Member Equity Essential Jack Piela, Patrie's partner in the business development effort, says he typically likes to see producers invest 40 to 50 percent of the initial equity needed for a project. Lenders want to see sufficient commitment on behalf of producers and enough capital to cover the losses which often occur in the first years while penetrating new markets. Cooperative development in the state has been helped tremendously by the Bank of North Dakota's program to buy down interest rates for new cooperatives, Piela says. The bank will typically reduce interest rates by half and share half the risk with a local bank. In the case of each new cooperative, producers must find their own champions to lead the effort.
Farmers have to take ownership of the concept and drive the project.
These failures primarily involved ethanol cooperatives, Patrie says. Those failures throttled back any investor interest for many years. You only had to lose one time and the word spread that this wasn't going to work. That's the one thing that worries Patrie and Piela the most. We've had no failures yet, but eventually we will.