume buyers. IFM found that there

was significant interest from both

growers and institutional buyers, but

Rural Cooperatives / September/October 2013 21

New co-op ‘hubs’ help meet need for local food in Wisconsin

By Courtney Berner, Cooperative Development Specialist, University of Wisconsin Center for Cooperatives

Wisconsin is one of the nation’s leading agricultural states and home to many local food co-ops. Photo by Bill Berry, courtesy

American Farmland Trust

CO-OP

MONTH
22 September/October 2013 / Rural Cooperatives

the infrastructure to aggregate product

was lacking.

Responding to this, the county

commissioned a study to determine the

feasibility of opening a fresh produce

packinghouse in Dane County. The

feasibility study, which was completed

in 2011, indicated demand for local

produce ranging from $18 million to

$26 million per year.

Next, the county put out a “request

for information” (RFI) seeking an

owner/operator for the food hub. The

selected candidate would receive

$28,000 for business planning services,

detailed information from the feasibility

study and technical assistance from the

county.

In response to the RFI, a unique

partnership developed between

Wisconsin Farmers Union (WFU),

which had been looking for

opportunities to support new

cooperatives, and a small group of

vegetable farmers. The WFU/grower

partnership won the contract and spent

the next several months writing a

business plan and fleshing out their

vision for the business.

Like Fifth Season, the Food Hub

decided to focus on developing

relationships with growers and buyers

and leveraging existing infrastructure,

rather than investing in a building or

major equipment.

With 11 members and projected

sales of $3 million in its first year of

operation, the Food Hub is far from

meeting the region’s demand for local

produce. However, with the goal of

recruiting 30-40 new farmers members

in the next few years and relationships

already in place with several key

distributors and grocery chains, they are

well on their way. n

COOPERATIVES are

alive and well in

Ohio. Thanks to state laws regulating

cooperatives in Ohio, any type of

business can choose to be a cooperative

— and many are so choosing. The Ohio

Cooperative Development Center

(OCDC) at the Ohio State University

has been assisting new and emerging

cooperatives throughout Ohio and

West Virginia. During the past five

years, OCDC has assisted in the

formation of more than 30

cooperatives, nearly 75 percent of

which are involved with local foods.

Highlights of OCDC assisted

cooperative successes include the

following co-ops.

Our Harvest. This co-op was formed in

2012, modeled on the co-ops of the

Mondragon region of Spain (home to

the world’s largest network of workerowned co-ops). Our Harvest leaders

believe it is the world’s first unionized,

worker-owned cooperative. Our

Harvest is a rapidly growing food hub

serving the Cincinnati area, where it

supplies local foods produced by its

worker-owners, as well by other local

growers. The co-op recently received

funding from CoBank and Farm Credit

Services to help expand production,

aggregation and distribution of locally

produced foods. In addition, Our

Harvest is working to increase the

number of new growers through an

apprenticeship program that includes

hands-on training on a farm. As

participants of the program graduate,

they can then become worker-owners of

Our Harvest, ensuring future

generations of farmers for the region.

For more information about the co-op,

visit: http://ourharvest.coop/.

Fifth Street Brewpub Cooperative.

Ohio’s first cooperative brewpub, which

formed in the St. Anne’s Hill Historic

District in Dayton, held its grand

opening Aug. 3. The founding

members of this cooperative had goals

of creating a place where neighborhood

residents could come together in a

relaxed and enjoyable atmosphere to

create a sense of community. It is hoped

that the co-op will have a positive

economic and social impact on the

neighborhood. Fifth Street Brewpub

currently has 2,050 members and

From food hubs to brewpubs, cooperatives are growing in Ohio

By Christie Welch, Program Manger, Ohio Cooperative Development Center, The Ohio State University

Carolyn Austin boxes jars of elderberry jam

produced by Austin’s Rush Creek Farm in

Ferryville, Wis. Her jams and jellies are

marketed through Fifth Season Cooperative,

among other channels. Photo courtesy

Austin’s Rush Creek Farm

CO-OP

MONTH
continues to grow. In July, the co-op

received the Preservation Award from

Dayton History. For more information

about the co-op, visit: http://www.

fifthstreet.coop/.

Uni-Serve USA. This cooperative is a

national network of commercial hoodcleaning companies that clean

restaurant vent hoods,

especially for fast-food

restaurants. The cooperative

allows its members to enjoy

the convenience of

centralized billing and

reporting. It also helps them

to provide improved

customer service, with

immediate response from a

local service provider. UniServe USA currently has 20-

plus companies as

cooperative owner/members

and maintains a preferred

vendors list that reduces the

cost of doing business by

helping its members act as

one company. Uni-Serve

USA cooperative also joins

with other cooperatives to

offer additional benefits and

services to owner/members,

such as the ability to

participate in benefits

offered through the United

Regional Purchasing

Cooperative (URPC),

BizUnite and Employee Perks. For

more information about the co-op, visit:

www.uni-serveusa.com.

Farmers Market Management

Network. This is a cooperative of Ohio

farmers’ markets managers, vendors and

producers who have come together to

provide networking, shared services and

consistent messaging with

regulators. Formed in

2008, FMMN has worked

to provide information

and training for the

rapidly increasing number

of farmers’ markets

throughout Ohio. FMMN

works with many groups

throughout the state to

help educate managers

and producers on food

safety regulations, best

marketing practices, and

shared services such as access to

insurance for Ohio farmers’ markets and

their vendors/producers. For more

information about the co-op, visit:

www.fmmn.org.

In addition to those listed above,

OCDC is working with groups

exploring the cooperative business

model. These include: Goodness

Grows, a faith-based incubator/training

farm in the Youngstown area; the MidOhio Valley Growers Cooperative, a

group of producers working together to

market their produce to Charleston and

Parkersburg residents in West Virginia;

and many more.

OCDC works with The Ohio State

University and West Virginia

University Extension Educators to

provide technical assistance to groups

exploring the development of

cooperatives in the two-state region. n

Rural Cooperatives / September/October 2013 23

Tending plants that will eventually produce food to be sold through the Our Harvest Cooperative in Ohio, which

is structured based on the worker cooperative model used in the Mondragon region of Spain. Photo courtesy

Our Harvest Cooperative
24 September/October 2013 / Rural Cooperatives

NEW HAMPSHIRE fishermen experienced

a 78-percent cut in the groundfish

quota allowed in 2013 and were further

challenged by low lobster prices and

increasing costs of fuel and bait. About

98 percent of the groundfish landed in

New Hampshire are normally shipped

out of state, with most being sold for

low prices at commercial fish auctions.

These factors put the New

Hampshire fishing industry in a

precarious position; its very survival is

threatened. Josh Wiersma, Northeast

Fishery Sector XI and XII manager and

Fishues (rhymes with “issues”) blogger

Sarah Van Horn decided that the time

was right to form a community

supported fishery (CSF) to help

preserve the industry. The objectives of

a CSF would be to help local fishermen

diversify markets, meet the need of

consumers for fresh, locally harvested

seafood and capitalize on an established

infrastructure of fishermen, producers

and processors.

“The maritime fishing industry — a

vital element of the economy, culture

and history of the New Hampshire

seacoast – is in crisis,” Van Horn says.

“We are addressing this crisis by

increasing the recognition and appreciation of the interdependent roles that

the fishing industry and the consumer

play in our local ecological economy.”

CSFs patterned on CSAs

Taking a cue from local, community

supported agriculture (CSA) programs,

in which farmers offer consumers shares

of the harvest for a pre-season, pre-paid

price, Wiersma and Van Horn worked

with local fishermen to develop a

business plan for a community

supported fishery.

Fourteen fishermen and crew from

Seabrook, Hampton, Rye and

Portsmouth — representing just about

all the active fishing boats in New

Hampshire — decided to organize the

initiative as a cooperative that would

reconnect local consumers with

commercial fishermen. That meant

Fishermen Neal Pike, president of the Yankee Fishermen Cooperative, and his son (also named Neal) begin the first trawl of the day on

board the Sandi Lynn. Photo by Sarah VanHorn

Multi-stakeholder co-op to bolster New Hampshire fishing industry

By Noémi Giszpenc and Lynda Brushett

CO-OP

MONTH
WE HEAR a lot about

the demutualization

of cooperatives, but what about the flip

side? How viable is it to convert a

privately owned business into a

cooperative? The Food Co-op Initiative

has been receiving inquiries from

independently owned grocery stores of

varying size and product mixes during

the past few years asking for advice on

becoming a cooperative.

Transitioning to a cooperative may

be a potential exit strategy for owners

wanting to retire or move on. In some

cases, the store may be in decline and

the community support of a cooperative

is seen as a way to gain investment and

build loyalty and sales.

As independent grocers struggle to

survive in an increasingly competitive

environment where large chains benefit

Rural Cooperatives / September/October 2013 25

bringing consumers into the fishing

business.

Unlike traditional CSFs, New

Hampshire Community Seafood is a

“multi-stakeholder” cooperative.

Instead of the fishermen being the sole

member-owners, consumers are also

offered an opportunity to become co-op

members. “This way,” Wiersma says,

“interested and engaged consumers can

be more directly integrated” into the

CSF and its mission.

Consumers are offered the

opportunity to buy a share in the

cooperative in addition to their seafood

share. Consumers who buy a share of

NH Community Seafood are

represented by having a seat on the

board of directors. They are also

entitled to receive a portion of any

profits made at the end of the year.

Buying a share of the co-op gives the

consumer a voice in the organization;

both the fishermen and the consumers

thus have a vested interest in seeing the

organization succeed.

Fifth fishing season

may be added

NH Community Seafood consumers

pre-pay for an eight-week “season” of

fresh seafood consisting of half, or full,

allotments of a weekly delivery of a

filleted groundfish share, a weekly

whole groundfish share, or a bi-weekly

“underdog” fish share (an underutilized

fish species). Four “seasons” are

planned, with a possible fifth season in

February and March that would feature

shrimp and scallop.

Deliveries of freshly caught fish are

made weekly or every other week to

farmers' markets and other community

locations. Cod, redfish, cusk, king

whiting, monkfish, pollack, squid and

lobster have been among the offerings.

Tweets keep consumers up to speed on

upcoming deliveries.

Taking cooperation a step further,

NH Community Seafood developed

partnerships to support aggregation,

processing and distribution with two

businesses that are key to the state’s

commercial fishery infrastructure.

Yankee Fishermen’s Cooperative in

Seabrook picks up the fish at the dock,

sorts and grades it, and then sends the

highest quality fish to Seaport Fish, a

family-owned wholesale and retail

market in Rye, N.H., which processes

and packages fish for delivery the

following day. This means consumers

receive fish within 30 hours of its being

landed.

NH Community Seafood’s mission is

to: “provide local fishermen a fair

market for all the species they catch and

to provide the consumer with access to

a wide variety of fresh, locally caught

seafood throughout the year; [this

provides consumers with] better insight

into the supply chain that brings

seacoast seafood to their table, and

[gives them] direct input about the

choice and diversity of fish they

consume.”

The co-op mission statement

continues: “The cultivation and

nurturing of this direct relationship

between local fishermen with local

consumers is intended to increase

demand for local seafood, to promote

community awareness and engagement

in marine resource issues and to support

our local and regional economies

through the preservation of the

livelihoods of local fishermen and the

supporting of shore-side support

infrastructure.”

Editor’s note: Giszpenc is the executive

director of CDI (Cooperative Development

Institute), headquartered in Shelburne

Falls, Mass. Brushett is the senior

cooperative developer at CDI specializing in

agriculture and food systems: co-ops of

producers (farmers, fishermen, foresters)

and consumers (retail stores, buying clubs,

institutions, etc.). CDI, a 501(c)3

organization, was founded in 1994 with

the mission of developing a cooperative

economy in New England and New York. It

provides direct business assistance, training

and networking for established co-ops, startups and businesses considering conversion to

cooperative ownership. n

Initiative helping convert grocery stores into co-ops

By Stuart Reid, Food Co-op Initiative

CO-OP

MONTH
26 September/October 2013 / Rural Cooperatives

from significant economies of scale, the

number of owners looking for a way to

sell or save their stores is increasing. Is

this a realistic opportunity for new coops to acquire ready-made storefronts?

Food Co-op Initiative decided that it

was important to understand the unique

issues that arise when a new co-op

forms around the desire to purchase

and convert an independently owned

store. We identified two rural

communities that were exploring a coop conversion and offered development

funds and support in exchange for the

organizers’ commitment to document

and share their experiences.

The Old Creamery (now Old

Creamery Co-op) has had a long

history in Cummington, Mass., where it

serves an isolated population on the

edge of the Berkshires. Noah’s Ark

(now Placerville Natural Foods Co-op)

was a more recent addition in the

historic gold-mining foothills of

Placerville, Calif. Both groups have

successfully completed their transitions

and are operating as consumer

cooperatives.

Patricia Cumbie interviewed the coop organizers, previous owners and new

general managers in preparation for

writing the final study.

Some of the key lessons we learned

from these case studies include:

• Support specifically designed to assist

the conversion process is minimal.

• Conversions require buyers, sellers

and financial institutions to have a

strong understanding of the needs of

cooperative financing.

• Sellers have to be patient with groups

that need time to organize their

community, raise capital and carry out

the legal process of conversion.

• Changing organizational structure

and transitioning operations to reflect

cooperative best practices —

including a chart of accounts,

membership records and management

accountability to a board — is an

extensive undertaking.

The full study, Buying a Business to

Start a Co-op: A Case Study of Food Co-op

Conversions, is available for free

download on the Food Co-op Initiative

website: www.foodcoopinitiative.coop/

content/co-op-conversion-case-study

There is another opportunity for

successful business conversions that we

have not yet addressed and may offer

significant advantages: the acquisition of

an independently owned grocery store

by an established co-op with financial

resources and operational experience.

Several such acquisitions have occurred,

and more research needs to be done to

document the process and encourage

similar efforts. Food Co-op Initiative

plans to continue its research and will

include this and other options in a

future study. n

Co-op patrons enjoy a meal the Old Creamery Co-op in Cummington, Mass., (also seen in exterior

photo), which serves members who live along the edge of the Berkshires. Photos by Stuart Reid,

courtesy Food Cooperative Initiative.
Rural Cooperatives / September/October 2013 27

MOST COOPERATIVES

form to help

members meet a specific need, such as

reducing costs for supplies and services,

or to perform processing and

marketing. Sometimes they arise to take

advantage of a special market

opportunity. Regardless of what initially

sparks a new co-op, a critical

component for the start-up and longterm success of any cooperative is the

existence of a group of people who

believe that they can accomplish more

by working together than they can as

individuals.

The Seattle Wholesale Growers

Market was born of a need and an

opportunity. As individuals, the

cooperative’s founding members were

struggling with the challenges most

producers face trying to farm, market

and manage their farm businesses. All

their farms were located long distances

from the urban markets, where there is

strong demand for their unique, locally

produced flowers and nursery stock.

Co-op builds

own wholesale depot

To address their marketing needs and

to take advantage of marketing

opportunities for their niche products,

the growers decided to open a “bricks

and mortar” wholesale depot in the

Georgetown area of South Seattle. The

Seattle Wholesale Growers Market

incorporated as a cooperative in

Washington state in February 2011. Its

new, wholesale market opened two

months later.

An unusually cold, wet winter

delayed many of the spring flowers that

year. However, within a few months the

market was packed with an enticing

diversity of floral products. These

included much-sought-after, hard-toship items such as lilacs, snowball

viburnum, unusual bulb crops,

blooming branches, poppies and many

forms of tulips.

Word about the co-op and its

offerings quickly spread through

Seattle’s community of floral designers,

and business began to boom at the new

wholesale market. Increased sales in the

first year contributed to the creation of

six new, full-time jobs.

“Our founding members were all

from rural areas in Washington,

Oregon and Alaska,” says Diane

Szukovathy, co-owner of Jello Mold

Farm and president of the cooperative.

“There were a lot of flowers being sold

in our region, but very few of them

were coming from local farms. The

traditional wholesale houses had

changed their buying habits in favor of

cheap imported flowers, mainly coming

from South America.

“Many Washington and Oregon

flower farms had already gone out of

business, and the remaining ones were

struggling to find efficient and reliable

channels for distribution,” Szukovathy

continues. “We felt that the strong ‘buy

Business blooms rapidly for Northwest horticulture co-op

By Jeff Voltz, Project Manager, Northwest Agriculture Business Center, A USDA Rural Cooperative Development Center

Flowers grown near Washington’s Mount

Baker will be sold through the Seattle

Wholesale Growers Market (SWGM)

cooperative. Photo by David E. Perry. Below:

Co-op members’ flowers on display for

wholesale buyers. Photo courtesy SWGM

CO-OP

MONTH
28 September/October 2013 / Rural Cooperatives

local’ sentiment in our region would

work in our favor, as it already had for

food farmers. We truly had no idea how

quickly we would be embraced by

Seattle’s professional floral buyers, who

appreciate the outstanding quality,

diversity of products and warm

community atmosphere of our market.”

Co-op assisted by NABC

Seeking help and guidance for the

development of a cooperatively owned

business, Szukovathy connected with

the Northwest Agriculture Business

Center (NABC) in the fall of 2010.

“It was very helpful to have NABC

as a resource to vet some of our ideas

about organizational structure,”

Szukovathy says. “They also provided a

great service in support of our startup

by providing an interim web page on

their site and staff resources to help us

publish weekly ‘fresh sheets’ for our

customers during that critical first year.”

As a core service, the cooperative has

provided the grower-members with a

facility to market their products as

individual businesses. But the

cooperative has also provided a venue in

which the growers are able to share

common values and best practices. This

opportunity led to the development of

the co-branded “By the Bunch” floral

program.

The grower-members have worked

together with two key Seattle-area

supermarket chains to bring fresh,

locally produced bouquets to market. As

a component of this program, Seattle

Wholesale Growers Market has

partnered with Salmon-Safe

(www.salmonsafe.org), a Pacific

Northwest regional eco-label which

allows qualifying member farms to

achieve third-party certification for

sustainable growing practices.

The Seattle Wholesale Growers

Market has grown from an initial 14

members to its current 17 members.

Gross annual revenues increased from

$300,000 in 2011 to over $500,000 in

2012. Sharp growth has continued in

2013, with projected annual revenues

expected to easily top $800,000.

Are the members pleased with the

results? “Most of us believe this effort

will be instrumental in the long-term

viability of our farms and our entire

industry,” says Szukovathy. Because of

this co-op and the market opportunities

it has provided, our farm sales have

more than doubled in the past three

years. And these sales are more

profitable because marketing and

transportation costs have been reduced.

“We are preserving farmland and our

rural heritage, creating jobs and

providing a more environmentally

progressive and safe product to the

marketplace,” she continues. “This

effort is a big win for a lot of people!” n

THE IDEA behind

Kentucky

Organic Farm

and Feed Inc.

(KOFFI) was

developed by a

group of Amish

and Mennonite dairy farmers in

southern Kentucky as they began to

investigate their options for sourcing

organic feed.

The farmers, who were transitioning

to organic dairy production, needed a

local source to mill their cattle feed. At

the time of the transition, a fellow

farmer, John Troyer, was doing some

milling for the group and he was selling

some organic products. Troyer agreed

to expand his production of organic

feed, and he rented a building on the

same road as his farm to expand

production to provide locally milled

organic feed for the dairy cattle

producers in the area.

“John was doing a great job, but he

had a lot of irons in the fire,” explains

Menno Beiler, KOFFI president. “He

had reached a point where he wanted to

pass off the business or get more people

involved. We decided to put together a

steering committee to look at what

direction we wanted to go, and that is

when we decided to develop a

cooperative to run the feed mill.”

Dairy Co-op ensures feed supply by operating organic grain mill

Courtesy Kentucky Center for Agriculture & Rural Development

CO-OP

MONTH
Rural Cooperatives / September/October 2013 29

KCARD gives

crucial assistance

The group decided to rent the

building Troyer had used as a mill and

continued the operation. The Kentucky

Center for Agriculture & Rural

Development (KCARD) was brought to

the table early in the process to help the

group of farmers navigate the

development of the cooperative.

“There were a few [of the dairy

farmers] who had business experience,

but none of us had any experience with

a cooperative,” says Beiler. “I can’t

remember who recommended we

contact KCARD for help, but this coop probably would have never

happened if KCARD hadn’t been there

to guide us through the development.”

Coming in to assist the co-op during

the early stages of development allowed

KCARD to help the farmers draft the

initial bylaws and articles of

incorporation to establish the

cooperative. The Center’s staff attended

meetings for several months, helping

the farmers as they developed a business

plan for the mill.

KCARD also worked closely with

Organic Valley, an organic milk

cooperative that is the buyer of the

farmers’ milk, to develop the plan for

supplying grain to the mill.

“At this point, the grain is not owned

by KOFFI; it is on consignment from

Organic Valley,” explains Beiler.

“Organic Valley has the grain delivered

to the mill, KOFFI mills it in the feed

ration each producer needs, and then

Organic Valley bills the farmer for the

grain. KOFFI bills the farmer for a

milling and moving charge.”

Expanding customer base

KOFFI has grown its customer base

beyond the initial farmers that came

together to create the cooperative. Sam

Justice, KOFFI mill operator and

driver, says that while the core business

remains the organic dairy farmers, a

growing number of small poultry

producers and other livestock operators

in the area are coming to the mill for

their organic feed.

“I believe we are the only organic

mill in about a 250-mile radius,” says

Justice. “The majority of our customers

are in the southern Kentucky area, but

we do have farmers that come from

Tennessee and even one that drives

from Georgia for organic feed.”

Justice and Beiler agree that running

an organic feed mill has offered

challenges and successes. Unlike

conventional feed mills, Justice can’t

just run down to the local elevator to

pick up grain if the supply at the mill

runs low. Yet, farmers have also learned

to work with Justice to use the unique

mix of organic grains in their animal

rations.

“It has been a learning experience for

us all. But thanks to the dedication of

our farmers and the continued

assistance from KCARD, we are

moving forward,” says Beiler, “I believe

that there is an opportunity for KOFFI

to continue to grow to provide a much

needed service to organic farmers in the

area.” n

Sam Justice, manager of the Kentucky

Organic Farm and Feed Inc. (KOFFI) feed mill

(facing page) takes care of the office work.

Photo courtesy KOFFI

INNOVATION is alive

and well in the

Upper Midwest, where cooperation is a

vital part of the rich fabric of the

region. Community leaders here

embrace collaboration, often involving

cooperatives, as a market solution that

benefits people and their communities.

More co-ops are headquartered in

Minnesota and Wisconsin than in any

other states. The two states are home to

more than 1,500 cooperative businesses

owned by more than 6.3 million

residents.

Upper Midwest cooperatives include

businesses that are on the Fortune 500

— CHS Inc. and Land O’ Lakes Inc. —

as well as co-ops that are leaders in the

fields of healthcare (HealthPartners

HMO) and financial services (Thrivent

credit union), all headquartered in the

Twin Cities area. The region is also

home to cooperatives that operate

critical access hospitals in rural

Wisconsin and to worker-owned coops, such as Union Cab and Isthmus

Engineering, both in Madison, Wis.

Great Lakes Center pursues innovative co-op solutions

By Bill Oemichen, President & CEO, Cooperative Network

CO-OP

MONTH
30 September/October 2013 / Rural Cooperatives

Electric and telecommunications

utility co-ops provide service across

rural and suburban areas of the region.

The Great Lakes area is home to a

growing number of rural and urban

grocery and senior housing cooperatives

as well hundreds of farm supply, fuel,

and grain cooperatives; credit unions;

mutual insurance businesses and Farm

Credit associations.

Partnering with USDA, others

The Great Lakes Cooperative

Center (GLCC) is a public/private

partnership between the Cooperative

Network, the University of Wisconsin

Center for Cooperatives and USDA.

The Center has received Rural

Cooperative Development Grant

funding from USDA the past two years

and has leveraged significant private

funds for cooperative development

activities.

This unique arrangement maximizes

the use of federal resources and

generates a strong return on investment

through the Center’s economic

development activity that is far greater

than its federal, state or private partners

could independently match. In its short

existence, the GLCC has created or

prevented the loss of more than 50 jobs.

During the past 18 months, GLCC

has focused on assisting community

leaders in developing new cooperative

businesses across the Upper Midwest, as

well as assisting established co-ops in

taking advantage of new opportunities

to better meet the needs of their

members.

The Center is focusing its work in

several specific arenas, including energy,

healthcare, senior housing, agriculture

and local food. Assistance provided

includes conducting feasibility analysis,

business plan and program

development, co-op creation and

governance, education/outreach and

technical assistance.

Co-op approach to healthcare

In the healthcare sector, GLCC is

working to promote greater access to

affordable, quality healthcare for

agricultural producers in Wisconsin and

Minnesota. The Farmers’ Health

Cooperative of Wisconsin (FHCW) is

now bringing a price-competitive,

comprehensive healthcare plan to

Wisconsin farmers and agribusinesses,

particularly in the state’s vitally

important, $26 billion dairy industry.

GLCC is working to create a similar

healthcare cooperative for Minnesota

agriculture: 40 Square Cooperative

Solutions. The Center is also providing

technical support to the newly

developed Common Ground Health

Care Cooperative in Wisconsin and

other healthcare cooperatives that are

being developed across the nation to

meet a fall deadline for offering

competitive, high-quality health care

plans on new state health insurance

exchanges.

In the area of senior co-op housing,

GLCC is playing a key role in hosting a

national conference each year in

Minnesota, conducting workshops

featuring key issues that senior housing

cooperatives face and facilitating the

exchange of “best practices” among the

cooperatives' managers. This past year,

the conference assisted about a dozen

rural cooperatives through the exchange

of board policies and other technical

information.

Co-op roles in energy,

local foods, education

In the energy sector, GLCC is

working with three Wisconsin electric

cooperatives to create an energyefficiency program that will provide

members (many of them low-income

families) with access to energyefficiency technologies that can save

money for rural home and business

owners.

To promote local foods, GLCC

offers a diverse array of services to

developing and existing cooperatives.

These include the Deerfield Grocery

Cooperative, Wisconsin Food Hub,

North America Aronia Cooperative and

Spring Rose Growers Cooperative.

Working with the University of

Wisconsin Center for Cooperatives,

GLCC is providing these important job

generators with business planning

information, training and other

technical resources.

Finally, the GLCC is working with

Wisconsin’s 12 CESA’s (Cooperative

Education Services Agencies) to

conserve scarce K-12 school district

financial resources through the

common purchase of transportation

Development of senior housing cooperatives, such as the Realife Cooperative of Coon Rapids,

Minn., has been a major focus of the Great Lakes Cooperative Center. Photo courtesy

Cooperative Network
Rural Cooperatives / September/October 2013 31

VIRGINIA is home to a

large, flourishing

agricultural community that includes

many small individual and family farms.

Many farmers here experienced high

stress and low income after the loss of

the tobacco and peanut federal

programs, resulting in pressure to find

new crops and sources of income.

Small farms in the Old Dominion

continue to confront obstacles as they

try to compete with larger agricultural

corporations. But they often find that

they need some type of assistance to

remain viable.

VA FAIRS supports

small farm sector

The Virginia Foundation for

Agriculture, Innovation and Rural

Sustainability (VA FAIRS) is a rural

development center that provides help

to farmers and rural businesses. The

foundation assists in the creation of

rural businesses, offering assistance to

individuals, cooperatives, small

businesses and other similar entities in

rural areas.

The development center is funded in

part through the USDA’s Rural

Cooperative Development Grant

(RCDG) program, which allows

recipients to further develop their

business goals and help other rural

businesses. According to the USDA

Rural Development’s website, the

purpose of the RCDG program is to

“improve the economic condition of

rural areas by assisting individuals or

entities in the startup, expansion or

operational improvement of rural

cooperatives and other business

entities.”

“We have used these grants to help

cooperatives, which, in turn, have

helped other rural businesses by

providing services and outlets for their

products,” says Chris Cook, the center’s

executive director.

VAN helps small aqua-farms

Virginia Aqua-farmers Network

LLC (VAN) is a cooperatively

organized, producer-owned business of

independent freshwater fish and prawn

producers. Though VAN is chartered as

an LLC, the entity is operated, and

functions, as a cooperative. The

network provides an outlet for small

aqua-farmers, primarily in south-central

Virginia, who wish to provide their

consumers with fresh, locally produced

seafood. They can accomplish this by

bringing together production resources

and marketing opportunities for the

benefit of smaller aqua-farmers.

The idea behind the Virginia Aquafarmers Network started with a desire

fuels and through development of a

model bus transportation contract. This

activity is consistent with the common

purchasing role created for these school

district cooperatives by the Wisconsin

Legislature in 1964.

Most Upper Midwest cooperatives

had very humble beginnings, but now

serve as major economic anchors in

their communities. GLCC is working

with those cooperatives to ensure the

region’s strong cooperative tradition

continues to provide the foundation for

a strong rural economy. n

Aquaculture providing opportunities for Virginia farmers to diversify

By James Matson and Jessica Shaw

Fish farming is proving to be a promising alternative “crop” for some producers in Virginia. Chris

Bentley and Dr. Clarke Morton of Mid-Atlantic Aquatic Technology (MAAT) operate a fish farm on

the state’s eastern shore. The farm is a member of the Virginia Aquafarmers Network.

CO-OP

MONTH
32 September/October 2013 / Rural Cooperatives

to assist existing small-scale aquafarmers and flue-cured tobacco growers

who were looking to use their existing

farm infrastructures to produce an

alternative income stream. 

VAN supports the growth of the

Virginia aquaculture industry and offers

farmers a means of furthering their

production. Before the dreams of VAN’s

project leaders could become a reality,

the cooperative needed financial and

organizational help. 

VAN’s initial development was a

slow process, as there were many

obstacles to overcome. But the leaders

were determined, and the Virginia

Aquaculture Association was

instrumental in procuring funds from

USDA’s Value-Added Producers Grant

(VAPG) program, which led to the

creation of a feasibility study and an

initial marketing and business plan.

After the completion of these

documents, VAN was able to hold its

first meeting with producers. 

Many organizations — including VA

FAIRS, Virginia State University,

Virginia Tech University, Virginia Farm

Bureau Federation and others — took

interest in VAN’s venture because of its

potential to help farmers move from

traditional cash crops into new, valueadded niche marketing.

“VA FAIRS has been an exceptional

partner and has been instrumental in

guiding us to build from the ground up”

says Lynn Blackwood, VAN chairman

and founding member. “We hope to

further develop [the network] by

bringing in new producers and continue

to integrate vertically.” 

VAN is currently working with a

number of producers to help expand

seafood items produced. It continues to

provide producers with technical

assistance, training, purchasing

opportunities, logistics coordination and

marketing opportunities. 

MAAT develops unique 

fish farming practice

Mid-Atlantic Aquatic Technology

(MAAT), which recently joined VAN,

is operating a land-based fish farm on

the eastern shore of Virginia. MAAT

has worked for years to develop its own

unique system of raising fish from eggs

to market size, while maintaining a

healthy, sustainable environment for the

fish. 

As the business has grown, MAAT

has partnered with many organizations

that have helped it further develop its

goals. “Through their pool of expertise,

Virginia FAIRS and VAN have only

proven to make our business stronger as

they have helped expand and strengthen

our collaborative knowledge,” says

MAAT Farm Manager Chris Bentley.

“We hope to continue this partnership

as we grow.” 

Although others had tried and failed,

VAN persisted in its desire to help local

farmers and strived to make their

desires a reality. With assistance from

VA FAIRS, the network has helped

secure the future for smaller, rural

businesses, such as MAAT, that may not

have otherwise possessed the means to

succeed on their own. 

Stephen Versen, project manager for

the Agriculture and Forestry

Development Services, part of the

Virginia Department of Agriculture and

Consumer Services, says that an

aquaculture cooperative serves as an

important vehicle that helps existing

and future members reach markets and

gives them the marketing tools to be

successful. 

Editor’s note: Matson is a South

Carolina-based business development

consultant with expertise in cooperative

development. Shaw is an editor and

consultant with Matson Consulting. g

HOOSIER HARVEST

Market — the first

food hub in central Indiana to focus on

Indiana-grown products — opened to

customers on May 31. The food hub is

based in Greenfield and will have

several delivery points throughout

central Indiana.

Hoosier Harvest Market is a

cooperative that is connecting Indiana

food producers with consumers who

seek locally grown food products. Many

of our neighbors in surrounding states

have enjoyed such a “local food

connection” for several years, and now

Hoosiers have the same opportunity to

buy local food and to support local

producers.

At the outset, Hoosier Harvest

Market will be operating as a “virtual

marketplace.” With the click of a

mouse, consumers can order their

Central Indiana’s first food hub goes “LIVE!”

By Debbie Trocha, Executive Director, Indiana Cooperative Development Center Inc.

The Hoosier Harvest Market operates a “virtual

marketplace” via this website. 

C O - O P

MONTH
Rural Cooperatives / September/October 2013 33

locally produced foods any time, from

the comfort of home or office. The food

hub is viewed as a complement to the

region’s farmers markets. 

The co-op’s website, www.hoosier

harvestmarket.com, explains how to

become a member and to place orders

directly with producers. It also provides

delivery locations. Producers who want

to sell their local products can find

more information and join through the

website.

How does a food hub work?

Farmers/producers update their

product availability and prices weekly in

an online marketplace.

Consumers shop and fill their

“market baskets” with products from the

farmers of their choice and pay online.

Farmers deliver their products to an

aggregation point for rapid sorting and

packaging.

Customized individual market baskets are delivered to a pickup point that

the consumer has previously selected.

Help from many sources

Purdue University Hancock County

Extension spearheaded this initiative,

with assistance from the Indiana

Cooperative Development Center

(ICDC), Indiana State Department of

Agriculture, bankers, community

organizations and farmers. 

Planning for the initiative began in

the fall of 2011. A Specialty Crop Block

grant was received through the Indiana

State Department of Agriculture (with

funding from USDA) and a business

plan and feasibility study were

completed in 2012. ICDC helped guide

the steering committee through its legal

incorporation as a cooperative. 

According to U.S. Agriculture

Secretary Tom Vilsack, “Skyrocketing

consumer demand for local and regional

food is an economic opportunity for

America's farmers and ranchers. Food

hubs facilitate access to these markets

by offering critical aggregation,

marketing, distribution and other

services to farmers and ranchers. By

serving as a link between the farm or

ranch and regional buyers, food hubs

keep more of the retail food dollar

circulating in the local economy.”

In effect, the success of regional

food hubs comes from entrepreneurship, sound business sense and a desire

for social impact, Vilsack said. USDA

estimates that there are currently more

than 220 active food hubs across the

country. g

GERMAN scientists

Fritz Haber and

Carl Bosch created the Haber Bosch

process in the early 20th century for

making synthetic fertilizer. Nature

Magazine says that these two

individuals were the most influential

persons of the 20th century, their work

rivaled only by the germ theory of

disease, developed by Louis Pasteur and

Robert Koch, for having the greatest

impact on humankind in the past 200

years. 

The Haber Bosch process makes

anhydrous ammonia (NH3), which is

the building block for other solid and

liquid nitrogen fertilizers. The process

combines nitrogen, taken from ambient

air, and hydrogen, most commonly

taken from methane or natural gas. 

This process was first employed for

New farmer-owned fertilizer plant being explored

By Bill Patrie, Director, Common Enterprise Development Corporation

The Dakota Gasification Co. (DGC), a for-profit subsidiary of Basin Electric Power Cooperative, operates the

Great Plains Synfuels Plant, near Beulah, N.D. , the nation’s only commercial-scale coal gasification plant that

manufactures natural gas. Photo Courtesy Basin Electric Cooperative

C O - O P

MONTH
34 September/October 2013 / Rural Cooperatives

commercial fertilizer production about

1913. By the 1950s, farmers across the

United States and Canada owned

fertilizer manufacturing facilities that

used the process developed by the

German scientists.

When natural gas prices spiked in

the United States and Canada in 2008,

many fertilizer production facilities

using natural gas shut down. Taking

their place were fertilizer manufacturing facilities developed in parts of

the world where there were supplies of

“stranded” natural gas (an undeveloped

natural gas field). Over time, farmerowned manufacturing plants were

closed or sold. Now there are none left

in the United States or Canada. 

In 1988, Basin Electric Cooperative

acquired Dakota Gasification Co.

(DGC), which manufactures synthetic

natural gas and other high-value gases

from coal. DGC added an ammonia

manufacturing plant that uses the

Haber Bosch process to add value to the

natural gas it was already producing.

The Dakota Gasification plant and the

fertilizer operation are operated on a

for-profit basis without the opportunity

for farmer ownership (for more about it,

visit: www.dakotagas.com).

With the discovery of the Bakken oil

formation in North Dakota, natural gas

has once again become plentiful. Prices

have fallen to the point that when an oil

well begins producing, oil companies

flare (burn) the escaping natural gas

rather than attempt to capture it. As a

consequence, a satellite image of the

Bakken at night has a light density of a

major urban area.

CEDC helping farmers 

explore new plant 

Common Enterprise Development

Corporation (CEDC) has been working

with the North Dakota Corn

Utilization Council, the North Dakota

Soybean Council and producer groups

from South Dakota, Minnesota and the

Canadian Province of Manitoba to find

ways that farmers could once again gain

an ownership position in a fertilizer

manufacturing facility. 

The initial feasibility study

conducted for the group by North

Dakota State University (NDSU)

suggested that a facility located in the

upper Great Plains accessing Bakken

natural gas would be cost competitive

with other manufacturing facilities in

the United States and Canada. It would

also likely have a transportation cost

advantage for supplying the local

farmers.

Farmers operating as Northern

Plains Nitrogen LLP are currently

organizing an equity campaign to

convert the feasibility study into a

business plan. Money raised would be

used to build and operate a plant at

Grand Forks, N.D. The farmers behind

this effort are not alone. There have

been a number of press announcements

of major corporate expansions of

existing fertilizer manufacturing

facilities in the United States and

Canada. The largest cooperative in the

United States, CHS Inc., has also

announced an engineering study for a

site near Spiritwood, N.D.

The feasibility study completed by

NDSU suggests that the smallest

manufacturing plant that would be

competitive on a cost-per-ton basis

must produce about 750,000 tons per

year. Such a plant would cost up to $1.5

billion. The largest fertilizer companies

in the world are state-operated

enterprises, so farmers are facing not

only multinational corporations, but

foreign nations themselves. 

Haber and Bosch started something

big 100 years ago, and it makes for a

wild ride for farmers trying to reestablish a producer-ownership stake in

fertilizer production. g

Simple Yoga &

Wellness Cooperative began as a sole-proprietor yoga

instruction center in Hamilton, Mont.,

in 2007. The founder, Meg McCracken,

had a passion for the art and benefits of

yoga and soon developed a loyal

customer base and a staff of talented

instructors. She ran the Simple Yoga

studio for six years.

Hamilton, population 4,100, is the

Ravalli County seat. The rural county is

90 miles long with communities nestled

between the Bitterroot and Sapphire

Mountains. Businesses tend to be small

here — 51 percent of businesses in the

county have nine or fewer employees.

Montana ranks 38 among the states

for average per capita wages. According

to the U.S. Bureau of Economic

Analysis, Ravalli County’s per capita

personal income is $30,955, just 74.5

percent of the national average. About

15.3 percent of the county residents fall

below the poverty line. 

When “life’s changing tides” took the

founder of Simple Yoga to new

opportunities in California, many of the

practitioners and instructors could not

bear the thought of losing their yoga

Simple Yoga & Wellness Co-op promotes health in Montana

By Julie Foster

C O - O P

MONTH
studio. However, there wasn’t

much time to consider the

options. 

Two of the yoga

practitioners — Marilyn

Morris and Alla Brooks —

decided they had to try to

save their studio, so they made

a deal with the owner to buy

the business. 

Co-op viewed as best

business structure

The new owners, the

customers and the instructors

knew that they wanted to

form a cooperative. They had

done Internet research and

found that the co-op model

seemed to best meet their

needs. They then sought

professional assistance from

an attorney and a certified

public accountant.

They found professionals

who wanted to help, but didn’t

know the first thing about

starting a cooperative. That

led to the beginning of what

could have been ongoing,

costly research into how to incorporate

a cooperative. 

Fortunately, an article in the local

newspaper pointed the fledgling co-op

to the Ravalli County Economic

Development Authority (RCEDA) and

then to a cooperative development

specialist with the Montana

Cooperative Development Center

(MCDC).

“Without the technical assistance

made possible by the Montana

Cooperative Development Center, we

would have spent a lot of time and

money trying to create our cooperative,”

says Brooks, now a co-chair of the coop. “We sought help from a local

attorney who specializes in assisting

nonprofits, but was not familiar with

the cooperative business model. One

hour’s time for research into forming a

cooperative cost nearly $200.” 

Mounting legal costs such as that

would have soon exceeded the financial

resources on the start-up co-op, she

notes. 

A perfect fit

RCEDA has been part of the

MCDC team for nearly eight years.

MCDC provides training and

continuing education for a statewide

network of cooperative development

specialists. Assisting the Simple Yoga &

Wellness Cooperative was a unique,

rewarding experience for RCEDA. 

The co-op organizers said they had

goals even beyond running a yoga

studio, describing what the co-op world

knows as the “seven cooperative

principles.” These principles include

goals such as a commitment to

improving communities and to work to

help other cooperatives. 

The co-op organizers

had no knowledge that the

seven core co-op principles

even existed. It was that

kind of perfect fit during

the entire process that made

working with this co-op so

memorable. 

The cooperative is a

source of jobs, contracting

with six regular instructors,

two substitute instructors

and a part-time bookkeeper.

An additional yoga

instructor will likely be

added to the staff this fall.

The facility is in a leased

location, with the co-op

being the “anchor” tenant.

The customer base and

revenue are growing. 

Co-op co-chair Brooks

stresses how important the

member/owners’ volunteer

efforts have been in making

the business work. Through

donation of seed money and

time, many have stepped

forward to help. Volunteers clean the

studio, water plants, build studio

accessories and help with fundraising.

During a recent workshop, one member

provided housing for the guest

instructor. 

While many people and people

agencies — including USDA, Montana

State University and MCDC — have

helped the co-op succeed, co-op

founders Marilyn Morris and Alla

Brooks havde played the biggest role by

stepping up to save the business, taking

the risk and making the substantial

initial effort to turn this into a story

worth telling.

Editor's note: Foster is cooperative

development specialist with the Montana

Cooperative Development Center and

executive director of the Ravalli County

Economic Development Center. g

Rural Cooperatives / September/October 2013 35

Hamilton, Mont., (above), is the home of the Simple Yoga & Wellness

Cooperative. Here, students in the lotus position practice breathing and

meditation exercises. The co-op was formed to save the studio when closure

appeared likely. 
LOOK AROUND.

What’s in the news?

The media is flooded with stories about

an economy still struggling to restore

jobs lost in the recession, the high cost

of living, wage stagnation and volatile

gas prices. 

But there are beacons of progress and

hope, among them an increasing

number of stories about the positive

impact co-op development is having on

our economy and within communities.

It is work being supported, in part, by

members of CooperationWorks, a

network comprised by many of the

nation’s rural cooperative development

centers. The impact of

CooperationWorks (CW) is not just

illustrated with stories of human

triumph, but is proven in numbers.

During the past year, CW conducted

a survey to measure the economic

impact of our members’ work, collecting

data from 18 member development

centers about business development

performance and job creation. This

survey is a continuation of a study

conducted in 2009. 

Hundreds of 

businesses launched

Between 2009 and 2011, CW

Centers assisted in the development of

276 new businesses, of which 154 were

cooperatives. During this period, 6,050

jobs were created or saved and —

equally important — essential services

were restored in many rural

communities. Thus, for every $1,362 in

federal dollars invested in a CW Center

in 2011, a job was saved or created. 

The ability of CW Centers to impact

both rural and, to a lesser extent, urban

communities, is stretched by leveraging

these federal funds. In 2011, $2.84

million of non-federal funds were

leveraged. Additionally, the CW

Centers assisted their clients in securing

$79.7 million in federal funds between

2009 and 2011 (this amount includes a

$69.3 million federal loan secured by

one Center to start a health care

cooperative). The Value-Added

Producer Grant Program (VAPG) was

the most common source of funding for

projects. 

CW Centers typically work with

clients for multiple years, relying on

federal funding through the Rural

Cooperative Development Grant

(RCDG) program, administered by the

Cooperative Programs of USDA Rural

Development, for a significant portion

of their annual revenue. The Centers

that received RCDG awards for five or

more consecutive years have developed

more businesses and impacted a greater

number of jobs. These centers are also

better able to leverage a greater diversity

of non-RCDG revenue sources. 

The impact of CW Centers reaches

beyond new co-op development and job

creation. In 2011, the median CW

Center used federal or matching funds

to provide assistance to 85 businesses,

91 percent of them rural. Additionally,

CW Centers offer non-job benefits,

such as housing development and

training/education. Three Centers alone

helped create 780 housing units. 

Measurable impacts

for real people

Some recent projects supported by

CW Centers reveal how these efforts

have had a meaningful impact on

improving lives and communities:

• In Parshall, N.D., the North Dakota

Rural Electric and Telecommunication

Development Center assisted in the

development of a new daycare center,

creating six jobs. For one family, local

daycare means their son no longer has

to live with his grandparents (five hours

away) because adequate daycare is now

available in Parshall. 

• The Center for Cooperative Forest

Enterprises worked on a forestry

restoration project that has led to the

identification of 30 different products

from forest byproducts, resulting in new

businesses and job growth in the

Southwest.

• The Food Co-op Initiative, with a

staff of three, is in contact with more

than 100 communities that are home to

new, active retail food co-ops. It has

produced a number of online resources

to help these co-ops reach more people

and have a greater impact (also see page

25) . 

• The Cooperative Development

Institute, serving the Northeast, is

working with farmers and consumers to

restructure local food systems, giving

consumers more access to fresh fruits

and vegetables while helping improve

income for small farmers (also see page

24) . 

• CW member centers in California

have given an under-employed

population economic stability that is

leading to a stronger community with

the creation of worker co-ops. 

In these and many other ways, CW

members leverage USDA funding to

play a major role in the economy,

making life better for families and

individuals. g

CooperationWorks members working for job growth, stronger rural economy

By Sara Pike, Director, CooperationWorks

36 September/October 2013 / Rural Cooperatives

C O - O P

MONTH
New agronomy unit at

Southern States; co-op closing

some stores, adding others

Southern States Cooperative is

forming a new Agronomy Business

Unit to better serve the needs of core

agricultural customers. Southern States

offers a range of products and services

to help growers in the field.

“We have reorganized our wholesale

crops division, with 67 retail stores

located in 13 high-volume agronomy

districts, to form the new Agronomy

Business Unit. Our new growth strategy

will enable us to be more streamlined

and efficient from sourcing products to

application in our farmers’ fields,”says

Tom Scribner, Southern States

president and CEO.“For years

Southern States has been organized

around wholesale and retail business

units. To ensure we create great

customer experiences, we are aligning

our infrastructure and associates to meet

the evolving needs of our farmer

producers and rural lifestyle customers.”

As part of the multi-pronged

strategy, Southern States will expand

offerings with branded dealers,

independent dealers and commercial

accounts. Additionally, a small number

of retail locations — about two dozen

(or less than 2 percent) of its 1,244

retail stores in 17 states — are closing.

Most of the store closures will be in

northern Georgia and northern

Alabama.

Additional retail stores, as well as

independent dealers for Southern

States-branded products, will be added

in the future. Stores will focus on rural

America customers in high-growth

markets, including cow calf operators,

equine customers, gardeners and rural

enthusiasts.

“As we celebrate our 90th

anniversary, we are recommitting our

efforts to provide farmers with the latest

in technology and support,”says

Scribner.“True to our mission of

helping people grow things, it is our

belief that an intense focus on the

producer will allow us to meet and

exceed our customer’s needs. The

agricultural industry is changing rapidly,

and we plan to be at the forefront of

those improvements.”

Denver eyed for

Ardent Mills HQ

CHS Inc., ConAgra Foods and

Cargill have announced that their

proposed joint venture flour milling

company, Ardent Mills, plans to

establish its headquarters in the Denver

metropolitan area, contingent upon final

application and approval of state and

local incentives. The transaction is

expected to be completed in late 2013,

Rural Cooperatives / September/October 2013 37

Newsline

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

Co-op developments, coast to coast

Southern States Cooperative has formed an Agronomy Business Unit to better serve its agricultural producers.

Photo courtesy Southern States Cooperative
38 September/October 2013 / Rural Cooperatives

following regulatory clearances,

financing and the satisfaction of

customary closing conditions.

A specific office location and

operating date has not yet been set for

the new headquarters, but the new

company is expected to have a presence

in the Denver area starting in 2014.

“Selecting the Denver area as the home

for Ardent Mills will allow us to offer

great quality of life for employees,

provide excellent service to our

customers and position the business for

long-term growth,” says Dan Dye, who

currently serves as president of Horizon

Milling and will lead Ardent Mills as

CEO once the new company is formed.

Ardent Mills is being formed by

ConAgra Mills and Horizon Milling, a

Cargill-CHS joint venture formed in

2002.

NCB partnering with Spanish

bank to bolster co-op sector

National Cooperative Bank (NCB),

Washington, D.C., is teaming with

Laboral Kutxa, the financial cooperative

arm of Spain’s Mondragon Group, to

build cooperative businesses throughout

America. Mondragon is the world’s

largest industrial, worker-owned and

run cooperative, having been founded

in the Basque region of Spain 55 years

ago. It is the winner of the 2013

Financial Times “Boldness in Business”

award.

The two co-op banks will collaborate

to support each other’s customers,

including subsidiaries of cooperatives

operating in the United States that

belong to Mondragon Group.

Predicated on similar “doing well by

doing good” principles, social

responsibility values and a growing

understanding that cooperative markets

extend beyond borders, both entities

have pledged to support each other’s

customers with regard to charges,

payments, financial services, online

banking systems and other commercial

banking practices.

NCB’s customers are cooperatives —

including grocery wholesaler co-ops,

food co-ops, purchasing co-ops, credit

unions and housing co-ops — that share

in the spirit of working cooperatively to

meet personal, social and business

needs. Laboral Kutxa has 450

branches with 1.3 million customers.

Mondragon is Spain’s tenth largest

industrial group, with 80,000 personnel

and a presence in 70 countries,

including expanding operations in

North America.

In 2009, Mondragon agreed to work

with the United Steelworkers union to

develop a hybrid union/co-op model

that has since been adopted by unions

in more than 10 U.S. cities. These

projects range from an organic/

sustainable farm to a commercial

laundry and energy-efficiency business.

Mondragon International USA is also

partnering with the Ohio Employee

Ownership Center (OEOC) and the

City University of New York (CUNY)

School of Law’s Community Economic

Development (CED) Clinic to create

“reusable” union-co-op business

templates.

CVA, ADM joint venture to build

Nebraska grain loading facility

Central Valley Ag Cooperative (CVA) and Archer Daniels Midland

(ADM) Co. have announced the

formation of 81-20 Grain Terminal

LLC, a joint venture that will construct

a 5- million-bushel shuttle loader grain

elevator near Randolph, Neb. The

elevator will originate corn and

soybeans from regional farmers,

primarily for transportation by 110-car

BNSF Railway shuttle trains to export

markets via the U.S. Gulf Coast, Pacific

Northwest and Southwest.

CVA and ADM will each own 50

percent of the grain facility, which will

feature two receiving pits and one rail

receiving pit, each capable of dumping

20,000 bushels of grain per hour. The

facility will be located at the

intersection of U.S. Highway 20 and

U.S. Highway 81, three miles west of

Randolph. It is expected to begin

operating by fall 2014.

Pierce County — in which the

elevator will be located — along with

surrounding Cedar, Knox and Wayne

counties — have all seen corn and

soybean production increase

dramatically since 2000. The facility’s

location at the intersection of two major

highways will provide the area’s

producers with convenient access.

“Enhancing the ability of memberTxomin Garcia Hernandez, president of Laboral Kutxa, and Charles Snyder, president and CEO of

National Cooperative Bank (NCB), at a ceremony to announce that the two cooperative banks

will be working together to support members. Photo courtesy NCB
Rural Cooperatives / September/October 2013 39

Citing his “crucial role in cooperative education over

the past two decades as editor of USDA’s Rural

Cooperatives magazine,” the Association of Cooperative

Educators (ACE) has presented Dan Campbell with the

2013 Outstanding Contribution to

Cooperative Education and Training

award. The magazine, now in its 80th

year, is dedicated to promoting

understanding and use of cooperative

businesses.

ACE credited Campbell for

expanding the focus of the magazine

beyond agriculture to also include

other areas of cooperative innovation

in the rural United States, as well as

the role co-ops play in international

economic development. “Under

Campbell’s editorship, the magazine

has become an excellent vehicle for

sharing information and ideas among

cooperators. He has kept the magazine

relevant, shepherding the publication

through changes in technology,

changes in political administration and changes within

the co-op movement itself,” according to nominators Bill

Patrie, executive director of Common Enterprise

Development Corporation in North Dakota, and Margaret

Bau, cooperative development specialist with USDA

Rural Development in Wisconsin.

The award was accepted on Campbell’s behalf by

Miguel Ramirez of USDA Rural Development’s Puerto

Rico office during the ACE Institute in San Juan, P.R., in

August. Campbell’s acceptance remarks emphasize that

the magazine is a team effort that involves the efforts of

many people, not only at USDA, but in the larger

cooperative community.

“All of us at USDA Rural Development who work on

Rural Cooperatives magazine are deeply grateful to ACE

for this award recognizing our work,” Campbell said.

“Like ACE, our goal is to increase the use and

performance of cooperatives. To receive this award from

ACE — whose members have such dedication and

passion for promoting cooperatives as a powerful selfhelp economic development tool — makes it doubly

meaningful.”

The other award winners included:

Jesús Andrés Aranda won the Outstanding

Contribution to Cooperative Education and Training

Award, acknowledging his nearly six decades as a

cooperative leader. He was part of the Group for Critical

Reflection and Cooperative Action Santiago Andrade

(GRACSA) that developed the

Manifesto of Castañer in the 1970s,

which helped identify cooperatives as

protectors of Puerto Rican culture and

promoters of social justice.

William Patrie won the John Logue

ACE Award, named in honor of a

colleague who shared Patrie’s passion

for cooperation and self-determination.

For nearly 40 years, Patrie has helped

people find cooperative solutions in

farm and fish marketing, worker

ownership, housing, energy production,

communication services, healthcare

and community regeneration. He is the

author of “Creating Co-op Fever,” a

guide for co-op developers, and “100

Stories of Hope,” about North Dakotans

overcoming poverty, among many other

publications and articles.

Katie Campbell received the William Hlushko Award

for Young Cooperative Educators (under age 36) for

cultivating Aynah, a student organization that works for

international cooperative development. Aynah, founded

in 2010 on the campus of Iowa’s Luther College, helps

develop cooperatives to meet community needs,

including two water co-ops in Ethiopia. It also raises the

profile of cooperatives on campus and is leading to

curriculum changes to include courses about

cooperatives.

Cooperativa de Seguros Múltiples de Puerto Rico

(CSM), an insurance company, received a special ACE

award presented to organizations or individuals who

have shown extraordinary leadership as association

members. The award coincided with CSM’s 50th

anniversary in 2013.

ACE members are educators, researchers,

communicators, students and developers of cooperatives

and credit unions, primarily in Canada and the United

States, including Puerto Rico. Its annual Institute allows

members to learn from one another and the host region,

and highlights new learning about cooperatives and credit

unions. Learn more about ACE at: www.ace.coop. n

Rural Cooperatives editor, four others saluted by ACE

Dan Campbell
40 September/October 2013 / Rural Cooperatives

owners to link to greater global

marketing and transportation

opportunities is what makes this joint

venture so exciting,” says Doug

Derscheid, president and CEO of CVA.

“The new elevator — along with our

global transportation fleet and network

of customers — will provide additional

marketing opportunities for regional

producers, which can help add value to

their crops,” adds Joe Taets, president,

ADM Agricultural Services.

Established in 2003, CVA operates

25 grain facilities with a capacity of

more than 45 million bushels of grain

in central and northeastern Nebraska.

The co-op has 365 employees who

provide agronomy and grain and feed

services to 10,000 farmers and ranchers.

Farmer Co-op Conference

to focus on global, U.S.

market trends

The 16th Annual Farmer

Cooperative Conference, to be held

Nov. 7-8 in Minneapolis, will offer

expert analysis of the cutting-edge

issues facing agribusiness cooperatives.

Strategic issues being highlighted

include global and domestic economic

trends, policy updates, cooperative

finance issues, productivity and

integrated data analysis, and consumerdriven markets.

The conference attracts cooperative

business leaders and industry experts

who come together to share the latest

in research and innovative approaches

being used by agricultural cooperatives.

The conference is organized by the

University of Wisconsin Center for

Cooperatives, with assistance from a

planning committee of industry and

academic experts.

“The topics are practical yet always

explore the frontiers of the cooperative

model,” says Phil Kenkel, the Bill

Fitzwater Cooperative chair at

Oklahoma State University. “The

interaction between managers,

directors, academics and other industry

professions is truly unique.”

“As a longtime sponsor of the

Farmer Cooperatives Conference,

CoBank appreciates the value the

program provides to cooperatives that

are continually searching out ways to

deliver value to their member-owners in

an unpredictable economic

environment,” says Peter Rudeen, of

CoBank’s Regional Agribusiness

Banking Group. “We encourage

cooperative leaders to attend the

conference and to support its ongoing

success.”

In addition to CoBank, support for

the conference comes from: CHS,

Dorsey & Whitney, Farm Foundation,

GROWMARK, Land O’Lakes,

Lindquist and Vennum, NCFC

Education Foundation, Stoel Rives,

CliftonLarsonAllen, Gardiner Thomsen

and the Ralph K. Morris Foundation.

The conference will take place at the

Radisson Plaza Hotel in Minneapolis.

For more information, visit:

www.uwcc.wisc.edu, or contact Anne

Reynolds at 608-263-4775 or

atreynol@wisc.edu.

Minnesota electric co-op

plans to acquire Alliant energy

Some 43,000 new electric customers

will be welcomed into the cooperative

family if Minnesota and federal

regulators approve Alliant Energy’s plan

to sell its Minnesota electric and natural

gas distribution businesses. Alliant

Energy Corp., based in Madison, Wis.,

announced that it has reached an

agreement to sell its electric

distribution service to Southern

Minnesota Energy Cooperative

(SMEC), a group of 12 locally owned

and operated electric co-ops.

“Electric cooperatives already have a

long track record of serving memberowners in this area of Southern

Minnesota,” says Cooperative Network

President and CEO Bill Oemichen. In

fact, member-owned, not-for-profit

electric cooperatives were usually formed because for-profit utilities thought it

wasn’t cost effective to serve lowdensity areas with so few customers.”

The state’s 44 electric distribution

cooperatives cover 85 percent of the

geographic area in Minnesota. “If

approved, this deal will literally give

power back to the people who use the

cooperative’s services,” Oemichen adds.

Electric cooperatives are

democratically run, so members have

the opportunity to vote for directors;

any revenues generated are returned to

customers in dividends or improved

services. Ownership changes from

Alliant to the Southern Minnesota

Energy Cooperative are likely to take

effect in six to 12 months, assuming

regulatory approval is granted.

DFA acquires Dairy Maid,

expands fluid milk business

Dairy Farmers of America (DFA) has

acquired Dairy Maid Dairy. Located in

Frederick, Md., Dairy Maid is a familyowned processor of milk, juice and fruit

drinks. Dairy Maid has been owned and

operated by the Vona family since 1946

and is currently led by brothers Jimmy

and Jody. The Vonas will continue to

manage the day-to-day operations.

“The acquisition of Dairy Maid

Dairy aligns with DFA’s strategy to

increase its commercial footprint and

expand ownership in the fluid and fresh

dairy category,” says Rick Smith, DFA

president and chief executive officer.

“The Vonas have built a solid business

and earned a reputation for quality

products and superior service; it is

business our dairy farmer memberowners can be proud of.”

Dairy Maid’s customers include

major grocery chains, schools and

governmental entities, such as prisons

and military installations. Milk to the

facility is supplied by a variety of

sources including DFA, MarylandVirginia, Lanco, Land O’Lakes,

Cumberland Valley and Dairy

Marketing Services.

Despite the change in ownership,

there will be no disruption in

operations. It is anticipated that Dairy

Maid’s 110 employees will retain their

positions and milk procurement will not

be disrupted, ensuring quality products

and service continue for Dairy Maid’s

customers.

“We are pleased to be able to
Rural Cooperatives / September/October 2013 41

Quad County Corn Processors (QCCP) in Galva, Iowa,

has broken ground on an $8.5 million

biorefinery that will use new technology

it developed to process corn kernel fiber

into cellulosic ethanol. The new plant is

being built next to the co-op’s existing,

35-million-gallon-per-year corn ethanol

facility.

The co-op is using ACE (Adding

Cellulosic Ethanol) pre-treatment and

fermentation process technology,

developed by Travis Brotherson, plant

engineer at QCCP. The company hopes

to add 2 million gallons of ethanol

production per year with the plant

expansion.

“With the addition of this new

cellulosic process, we will stretch the

production capacity of each and every

corn kernel that passes through our

plant,” says Delayne Johnson, Quad

County’s general manager. “We will

increase our ethanol yields by 6

percent, increase our corn oil extraction

three times over, while also creating a

higher protein livestock feed. This is

value-added agriculture at its best.”

Renewable Fuels Association

President and CEO Bob Dinnen called

the new plant “great news for the

biofuels industry,” during the groundbreaking ceremony

in August.

“I applaud Quad County for proving that the first and

second generations of ethanol are literally ‘bolted’

together,” Dinnen said. “The future is now and the

present is future. Cellulosic production will soon begin

side-by-side with conventional

ethanol. Delayne Johnson and his

team are to be congratulated for

their vision, determination and

innovation.”

QCCP received $4.25 million

from USDA and the Department of

Energy as part of the Biomass

Research and Development

Initiative to develop the technology.

The research and development

process spanned four years.

The co-op plans for the new

facility to be in operation by the

spring of 2014; it will create five

new jobs. “The greatest

benefactors will be the Galva

community, our shareholders, the

ethanol industry and the

consumer,” Johnson said.

American Coalition for

Ethanol’s Executive Vice President

Brian Jennings praised Quad

County for likely being “the first

production facility on the planet to

produce corn and cellulosic

ethanol from the same feedstock at

the same site."

Added Dinnen: “Milestones

like the one we celebrate today demonstrate the U.S.

ethanol industry’s barrier-breaking innovation and

unparalleled ability to create jobs, particularly in small

cities and rural communities all across the country.” n

Iowa co-op to produce cellulosic ethanol

Shovels are readied for the

groundbreaking ceremony at

Quad County Corn Processors,

Iowa, where the plant is being

expanded for cellulosic ethanol

production. Photo courtesy

AgWired

become part of the DFA family,” says

Jimmy Vona. “DFA shares many of the

same values that my family does. This

transaction ensures the business we

have built over the past four decades

will continue to thrive in the future.”

Indiana grain facility

rebuilding after explosion

Co-Alliance Cooperative is

rebuilding a grain facility in Union

Mills, Ind., that was the site of an

explosion in June, resulting in the death

of one employee. The co-op hopes to

have the facility open in time for grain

deliveries this fall.

Safety inspectors with several

agencies — including, the U.S.

Department of Homeland Security,
cotton, vegetables and dairy products. 

Farm production expenses registered

double-digit increases for feed and seed.

Crop protectants, fertilizer and fuel

sales increased 9, 6 and 2 percent,

respectively. 

Record net income (before taxes) of

$6.1 billion eclipsed the previous high

of $5.4 billion set in 2011. Net income

was up almost 13 percent, $700 million,

from 2011.

Prices are expected to remain strong

to slightly lower in 2013, but

cooperatives should maintain a strong

presence in the agricultural economy. 

A closer look at the 185,000 workers

employed by ag co-ops shows that the

number of full-time employee was

down by 1,600 from 2011, while parttime and seasonal employee numbers

increased more 3,000.

The value of cooperative assets grew

in 2012 by $3.5 billion, with liabilities

increasing by $1.7 billion and owner

equity gaining $1.8 billion. Equity

capital still remains low but is clearly

showing an upward trend, with a 6.5-

percent increase over the previous year.

Patronage income (refunds from

42 September/October 2013 / Rural Cooperatives

Co-op sales

continued from page 5

Table 2

U.S. cooperatives net business volume, 2012 and 2011

Item 2012 2011 Change

Billion $ Percent

Products marketed:

Bean and pea (dry edible) 0.17 0.16 4.3

Cotton 3.08 3.98 -22.5

Dairy 40.17 40.67 -1.2

Fish 0.19 0.25 -25.2

Fruit and vegetable 5.75 5.57 3.2

Grain and oilseed 62.72 55.28 13.5

Livestock 4.02 4.23 -5.0

Nut 1.10 0.91 21.3

Poultry 1.45 1.30 11.7

Rice 1.56 1.56 -0.2

Sugar 5.34 4.76 12.2

Tobacco 0.12 0.25 -52.4

Other marketing 5.61 5.83 -3.8

Total marketing 132.04 124.75 5.8

Supplies purchased:

Crop protectants 7.17 6.59 8.8

Feed 11.77 10.47 12.3

Fertilizer 14.11 11.93 18.2

Petroleum 22.91 20.32 12.7

Seed 3.20 2.90 10.4

Other supplies 5.70 5.57 2.3

Total supplies 64.85 57.79 12.2

Services and other income 4.72 4.44 6.4

Total business 201.61 186.98 7.8

Department of Homeland Security,

Indiana OSHA (Occupational Safety

and Health Administration) and the

U.S. Environmental Protection Agency

— determined that the explosion was

caused by a heavy steel pulley that came

loose and slid into a concrete wall. The

conveyor kept operating, and the pulley

continued to rotate. The resulting

friction against the concrete wall

generated enough heat to ignite grain

dust in the elevator, resulting in an

explosion.

James Swank, was on a work

platform outside one of the silos when

the force of the blast caused him to fall

more than 100 feet to his death.

United Cooperative subsidiary

to merge with Hillsboro co-op

Members of Hillsboro Farmers

Cooperative, based in Hillsboro, Wis.,

have voted in favor of a merger with a

wholly-owned subsidiary of Beaver

Dam, Wis.-based United Cooperative. 

“We look forward to serving these

patron members with assets obtained

through the merger, as well as future

equipment and facility investments

already in the planning stages,” says

David Cramer, United Cooperative

president and CEO. The merger

becomes final Oct. 1, 2013.

Hillsboro Farmers Cooperative’s

projected revenue for the fiscal year

ending Sept. 30, 2013, is about $60

million. Hillsboro co-op has locations in

Hillsboro, Kendall, Wilton, Yuba,

Wonewoc, Ontario and Cazenovia.

United Cooperative had sales of $634

million in 2012. It operates feed, grain,

agronomy, fuel, lubricant and propane
other cooperatives due to sales between

cooperatives) increased by more than 46

percent, to $899 million, up from $613

million in 2011.

Farm numbers remained about the

same as in 2011, with USDA counting

2.2 million in both years. The number

of farmer cooperatives continues to

decline — there are now 2,238 farmer,

rancher and fishery cooperatives, down

from 2,299 in 2011. Mergers account

for most of the drop, resulting in larger

cooperatives.

Producers held 2.1 million

memberships in cooperatives in 2012,

down about 7 percent from 2011. The

number of cooperative memberships is

slightly less than the number of U.S.

farms, but this does not mean that

almost every producer is a member of

an agricultural cooperative. Previous

studies have found that many farmers

and ranchers are members of up to

three cooperatives, so farm numbers

and cooperative memberships are not

strictly comparable.

Editor’s note: Information for this article

was compiled by the Cooperative Programs

statistics staff of USDA Rural

Development: Sarah Ali and E. Eldon

Eversull. n

Rural Cooperatives / September/October 2013 43

Figure 2 — Distribution of Cooperatives and Volume, by Size, 2012

Billion dollars

70

60

50

40

30

20

10

0

Less than 5.0 5 –9.9 10 – 14.9 15 – 99.9 100 – 499.9 500 and more

Gross business volume (Million dollars)

Cooperatives Dollar volume

agricultural land equivalent to an area

the size of Indiana to permanent, nonfarm development from 1982–2007.

While the Great Recession may have

slowed this conversion rate during the

past few years, rebounds from past

slowdowns in the housing and

commercial real estate markets have

shown that without careful

consideration, the pressures to convert

our farmland remain and will return.

These more traditional threats to our

agricultural land base are now

compounded by new demands on our

soil resources, such as from mining and

oil and gas exploration. The permanent

loss of farmland affects not only the

productive capacity of these soils but

also our associated agricultural

businesses, our rural communities and

our farm families.

As we witnessed in Wisconsin,

leadership and a vision born out of the

spirit and principles of cooperatives

were the hallmarks of success. This

same energy, resourcefulness and

collaborative approach can be harnessed

in other states to achieve similar

thoughtful and practical results.

We welcome the opportunity and

stand ready to work with leaders of

cooperatives across the country to

address the threats to our valuable

agricultural land resources and to craft

solutions that strengthen our family

farms and their communities.

Editor’s Note: In 2011, the Gathering

Waters Conservancy, a statewide service

center for Wisconsin’s land trust

community, established the Rod Nilsestuen

Award for Working Lands Preservation.

The award celebrates an individual or

organization that exemplifies Nilsestuen’s

extraordinary commitment to the

preservation of Wisconsin’s working lands.

In September of this year, the award was

granted to fellow National Cooperative

Hall of Fame member and former

American Farmland Trust Trustee Tom

Lyon for his tireless dedication to and

involvement in the passage and

implementation of the Wisconsin Working

Lands Initiative. For more about AFT,

visit: http://www.farmland.org. n

Commentary

continued from page 2
Periodicals Postage Paid

U.S. Department of Agriculture

United States

Department of Agriculture

Washington, DC 20250

OFFICIAL BUSINESS

Penalty for private use, $300

NOTICE:

q Check here to stop receiving this publication and mail this

sheet to the address below.

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

to:

USDA/Rural Business—Cooperative Service

Stop 0705

Washington, D. C. 20250-3255

44 September/October 2013 / Rural Cooperatives

October is Co-op Month. Americans have long

worked together in cooperatives to meet challenges

that were too big to overcome by themselves. Co-ops

are a means for farmers and other people to attain

economic and service benefits from businesses that

they themselves own and control.

Today, co-ops are more relevant than ever. Help

people in your community learn about the advantages

of belonging to a co-op. Spread the Word!