al r u r cooperatives - usda rural development...rural cooperatives / september/october 2012 3...

USDA / Rural Development September / October 2012

Rura

lCOOPERATIVESCOOPERATIVES

Gearing Upthe Co-op EconomyRECORD SALES YEARFOR CO-OPS / page 4

TOP 100 AG CO-OPSFOR 2011 / page 8

CO-OP MONTH SPECIALSECTION / page 20

2 September/October 2012 / Rural Cooperatives

Commentary October is National Cooperative Month. In support of the occasion, AgricultureSecretary Tom Vilsack has signed this proclamation, which is on display at anumber of locations around USDA's headquarters in Washington, D.C.

Features

Rural Cooperatives / September/October 2012 3

Volume 79, Number 5September/October 2012

Rural Cooperatives (1088-8845) ispublished bimonthly by USDA RuralDevelopment, 1400 Independence Ave.SW, Stop 0705, Washington, DC. 20250-0705.

The Secretary of Agriculture hasdetermined that publication of thisperiodical is necessary in the transactionof public business required by law of theDepartment. Periodicals postage paid atWashington, DC. and additional mailingoffices. Copies may be obtained from theSuperintendent of Documents,Government Printing Office, Washington,DC, 20402, at $23 per year. Postmaster:send address change to: RuralCooperatives, USDA/RBS, Stop 3255,Wash., DC 20250-3255.

Mention in Rural Cooperatives ofcompany and brand names does notsignify endorsement over othercompanies’ products and services.

Unless otherwise stated, articles in thispublication are not copyrighted and maybe reprinted freely. Any opinions express-ed are those of the writers, and do notnecessarily reflect those of USDA or itsemployees.

The U.S. Department of Agriculture(USDA) prohibits discrimination in all itsprograms and activities on the basis ofrace, color, national origin, age, disabili-ty, and where applicable, sex, maritalstatus, familial status, parental status,religion, sexual orientation, geneticinformation, political beliefs, reprisal, orbecause all or part of an individual’sincome is derived from any publicassistance program. (Not all prohibitedbases apply to all programs.) Personswith disabilities who require alternativemeans for communication of programinformation (Braille, large print, audiotape,etc.) should contact USDA’s TARGETCenter at (202) 720-2600 (voice and TDD).To file a complaint of discrimination, writeto 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 providerand employer.

Tom Vilsack, Secretary of Agriculture

Dallas Tonsager, Under Secretary,USDA Rural Development

Dan Campbell, Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question?Call (202) 720-6483, or email:[email protected] This publication was printed with vegetable oil-based ink.

p. 4

04 Farm co-ops set sales, income records Number of full-time jobs up 1,800

08 Top 100 ag co-ops eclipse previous sales record by $18 billionBy Sarah Ali and David Chesnick

20 Gearing Up the Co-op Economy

37 Use of joint ventures by ag co-ops on riseBy Bruce J. Reynolds

40 ‘The pillar of my home’Coffee co-ops brew better quality of life for Ethiopian farm families By Anja Tranovich

Departments02 COMMENTARY

18 MANAGEMENT TIP

44 NEWSLINE

p. 18

ON THE COVER: The nation’s nearly 2,300 agricultural cooperativesset new records for both sales and income in 2011, besting the previoussales record by more than $10 billion. Also in this issue is our annuallook at the nation’s 100 largest ag co-ops, which also set records, thanksin large part to higher commodity prices in most sectors. See pages 4and 8.

p. 40

C O - O P MON T H S P E C I A L S E C T I O N


Farm co-ops set sales, income recordsNumber of full-time jobs up 1,800

Editor’s note: Information for thisarticle was compiled by the CooperativePrograms statistics staff of USDA RuralDevelopment: Sarah Ali, Jacqueline E.Penn and E. Eldon Eversull.

armer, rancher andfishery cooperativesposted record salesand income in 2011,surpassing the

previous record sales of 2008 by $10billion while besting the old incomerecord by $500 million. Employmentlevels remained strong, withcooperatives employing 184,000 full-time, part-time and seasonalworkers, up slightly from 2010. The year saw double-digit increasesin prices for dairy products, cotton,livestock and grains and oilseeds.Farm production expenses also haddouble-digit increases in 2011, withfeed, fertilizer and fuel prices leadingthe upward trend. The 2,285surveyed cooperatives had sales of$213 billion, exceeding 2010 sales bymore than $40 billion (table 1).

“These new cooperative sales andincome records for 2011 underscorethe strength and productivity of thenation’s farmer- and rancher-ownedcooperatives and the vital role theyplay in the nation’s economy,” saysDallas Tonsager, under secretary forUSDA Rural Development. “Pricesare expected to remain strong in2012, but production may bedampened, with almost two-thirds ofthe contiguous U.S. experiencingdrought.”

Grain and oilseed sales bycooperatives climbed by almost $14billion, while dairy productmarketings increased $8 billion(table 2). Cotton sales increasedmore than $1.5 billion whilelivestock and sugar sales both gainedover $600 million. Sales of farmsupplies increased by $10 billion,


F

Table 1U.S. cooperatives, comparison of 2011 and 2010

Item 2011 2010 ChangeNumber Percent

Sales (Gross, Billion $)Marketing 128.0 103.0 24.27Supplies 80.9 63.8 26.72Service 4.5 4.9 -9.69Total 213.4 171.8 24.21

Balance sheet (Billion $)Assets 78.5 65.0 20.68Liabilities 50.6 39.2 29.11Equity 27.9 25.9 7.90Liabilities and net worth 78.5 65.0 20.68

Income Statement (Billion $)Sales (Gross) 213.4 171.8 24.21Patronage income 0.6 0.7 -11.42Net income before taxes 5.4 4.3 25.53

Employees (Thousand)Full-time 130.9 129.0 1.43Part-time, seasonal 52.8 54.4 -2.95Total 183.6 183.4 0.13

Membership (Million) 2.3 2.2 1.83

Cooperatives (Number) 2,285 2,314 -1.25


primarily due to increasing energyprices. Farm supply co-ops recordedgains of more than $3 billion forpetroleum products, while sales wereup by $1 billion for fertilizer, feedand crop protectants.

Net income before taxes foragricultural co-ops was a record $5.4billion, eclipsing the previous high of$4.9 billion, set in 2008. Net incomewas up more than 25 percent, or $1billion, from 2010.

Marketing of food, fiber,renewable fuels and farm supplies bycooperatives experienced 24-percentincreases over the previous year(table 1), according to the annualsurvey conducted by the CooperativePrograms office of USDA RuralDevelopment. Gross businessvolume of $213 billion was thelargest ever, as was net income

Photo courtesy AGP Inc.

Figure 1 — Cooperatives’ Gross and Net Business Volumes, 1979 –2011

Billion dollars

225

200

175

150

125

100

75

50

25

01979 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.

Net2

Gross1


Table 2U.S. cooperatives net business volume, 2011 and 2010

Item 2011 2010 Change$ billions Percent

Products marketed:Bean and pea (dry edible) 0.151 0.160 -5.9Cotton 3.971 2.294 73.1Dairy 39.140 31.126 25.7Fish 0.251 0.225 11.6Fruit and vegetable 5.562 5.451 2.0Grain and oilseed 53.923 40.489 33.2Livestock 4.231 3.539 19.6Nut 0.907 0.905 0.2Poultry 1.302 1.179 10.4Rice 1.536 1.518 1.2Sugar 4.737 4.101 15.5Tobacco 0.251 0.243 3.4Wool and mohair 0.005 0.005 3.2Other marketing 5.817 4.522 28.6Total marketing 121.784 95.756 27.2

Supplies purchased:Crop protectants 6.494 5.641 15.1Feed 10.531 8.599 22.5Fertilizer 11.681 9.371 24.7Petroleum 20.092 16.468 22.0Seed 2.831 2.626 7.8Other supplies 5.692 4.413 29.0Total supplies 57.322 47.118 21.7

Services and other income 4.453 4.930 -9.7

Total business 183.559 147.805 24.2

before taxes (figure 1).The value of cooperative

assets in 2011 grew by about $13billion, with liabilities increasingby $11 billion and owner equitygaining $2 billion. Equity capitalremains low but is clearlyshowing an upward trend, withan 8-percent increase over theprevious year (figure 2).

Patronage income (refundsfrom other cooperatives due tosales between cooperatives) fellby more than 11 percent, to$613 million, down from $674million in 2010.

Farmer, rancher and fisherycooperatives remain one of thelargest employers in many ruralcommunities and also providejobs in many cities. The totalfarm co-op workforce of 184,000was up slightly from 2010.While full-time jobs at co-opsincreased by 1,800, the numberof part-time and seasonalemployees declined by 1,600.

There was a continueddownward trend in farmnumbers, with USDA counting2.2 million farms in 2011, downabout 10,000 from 2010. Thenumber of farmer cooperativescontinues to decline; there arenow 2,285 farmer, rancher andfishery cooperatives, down from2,314 in 2010. Mergers accountfor most of the drop, resulting inlarger cooperatives.

Producers held 2.3 millionmemberships in cooperatives in2011, up 2 percent from 2010.The number of U.S. farms andcooperative memberships arenow about equal. This does notmean that every producer is amember of an agriculturalcooperative. Previous studieshave found that many farmersand ranchers are members of upto three cooperatives, so farmnumbers and cooperativememberships are not strictlycomparable. n

Figure 2 — Cooperatives’ Assets, Liabilities, and Net Worth, 2002 – 2011

Billion dollars80

70

60

50

40

30

20

10

02002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Net worth

Liabilities

Assets


ag co-ops eclipse previoussales record by $18 billion

Top

A stainless steel cheese vat is installed at the AMPI dairy plant in Jim Falls, Wis. The co-op’s investment in state-of-the-art cheese technologyhas led to the production of more and better cheese from the same volume of milk. Photo courtesy AMPI


By Sarah Ali and David ChesnickAgricultural EconomistsCooperative ProgramsUSDA Rural Development

he nation's 100 largestagricultural cooper-atives reported recordsales revenue of $148billion in 2011, an

increase of almost 30 percent over2010, when revenue totaled $113 billion(table 1). Net income for the 100 topco-ops also set a new record in 2011,reaching $3.17 billion, up from $2.35billion in 2010. The previous recordswere $130 billion for sales and $2.42billion for income, both marks set in2008.

All seven function areas showedhigher sales in 2011. Leading theincrease were the mixed grain and farmsupply cooperatives, with total salesincreasing 37 percent. Thesecooperatives accounted for nearly one-half of the total increase in sales. Thosecooperatives selling farm supplies sawsales of farm supplies increase by $12billion, or 36 percent.

Saint Paul home to two of top three co-ops

CHS Inc., Saint Paul, Minn. — anenergy, farm supply, grain and food co-

op — was once again the nation’slargest ag co-op, with $36.9 billion inrevenue in 2011. It was followed byDairy Farmers of America, Kansas City,Mo., with $12.9 billion in revenue. Ittraded places from 2010 with thirdranked Land O’ Lakes Inc., St. Paul,Minn., a dairy food and farm supply co-op, with $12.8 billion in revenue.

Iowa is home to 14 of the top 100 agco-ops, the most of any state. It isfollowed by Minnesota with 13,Nebraska with 10, California with 6 andWisconsin with 5 top 100 ag co-ops.

The biggest upward jumps on the listwere made by cotton cooperatives, dueprimarily to sharply higher cottonprices in 2011. Carolinas CottonGrowers Cooperative, Garner, N.C.,made the largest upward jump, risingfrom 129 in 2010 to 71 on the 2011 list.It was followed by Calcot Ltd.,Bakersfield, Calif., which climbed from131 to 85 in 2011.

The next eight biggest gainers on thelist were all grain or mixed (grain andfarm supply) co-ops, again due largelyto high grain prices.

Cost of goods sold risesCost of goods sold was also up 31

percent over 2011, mirroring theincrease in total sales. With marketingcooperatives — such as dairy, fruit and

vegetables, cotton, sugar and grain co-ops — the cost of goods sold usuallyrepresent payments to members fortheir product.

Gross margins increased by 18percent, to $12 billion. However, grossmargin as a percent of total salesdeclined from 9 percent in 2010 to 8percent in 2011.

Service revenues were down 15percent, to $1.4 billion in 2011, withgrain and mixed grain co-opsaccounting for most of the decline.

Total expenses for the top 100 ag co-ops increased by 7 percent from 2010 to2011. The largest cost increase waslabor expense, which increased bynearly $300 million in 2011, to $5billion. Dairy and mixed grain/farmsupply cooperatives were the maincause of this increase.

While cooperatives are considered“not for profit”, they do generate netmargins and pay taxes. The top 100cooperatives paid 21 percent highertaxes in 2011. Farm supply cooperativespaid almost $100 million more in taxesin 2011 than 2010, which accounted forthe bulk of the increase.

Net margins climb $800 millionNet margins increased by more than

$800 million in 2011. Most of theincrease came within the mixed

Figure 2—Net Income, Top 100 Ag Co-opsFigure 1—Total Business Volume, Top 100 Ag Co-ops

($ billions)160

140

120

100

802006 2007 2008 2009 2010 2011

($ billions)3.53.33.12.92.72.52.32.11.91.71.5

2006 2007 2008 2009 2010 2011

grain/farm supply and farm supply cooperatives. Dairy andfruit and vegetable cooperatives had lower net marginscompared to 2010. However, both groups still returned solidnet margins in 2011 ($339 million and $467 million,respectively).

The asset base for the top 100 grew by $9.6 billionbetween 2010 and 2011. Seventy-seven percent of theincrease was due to mixed grain/farm supply and farmsupply cooperatives. Total assets in 2011 were $49.5 billion(table 2).

Current assets accounted for nearly 90 percent of thatincrease; the largest 100 cooperatives ended 2011 with $32.6billion in current assets. Mixed grain and farm supplycooperatives, which include some of the largest farmercooperatives, accounted for 50 percent of total amount ofcurrent assets.

Fixed assets also showed an increase of $934 million,pushing the total for the top 100 co-ops to $10.7 billion.

Current liabilities increased by more than $6.4 billion forthe largest 100 ag co-ops. At the end of 2011, total currentliabilities for the largest 100 ag co-ops were $23.6 billion.Total liabilities increased by $9.6 billion, ending the year at$33.7 billion.

Equity allocated to members jumped 2 percent in 2011,to $11 billion. Retained earnings also showed a substantialincrease of 29 percent, ending the year at $4.7 billion. Basedon the combined balance sheet, it would appear thatthroughout the recession, cooperatives have relied moreheavily on member financing than borrowed funds.However, looking at the average performance ratios shows adifferent result.

Table 3 illustrates the performance measures for thelargest 100 ag co-ops. These ratios are the average valuesfor all 100 co-ops. This provides a more accurate reflectionof the performance for all the co-ops and is not influencedby the largest of the group. For example, the largest five co-ops represent 50 percent of total business volume.Therefore, they will have more influence on the combinedvalues in table 1 and 2.

Debt-to-asset ratio risesThe debt-to-asset ratio illustrates what percentage of the

businesses assets are financed by debt. In 2011, the ratiorose from 0.63 to 0.67. This shows that, on average, thelargest ag co-ops are financing their assets with higheramounts of debt. Only the fruit/vegetable co-op sector hadlower overall debt financing.

The current ratio provides a comparison of how abusiness’ most liquid assets can cover its current liabilities.Between 2010 and 2011, the current ratio fell from 1.46 to1.41. This would indicate that a majority of the co-ops wereless liquid in 2011 than in 2010. The dairy andfruit/vegetable co-ops were the only sectors to have, onaverage, a higher current ratio in 2011.

Long-term debt and equity are generally used to finance

Figure 4—Assets of Cooperatives by Function, 2011

Mixed (Grain & Supply)47%

Supply16%

Other5%

Fruit & Vegetable6%

Sugar5%

Dairy15%

Grain6.0%


Figure 3—Sales Revenue of Cooperatives by Function, 2011

Mixed (Grain & Supply)43%

Supply16%

Fruit & Vegetable4%

Sugar 3%

Dairy23%

Grain5%

Other 6%


a business’ long-term assets. The long-term debt-to-equity ratio focuses onthis long-term financing. The ratiojumped from 0.66 in 2010 to 0.73 in2011. The higher long-term debtfinancing was caused mostly by thedairy, mixed grain/farm supply andsugar co-op sectors.

More reliance on debtOverall, the top 100 ag co-ops used

more debt in 2011. Some sectors —such as grain, farm supply and the“other” sector co-ops — used relativelymore short-term debt to financeoperations while dairy, mixed and sugarco-ops relied more on long-term debtfor financing. Fruit/vegetable co-opswere the only sector to lower theamount of debt used.

The times-interest-earned ratioshows how much a business can coverits interest expense on a pre-tax basis.The higher the ratio the better, as alow value could indicate trouble payingobligations. In 2011, the average valuedropped from 17.4 times to 13.1 times.However, revenue before interest andtaxes of 13.1 times more than interestexpense is considered a strong position.All co-op sectors averaged interestcoverage of over five times.

Efficiency ratios examine how well abusiness uses its assets in its operations.For example, fixed asset turnovermeasures the ability to generate salesfrom a business’ fixed assets. Whilethere is no standard ratio to compare,looking at the change over time helps.This ratio increased from 31.7 to 36.9.

As a general rule, those co-ops withhigh amounts of fixed capital, such asprocessing co-ops, will have a lowerfixed-asset-turnover ratio than some ofthose that provide mostly marketingservices.

Profitability ratios less key for co-ops

Profitability ratios are important forany business, as an unprofitablebusiness will obviously soon be out ofbusiness. However, co-ops are in aunique position in that they try tooperate as close to cost as possible. For

Table 1Top 100 Ag Co-ops, Combined Operating Statement

Item 2011 2010 Difference Change............... $ billions ......................... Percent

Total sales 147.59 113.60 34.00 29.9%Cost of goods sold 135.57 103.39 32.17 31.1%Gross margins 12.03 10.20 1.82 17.9%

Service revenue 1.42 1.68 -0.26 -15.4%

Wages 5.05 4.75 0.30 6.2%Depreciation 1.22 1.15 0.08 6.7%Interest expense 0.58 0.48 0.10 20.2%Other expenses 3.64 3.42 0.22 6.4%Total expenses 10.50 9.81 0.69 7.0%

Net operating margins 2.95 2.08 0.87 42.1%Patronage refunds received 0.18 0.19 -0.01 -7.2%Non-operating revenue/expenses 0.23 0.24 -0.01 -3.1%

Net margins before taxes 3.36 2.51 0.85 33.9%Taxes 0.19 0.16 0.03 20.9%Net margins 3.17 2.35 0.82 34.8%

Table 2Top 100 Ag Co-ops, Combined Balance Sheet

Item 2011 2010 Difference Change............... $ billions ......................... Percent

Current assets 32.56 23.84 8.72 36.6%

Investment in other co-ops 1.55 1.46 0.09 6.3%Plant, property &equipment 10.69 9.76 0.93 9.6%Other assets 4.67 4.83 -0.16 -3.3%Total assets 49.47 39.89 9.59 24.0%

Current liabilites 23.65 17.20 6.45 37.5%Long-term liabilities 10.02 8.19 1.83 22.4%Total liabilities 33.67 25.39 8.28 32.6%

Allocated equity 11.06 10.83 0.23 2.1%Retained earnings 4.74 3.66 1.08 29.4%Total equity 15.80 14.49 1.31 9.0%

Total liabilities and equity 49.47 39.89 9.59 24.0%


example, gross margins will tend to belower than for a non-cooperative businessin the same field.

Between 2010 and 2011, the gross profitmargin decreased slightly, from 11 to 10percent. Net operating margins held steadyat 2 percent during the two years. Therewas not much change between the co-opsectors for either of these two ratios.

Return on total assets measures businessearnings before interest and taxes againstits total net assets. The average return ontotal assets for the top 100 ag co-ops alsoremain steady at 8 percent. Farm supplyco-ops had the highest returns at 12percent while dairy co-ops had the lowestat 6 percent. All the other co-op sectorswere around 7 percent in 2011.

Return on members’ equity measuresnet earnings after taxes against total equity.This examines the returns to members. In2011, the return on members’ equity was17 percent. This is down slightly from2010 when it was at 19 percent.

About the tables and figuresIn table 5, the rank, name, revenue and

assets are given for the nation’s 100 largestagricultural cooperatives. Information forthe largest cooperatives has beensegmented into seven function areas asdefined in table 4. The functional areas(and the number of cooperatives in each

Mixed29%

Supply10%Other

10%

Sugar7%

Dairy22% Grain

14%

Figure 5—Distribution of Cooperatives by Function, 2011

Fruit & Vegetable10%

Table 3Combined Average Ratios, Top 100 Ag Co-ps

Item 2011 2010

Current ratio 1.41 1.46Debt to assets 0.67 0.63Long-term debt-to-equity 0.73 0.66Times interest earned 13.08 16.99Fixed asset turnover 36.88 31.65Gross profit margin 0.10 0.11Net operating margin 0.02 0.02Return on total assets 0.08 0.08Return on member equity 0.17 0.19

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.

continued on page 50


2011RANK

2010RANK

Table 5—Top 100 Largest Agriculture CooperativesNote: Names withheld by request for the cooperatives ranked: 7, 40 and 78.

NAME

CHS Inc.,Saint Paul, Minn.

Dairy Farmers of America, Kansas City, Mo.

Land O'Lakes, Inc., Saint Paul, Minn.

GROWMARK Inc.,Bloomington, Ill.

Ag Processing Inc.,Omaha, Neb.

California Dairies Inc.,Artesia, Calif.

Name withheld by request.

United Sugars Corp.,Bloomington, Minn.

Northwest Dairy Association,Seattle, Wash.

Associated Milk Producers Inc., New Ulm, Minn.

United Suppliers Inc.,Eldora, Iowa

Plains Cotton Cooperative Assoc.,Lubbock, Texas

Foremost Farms USA Cooperative,Baraboo, Wis.

Ocean Spray Cranberries Inc.,Lakeville-Midddleboro, Mass.

Prairie Farms Dairy Inc.,Carlinville, Ill.

Dairylea Cooperative Inc.,Syracuse, N.Y.

Countrymark Cooperative HoldingCorp., Indianapolis, Ind.

American Crystal Sugar Company,Moorhead, Minn.

United Producers Inc.,Columbus, Ohio

South Dakota Wheat GrowersAssociation, Aberdeen, S.D.

Mixed (Energy,Supply, Food, Grain)

Dairy

Mixed (Supply,Dairy, Food)

Supply

Supply

Dairy

Sugar

Dairy

Dairy

Supply

Other (Cotton)

Dairy

Fruit & Vegetable

Dairy

Dairy

Supply

Sugar

Other (Livestock)

Mixed (Grain,Supply)

2010ASSETS

2011ASSETS

2010REVENUE

2011REVENUE

TYPE

$ million

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

13

25

14

11

12

20

19

17

16

23

36,936

12,924

12,849

8,742

4,372

3,657

2,173

2,071

1,979

1,949

1,843

1,666

1,620

1,612

1,588

1,566

1,544

1,473

1,376

25,315

9,872

11,146

6,154

3,302

2,963

1,700

1,650

1,709

1,387

1,008

1,374

1,582

1,518

1,335

1,123

1,197

1,204

1,047

12,217

2,295

5,438

2,631

1,332

809

190

579

324

887

265

466

1,226

715

186

545

878

40

584

8,666

2,165

4,885

1,876

1,187

676

131

496

288

662

187

398

1,201

684

181

417

788

38

473


2011RANK

2010RANK

NAME

MFA Incorporated,Columbia, Mo.

Maryland & Virginia Milk ProducersCo-op Assoc., Reston, Va.

MFA Oil Company,Columbia, Mo.

Farmers Cooperative Co.,Ames, Iowa

Producers Livestock MarketingAssoc. Omaha, Neb.

Riceland Foods Inc.,Stuttgart, Ark.

Co-Alliance, LLP,Avon, Ind.

Innovative Ag Services Co.,Monticello, Iowa

Sunkist Growers Inc.,Sherman Oaks, Calif.

Staple Cotton Cooperative Assoc.,Greenwood, Miss.

Heartland Co-op,W. Des Moines, Iowa

Agri-Mark Inc., Methuen, Mass.

Aurora Cooperative Elevator Co.,Aurora, Neb.

Select Milk Producers Inc.,Artesia, N.M.

Lone Star Milk Producers,Windthorst, Texas

Snake River Sugar Co.,Boise, Idaho

Michigan Milk Producers Assoc.,Novi, Mich.

United Dairymen of Arizona,Tempe, Ariz.

Blue Diamond Growers,Sacramento, Calif.


Supply

Dairy

Supply


Other (Livestock)

Other (Rice)

Supply

Grain

Fruit & Vegetable

Other (Cotton)

Grain

Dairy


Dairy

Dairy

Sugar

Dairy

Dairy

Other (Nut)

2010ASSETS

2011ASSETS

2010REVENUE

2011REVENUE

TYPE

$ million

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

21

15

22

27

26

18

32

44

24

38

34

30

43

33

36

28

35

42

31

1,366

1,356

1,307

1,243

1,153

1,109

1,042

1,028

1,019

963

962

899

892

888

879

876

871

830

825

1,051

1,221

1,047

842

908

1,127

767

610

1,013

658

710

782

614

727

688

827

699

615

775

408

159

381

546

115

574

382

250

183

354

483

316

427

107

97

699

167

131

297

358

158

338

330

122

480

255

117

190

278

199

268

325

91

64

673

161

110

276

Table 5—Top 100 Largest Agriculture Cooperatives


2011RANK

2010RANK


NAME

Tennessee Farmers Cooperative,La Vergne, Tenn.

Upstate Niagara Cooperative Inc.,Buffalo, N.Y.

Cooperative Regions of OrganicProducer Pools (CROPP), La Farge, Wis.

Farmers Cooperative,Dorchester, Neb.

Trupointe Cooperative,Piqua, Ohio

Cooperative Producers Inc.,Hastings, Neb.

Central Valley Ag Cooperative,O’Neil, Neb.

National Grape Co-operative Assoc.Inc., Westfield, N.Y.

NEW Cooperative Inc.,Fort Dodge, Iowa

United Farmers Cooperative,York, Neb.

Citrus World Inc. (Florida NaturalGrowers), Lake Wales, Fla.

Equity Cooperative Livestock SalesAssoc., Baraboo, Wis.

Heritage Cooperative, Inc.,W. Mansfield, Ohio

Sunrise Cooperative Inc.,Fremont, Ohio

NFO Inc.,Ames, Iowa

Watonwan Farm Service Co.,Truman, Minn.

Michigan Sugar Co.,Bay City, Mich.

North Central Farmers Elevator,Ipswich, S. D.

Producers Rice Mill Inc.,Stuttgart, Ark.

United Cooperative,Beaver Dam, Wis.

Supply

Dairy

Dairy



Grain

Mixed (Supply,Grain)

Fruit & Vegetable

Grain

Grain

Fruit & Vegetable

Other (Livestock)

Grain


Dairy


Sugar


Other (Rice)

Supply

2010ASSETS

2011ASSETS

2010REVENUE

2011REVENUE

TYPE

$ million

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

46

41

40

45

51

39

53

11

54

57

47

52

59

59

55

68

58

60

56

76

726

722

716

716

713

695

672

640

637

633

615

591

583

577

568

555

549

529

528

525

581

619

620

602

512

639

506

660

498

450

577

510

443

432

492

388

448

442

479

326

278

217

180

265

229

361

251

362

257

213

313

33

170

224

35

195

256

201

206

365

211

203

160

192

168

241

167

364

173

156

296

29

114

151

32

92

255

137

172

332


2011RANK

2010RANK


NAME

Southern Minnesota Beet SugarCooperative, Renville, Minn.

Pacific Coast Producers,Lodi, Calif.

Landmark Services Cooperative,Cottage Grove,Wis.

Tillamook County CreameryAssociation, Tillamook, Ore.

First District Assoc., Litchfield, Minn.

Key Cooperative,Roland, Iowa

Farmers Grain Terminal Inc.,Greenville, Miss.

Alabama Farmers Cooperative Inc.,Decatur, Ala.

West Central Cooperative,Ralston, Iowa

Premier Cooperative Inc.,Champaign, Ill.

Carolinas Cotton GrowersCooperative Inc., Garner, N.C.

Frenchman Valley FarmersCooperative Inc., Imperial, Neb.

Western Consolidated Cooperatives,Holloway, Minn.

River Valley Cooperative,Davenport, Iowa

Alliance Grain Co. Gibson City, Ill.

Western Sugar Cooperative,Denver, Colo.

Swiss Valley Farms Cooperative,Davenport, Iowa


Farmers Cooperative Society, SiouxCenter, Iowa

Five Star Cooperative,New Hampton, Iowa

Sugar

Fruit & Vegetable


Dairy

Dairy


Grain

Grain


Grain

Other (Cotton)




Grain

Sugar

Dairy



2010REVENUE

2011ASSETS

2010REVENUE

2011REVENUE

TYPE

$ million

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

61

50

85

63

67

73

48

65

49

83

129

64

77

75

102

92

74

105

104

510

502

500

479

477

474

473

463

445

444

435

432

431

424

405

401

397

394

391

440

516

295

426

391

350

306

415

520

308

210

419

343

346

274

383

347

167

271

360

304

166

295

95

116

174

232

381

153

181

287

199

155

112

230

119

182

153

319

301

155

264

87

110

116

198

250

99

123

153

201

84

60

197

115

127

57


2011RANK

2010RANK


NAME

Frontier Cooperative Inc., Brainard, Neb.

New Vision Cooperative,Brewster, Minn.

Harvest Land Co-op,Richmond, Ind.

Horizon Resources,Williston, N.D.

Calcot Ltd.,Bakersfield, Calif.

Ray-Carroll County Grain GrowersInc., Richmond, Mo.

Meadowland Farmers Cooperative,Lamberton, Minn.

Gold-Eagle Cooperative,Goldfield, Iowa

Tree Top Inc.,Selah, Wash.

Clifford Farmers Co-op Elevator Co.,Clifford, N.D.

Ag Valley Cooperative Non-Stock,Edison, Neb.

Bongards Creameries,Bongards, Minn.

Saint Albans Cooperative CreameryInc., St. Albans, Vt.

The Garden City Co-op Inc.,Garden City, Kan.

Farmers Cooperative Elevator Co.,Hanley Falls, Minn.

NORPAC Foods Inc.,Stayton , Ore.

Sun-Maid Growers of California,Kingsburg, Calif.

Minn-Dak Farmers Cooperative,Whapeton, Minn.

Western Iowa Cooperative,Hornick, Iowa

Producers Livestock MarketingAssoc., North Salt Lake, Utah





Other (Cotton)

Grain


Mixed(Supply,Grain)

Fruit & Vegetable


Grain

Dairy

Dairy



Fruit & Vegetable

Fruit & Vegetable

Sugar


Other (Livestock)

2010ASSETS

2011ASSETS

2010REVENUE

2011REVENUE

TYPE

$ million

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

86

106

78

114

131

79

71

96

69

134

90

100

88

93

112

70

80

116

121

101

389

387

387

385

385

381

381

375

371

370

369

367

361

360

359

356

352

346

339

338

294

266

342

245

206

332

357

281

365

196

307

339

293

285

249

359

323

242

233

275

167

125

163

116

133

103

179

96

292

76

237

91

34

110

160

249

178

230

114

43

121

89

134

103

123

90

129

92

277

58

126

70

31

103

159

247

168

197

105

34

By Andrew Zenk

Editor’s note: Andrew Zenk is anAgCountry Farm Credit Servicesagribusiness consultant specializing insuccession and retirement planning.

bout 96 percent of U.S.farms are run byfamilies, farmerpartnerships orcooperatives, but as

many as 89 percent of farmers don’thave a farm-transfer plan, according toUSDA. That’s a staggering number, andproducers such as Lee Watson, a corn,bean and wheat farmer in Bellevue,

Ohio, are doing something about it.Watson, who has worked with AgCredit ACA for 19 years, istransitioning his farming operation tohis son, Dusten, with a detailedsuccession plan.

“You hate to think about it, but youneed to plan,” Watson says. “So aboutthree years ago, we started passingshares of our farming corporation toDusten.” The goal is to have at leasthalf of the shares transferred by thetime the elder Watson retires.

A succession plan provides animportant opportunity to carefullyprotect a family’s hard-earnedinvestment. This requires planning,


Management TipThoughtful succession planning keepsfamilies farming for generations

“You hate to think about it, but you need to plan [for the transfer of your estate],” says LeeWatson, far left. He is in the process of transferring shares in the family farming corporation tothe family of his son, Dusten (right). Photo courtesy Farm Credit. Larry and Jenny Black (below,right) hope that their children will someday take over the citrus operation. Although decadesaway from retirement, they are doing estate planning now. Photo by Ron O’Connor, courtesy FarmCredit

A


open lines of communication anddiscipline. Family operations thatincorporate the following five practicesinto their planning set themselves upfor success for generations to come:

1. BUILD good habits througheducation: solid business plans leadto effective succession plans.

It is never too early to beginplanning. Producers should already bemanaging and planning for short- andmid-term operational and financialgoals, which lay the foundation for asolid succession plan. There are manyresources that help young andbeginning producers network and learnthe business side of agriculture.

Even the most seasoned producerscan benefit from programs that addresscurrent market situations. Buildinggood habits early will help to preserve

your operation for the next generationand maximize the contributions of thecurrent and previous generations.

Larry and Jenny Black, fifth-generation citrus growers and member-owners of Peace River Packing, a citrusgrowing and fresh fruitpacking/marketing cooperative, aredecades away from retirement, but theyalready appreciate the value of keeping

Peace River in the family. The family isa member of Farm Credit of CentralFlorida, and Peace River is a customer-member of CoBank, another FarmCredit entity. Two years ago, TheBlacks were honored with the YoungFarmer and Rancher of the Year Awardfrom the Florida Farm Bureau,recognizing their successful farmingoperation and Larry’s extensivecommunity and industry involvement.

“I’m in constant pursuit ofimproving my farming operation andmoving in a positive direction,” Larrysays, “and I hope that my youngchildren will also become farmerssomeday.”

2. PREPARE to be a multi-generational farm before yourtransition is complete.

While many families have long

envisioned a time when they pass thefamily operation down to their sons ordaughters, making sufficient income toenable younger generations to join thefamily business before one generationretires is a challenge for many.

Jimmy Carter, a sixth-generationfarmer and owner of Southern Belle,and his son Jake, are thriving today byembracing diversification and

innovation as two generations ofCarters work together on the family’s200 acres in Georgia. Jake startedbringing new ideas to the farm soonafter college. He started a “pick-your-own” strawberries, blueberries andblackberries operation and opened thefarm for agri-tourism in 2005, abusiness that has grown to host severalthousand visitors in a single weekend.In addition to hosting a petting zoo,bike track and corn cannon, the Carterscreate an intricate corn maze each year.

3. MAKE open, frequentcommunication a priority.

It is often hard for people to separatetheir family from their business partner,and communication within a family canbe difficult regardless of a businessrelationship. Open communicationabout this reality and agreeing upon aworkable communication strategy areimportant in the planning process.

Paul Rovey, owner and operator of a2,000-cow dairy farm in Glendale,Ariz., says his farm is all about family.He works the farm with his fivechildren and took over the farm fromhis father when he graduated fromcollege in 1978. “I’ve grown theoperation from 200 cows to 2,000. Iowe this success to my family; Iwouldn’t be here without them.”

4. PLAN for the “what ifs” in life and your operation.

You need a plan that provides a road-map in the event of a death, disability,departure and other possibilities lifemay bring. Having a mutual agreementon an action plan for these “what ifs” iscrucial to succession of the farm.Generally, these are handled with anestate plan for all involved and acollective agreement that is consistentwith the personal estate plan. Thecontents of these plans are unique toevery family, and consulting with aprofessional is a must.

5. LOOK to the experts for guidance.

Jimmy Carter, with son Jake, operate their thriving Georgia farm as a multi-generationalfamily-farm enterprise. Photo courtesy Farm Credit


Gearing Upthe Co-op Economy

C O - O P M O N T H S P E C I A L S E C T I O N

A rainbow that seems to arc around the height-adjuster gear of a vintage cultivator symbolizes the promise of anew crop of farmer co-ops. The photo was taken by Laurie Childs at Harlequin Organics Farm near Dixon, Mont.At the time, she was a driver for Western Montana Growers Cooperative and was farming part time.


ontana is known for itsbig, open spaces. “It isthe place we call home,and we love it,” saysKarl Sutton, program

manager of the Mission Mountain FoodEnterprise Center, a division of LakeCounty Community Development inRonan, Mont. “But it is a challenge tolink any one farm to consumers whenthe distances are so great.”

Co-ownership in a cooperative is away to aggregate volume, increasecapabilities and share costs, Suttonexplains. “There is value added, notonly value in the sense of dollars, butalso in the value of the relationshipsthat connect us all.”

The value of cooperatives to theircommunities and to each other is thetheme of a Northwest regionalconference to be held October 5-6 inSeattle. The conference, “Cultivating

NW Co-ops: Celebrating Our FoodCommunity,” will take a six-state/regional look at co-ops and theirimpacts upon communities and foodsystems.

Every year, October is recognized asCooperative Month and this year, as aspecial observance, 2012 has beendesignated the International Year of theCooperative by the United Nations. “It's timely to consider how cooperativebusiness models contribute to our localand regional food systems,” explainsDiane Gasaway, executive director ofthe Northwest Cooperative Develop-ment Center (NWCDC), a co-host ofthe conference. “The regionalconference in Seattle will highlightcooperatives in many lines of businessthat form the links between farm andtable. Cooperatives that market anddistribute, provide financing andoperate retail stores will be

participating. “The conference itself is an example

of collaboration,” Gasaway continues.The co-hosts are the cooperativedevelopment centers based inWashington, Alaska and Montana,along with CDS Consulting Co-op.The conference’s broad-based steeringcommittee and sponsors include manysuccessful cooperatives.

Montana schools reap benefits of co-op

Karl Sutton says the WesternMontana Growers Cooperative isbenefiting schools with deliveries oflocal produce. The cooperative wasestablished to increase the scale ofproduction of fresh produce in the areathrough aggregation, marketing anddistribution, he explains.

In a unique collaboration withMontana’s Lake County Development

“Cooperative Enterprises Build a Better World” is the theme of 2012International Year of Cooperatives, as designated by the United Nations. WithOctober also being Cooperative Month, it provides twice as much reason forcelebrating the many benefits that producer- and user-owned cooperativesconfer to their members. As U.S. Agriculture Secretary Tom Vilsack notes inhis proclamation of Co-op Month (see page 2), in America alone, more than130 million Americans are members of a cooperative. These range from co-ops with many thousands of members (a few of which are listed on theFortune 500), to tiny co-ops serving the needs of a dozen or fewer members.All that matters is that people have a common need that can be best metthrough group action. On the following pages, some of the nation’s co-op development centers

provide a glimpse at new and emerging co-ops and co-op endeavors that arehelping still more people to help themselves with cooperative businesses.

Northwest co-ops forge new links for local foods

M

By Meredith Rafferty, Northwest Co-op Development Center

CO-OP MONTH


Center, the cooperative now has accessto a produce- and meat-processingfacility and is delivering local foods tofour schools and the University ofMontana campus through the USDAFresh Fruit and Vegetable program.The cooperative had gross sales of$750,000 in 2011.

The entire process from farm toconsumer is a value-added chain,explains Sutton. Carrots from the fieldneed to be cleaned and transported.When supplied to schools, they alsoneed to be cut, packaged and deliveredin refrigerated trucks.

Without the processing stepprovided through the cooperativeagreement between Mission MountainFood Enterprise Center and WesternMontana Growers Cooperative, theprocessing link to the schools would notexist. “Schools in our region do nothave the equipment and labor to slice

carrots or peel and cube a wintersquash.” The processing step addsvalue. “It brings healthy, fresh food tothe schools, retains dollars in ourcommunities and connects people toplace,” says Sutton.

Cooperation among co-ops magnifies values

Other links in the value-added chainare member-owned food co-ops that

have forged new relationships with localfarms to put local products on theirgrocery shelves. An example is AshlandFood Co-op, which for 40 years hasemphasized wholesome foods in its full-service grocery co-op.

This 8,000 member co-op businessin southern Oregon is known for itscertified organic produce and products.“Yes, our co-op is a business,” saysAnnie Hoy, outreach manager for the

Steve Dagger and Jane Kile check on cropsproduced for Westerrn Montana GrowersCooperative. Kile, a founding member, wasthe driving force behind the launch of the co-op 10 years ago. She died three years ago,but the co-op continues to market the cropsof its members. Photo by Marti de Alva.

The Ashland Food Co-op (AFC) serves 8,000 members in southern Oregon. Photo courtesy AFC

mall, mobile processingunits have proven to beuseful in helping small-scale poultry andlivestock producers

meet the needs of local markets in anumber of areas around the nation. Butin western Montana, a concerted effortover several years to employ thisstrategy has yet to gain economicviability, due to a number of reasons.

Still, producers here hope that withadditional steps, they will be able to“grow their businesses” and help meetthe rising public demand for home-grown poultry.

Co-op formed to spearhead effort

The Montana Poultry Grower’sCooperative (MPGC) was incorporatedin 2006 to provide Montana’s small-scale poultry producers a way to

collaborate to meet their processing andmarketing needs. MPGC provides its18 members with access to two types ofmobile poultry processinginfrastructure: • Two small-scale pluckers and

scalders, and• One state-licensed mobile processingunit (MPU), comprised of a truck andtrailer. In addition to the processing

equipment, the cooperative organizeseducation workshops on heritage breedsof poultry, pasture-raised poultryproduction methods and safe, efficientpoultry processing practices.

The formation of MPGC followedon the heels of strategic research andlegislative work conducted by the GrowMontana Coalition, formed in 2004.Grow Montana is a broad-based foodand agriculture policy coalition with acommon purpose of promotingcommunity economic developmentpolicies that support sustainableMontana-owned food production,processing and distribution. Theultimate goal is to improve access toMontana-produced foods.


co-op. “But it is a business based on ourvalues. The values in our missionstatement led us into the community insupport of local farmers and localproducts.

“For our type of food cooperatives,”Hoy continues, “there is alwaysoutreach to members to support themin their knowledge of healthy food andhealthy living. We realize our place inthe community and actively supportlocal farmers and local foods.

“We also work hand-in-hand withother cooperatives in this area,” Hoyadds, pointing to a close relationshipwith the Rogue Federal Credit Union,Grange Co-op, Medford Food Co-opand Siskiyou Sustainable Cooperative inthe Rogue Valley of Oregon. These

relationships bring mutual support tothe Rogue Valley local food system.Together with Ashland Food Co-op,these cooperatives employ 600 peoplewith a total payroll and benefits of $25million.

“One of the principles ofcooperatives is sharing information andsupporting each other,” says Hoy,adding that these co-ops are workingtogether across business sectors. “Thisis all about living our values as ownersand members of cooperatives.”

Co-ops are an important link in thelocal food chain. According to a recentstudy by the National CooperativeGrocers Association, the average foodcooperative purchases from 157 localfarmers and food producers; locally

sourced products make up an average of20 percent of co-op grocery sales. Thestudy, Healthy Foods, HealthyCommunities: The Social and EconomicImpacts of Food Co-ops, also found thatfor every $1,000 shoppers spend at theirlocal food co-op, $1,604 in economicactivity is generated in their localeconomy.

Cooperatives are making a differenceto local foods and food systems throughtheir values. For cooperativesworldwide, it’s a difference worthcelebrating during International Year ofthe Cooperative, and every year.

For more information about theNWCDC, contact Meredith Rafferty at(360) 943-4241, or visit:www.NWCDC.coop. n

Montana’s small-scale poultry growers struggle to find economic way to process, market birdsBy Karl Sutton, Program Manager, Mission Mountain Food Enterprise Center, a division of Lake County Community Development

SCO-OP MONTH

Demand is growing for pasture-raised poultry,such as these turkeys being raised by amember of the Montana Poultry GrowersCooperative (MPGC), which was formed in2006. Photos courtesy MPGC


Prior to 2004, Montana’s regulatorystatutes did not recognize mobileprocessing units, nor did the statutesplace such units under any regulatoryagency. Grow Montana successfullypromoted the passage of HB-484 in2004, which gives the MontanaDepartment of Livestock the authorityto inspect mobile processing units.

Between 2004 and 2006, a steeringcommittee comprised of small-scalepoultry producers began developingMPGC’s business framework, leading tothe start of poultry processing usingsmall-scale equipment.

In 2006, Mission Mountain FoodEnterprise and CooperativeDevelopment Center (MMFEC) — adivision of Lake County CommunityDevelopment Corporation in Ronan,Mont. — supported a professionalresearch report on appropriate mobileprocessing technology for Montana’ssmall-scale, pastured-poultry producers.The resulting report — “MobileProcessing: Appropriate Technology forPastured Poultry Producers” — waswritten by University of Montanagraduate student Sarah Stokes. It madeuse of case studies, surveys andinterviews to evaluate the status ofMontana’s pastured-poultry industry,the market potential for pasture-raisedpoultry in western Montana and theprocessing and regulatory barriers thatwere hindering producers from meetingthe market demand.

The poultry producers surveyed forthe report were classified as “micro-scale” producers, meaning they raisefewer than 1,000 birds per year. Theseproducers had no legal method ofaccessing potential markets becauseMontana did not recognize the Federal1,000 Bird Limit Exemption that allowsfarmers to slaughter and market fewerthan 1,000 birds directly from the farmto the consumer. Many of these farmerswere selling on-farm, live birds tosidestep Montana’s laws.

Despite a clear demand for pasture-raised poultry, the state’s lack ofrecognition of the 1,000-bird

exemption and lack of state-inspectedprocessing facilities presentedsignificant barriers to producers’ abilityto access farmer markets and retailgrocery stores.

Market parameters identifiedBased on evaluations of MPUs in

New York, Washington and Kentucky,the university report surmised thatMPUs in Montana would only befeasible if there was an adequate base ofproducers with operations scaled tomatch processing unit capacities andthat were located within one to twohours of the processing unit’s homebase.

The university researcher offeredthree recommendations to helpMontana’s small-scale poultry industrymove forward:

1. Amend Montana rules, or passnew legislation, to allow a 1,000-birdexemption for on-farm poultryslaughter and direct sales to customers;

2. Obtain more small-scaleprocessing equipment that could be

located closer to cooperativemembers; and

3. Develop a state-inspected MPUfor poultry.

On the heels of this research, MPGCmembers — with support fromMMFEC, the Alternative EnergyResources Organization, and Farms forFamilies — began developingMontana’s first (and currently only)MPU. MPGC’s pioneering workinvolved designing and building theMPU and developing a user/processingmanual that enabled producers to meetregulatory requirements of HazardAnalysis Critical Control Points(HACCP) and Standard SanitaryOperating Procedures (SSOP). It alsodelivered a producer training programthat prepared MPGC members toprocess high-quality, safe poultry.

By the spring of 2009, the state’s firstMPU had been inspected and licensedby the Montana Department ofLivestock, in accordance with thefederal 20,000-bird limit exemption. Inaccordance with the 20,000 bird limit

A mobile poultry processing unit is available to co-op members, but more volume will be neededto cover all operation costs.


exemption, the slaughter facility isregularly inspected, although aninspector does not need to be onsite atthe time of processing. This exemptionallows farmers to sell at farmers marketsand into wholesale markets.

More volume neededUnder-utilization of the MPU has

been a critical concern for MPGC.Without sufficient revenue generatedfrom leasing the MPU at the price of$1.75 per bird processed, thecooperative has struggled to cover thecosts of insurance and maintenance ofthe infrastructure.

Last January, MPGC members weresurveyed to evaluate how effective theMPU was in helping them to growtheir businesses. According to the finalreport, 14 of 18 MPGC producers raisemeat birds, with an average flock size of175 birds. Only one producer raises

more than 1,000 birds. Ten out of 14producers are using the small-scaleplucking and scalding equipment whileonly four use the licensed MPU. Of thefour producers using the MPU, onlytwo are marketing their birds tocommercial markets while the othertwo are marketing direct to individualcustomers.

The 2012 report surmises thatMPGC producers have not grown theiroperations due to: • Continued regulatory challenges (i.e.,Montana still does not recognize thefederal 1,000-bird exemption, soMPU producers must obtain licensesfrom both the Montana Departmentof Livestock and the MontanaDepartment of Public Health andHuman Services);

• The distance they must travel toretrieve the MPU are too great forsome producers;

• High feed costs; and• Lack of technical support (especiallyfor breed selection for pasture-poultryand efficient range productiontechniques). These findings corroborate Stokes’

2006 report. Montana needs a two-tiered system

that meets the needs of producers whoraise fewer than 1,000 birds. The 2012report surmises that if Montanarecognized the federal 1,000-birdexemption, micro-level producers couldthen legally sell on their farms andgrow their businesses.

Only for producers close to reachingthe threshold of 1,000 birds will theMPU become an appropriate resource.At that point, regionally located, state-inspected facilities that reduce the drivetime for producers could enableMontana poultry growers to capture themarkets for pastured poultry. n

he recent birth of theColorado HealthInsurance Cooperativeincludes a number ofvery important lessons

for future health insurance co-opdevelopers, and perhaps for thoseworking on other types of co-opdevelopment projects. Our experiencewith the project suggests that thefollowing attributes among the coreinitial working group are critical:• A passion for co-ops (of course!); • An abiding commitment to ruralhealth care;

• Comprehensive health insurance andhealth care experience andknowledge;

• Strong connections in the health carefield built on lasting trust. In a nutshell, all you have to do is

find some really smart, passionate folkswho know everybody and who arewilling to work for free!

New law opens door for more health co-ops

The federal Patient Protection andAffordable Care Act (ACA) was passedin 2010 after much debate. ACAauthorizes the establishment ofnonprofit, private Consumer Operatedand Oriented Plans (CO-OPs) forhealth insurance under a start-up loanprogram admin-istered by the U.S.Department of Health and HumanServices (HHS).

In the spring of 2011, at an inform-ational meeting sponsored by the healthcare community in Denver regardingCO-OPs, the Rocky Mountain FarmersUnion Foundation (RMFU) sensed an

exciting opportunity to make a positivedifference for health care in the ruralRocky Mountain West. This was achallenging problem we had beenworking on for decades. RMFU hasbeen advocating for family farmers andranchers and their communities formore than 100 years and is a strongbeliever in cooperatives.

Discussions were held among RMFUstaff with extensive experience in ruralhealth care, social issues andcooperative development. These talksfocused on one issue in particular: Cana CO-OP realistically serve only ruralhealth care needs in Colorado andWyoming?

Those discussions led RMFU toinvite a number of potential partners tothe table, with such skills as: expertisein Colorado rural health issues; third-

Colorado launches health insurance co-opBy Bill Stevenson, Director, Rocky Mountain Farmers Union, Cooperative Development Center

TCO-OP MONTH


party health insurance administratorcapabilities, health foundation expertiseand funding, and business savvy incooperative formation and operations.

Working group launchedA working group was formed in the

fall of 2011, with a chairperson and atleast some formality to its proceedings.This group considered adding technicalexpertise and identified the next stepsnecessary to build the health insuranceco-op, including involvement of otherinstitutions and funding sources.

In the finest cooperativedevelopment tradition, a decision wasmade that a feasibility study with theseeds for a business plan was needed.This plan would need to determine ifthis co-op idea could work; if so, all the“how, what, who and when” questionswould have to be addressed.

We were very fortunate in thatmembers of our working group haddeep connections in the health careindustry, which led us to other individ-uals with expertise and even moreconnections who offered their help.This led to an important gathering lastFebruary of “interested persons” with avariety of specialties who wanted to bekept informed and involved.

The resources the working groupwas gathering were truly impressive byany measure within the Colorado healthinsurance, health care and ruraladvocacy communities.

The cost of the feasibility study(which included the costs for actuaryand statistical knowledge, as well as ananalysis of provider networks, claimsprocesses and general administrationand legal issues) was estimated at morethan $100,000. A budget wasestablished by interviewing four actuarycandidates and reviewing their costestimates, as well as securing costestimates for statistical work and theservices of a third-party administrator.

Fundraising then began, ultimatelyyielding generous commitments fromthe Colorado Health Foundation andUSDA to sponsor the feasibility study.

Preparing for HHS loan application

With the feasibility study underway,the working group began to plan forthe co-op’s HHS loan application,which was due in April, 2012. But whatwould the feasibility study reveal?

The results finally arrived, with theimportant revelation that the healthinsurance co-op was viable and could be

rural in focus. But the study also said aco-op must include urban, as well asrural, residents to ensure the number ofmembers necessary for the company tosurvive and thrive.

By March the time had come for thehealth insurance co-op to incorporate asthe Colorado Health InsuranceCooperative Inc., a Colorado nonprofitcooperative, with RMFU as the co-op’ssole member (until it actually beginsissuing policies). Five directors wereselected for the board: a former ruralhealthcare expert in government, aprominent cooperative lawyer anddeveloper, a former Colorado stateinsurance commissioner and stateauditor, a former health insurancecompany CEO, and a former ruralhealthcare administrator.

The co-op also needed to developworking relationships with Colorado’sDivision of Insurance. In early April,the co-op applied for about $69 millionin start-up and solvency loans fromHHS. The voluminous applicationeffort was led by the co-op’s interim,third-party administrator and actuary.The need for technical savvy at thispoint was paramount.

As we waited for the HHS decision-making process to unfold, the co-op

Board members of the Colorado Health Insurance Cooperative hope their experience launching their new co-op will be helpful to others consideringa similar cooperative. Photo courtesy Rocky Mountain Farmers Union

he Iowa Alliance forCooperative BusinessDevelopment (IACBD)and the AgriculturalEntrepreneurship

Initiative (AgEI) have developed anexperience-based learning program forIowa State University students, giving

them the opportunity to work withIowa’s rural cooperatives.

The program, funded through aRural Cooperative Development Grantfrom USDA Rural Development, isdesigned to team students and facultywith cooperatives to develop newbusinesses in rural areas.

Cooperatives are major drivers ofeconomic development in rural areasand are positioned to helpentrepreneurs. This program combinesthe energy of university students, thetechnical knowledge of faculty and thebusiness resources of establishedcooperatives to create new businesses.


began to plan for the start-up, with ahighly qualified interim CEO hired(based on some strongrecommendations) who performedmuch of the detail work at no charge.

Interview preparation pays off In mid-May, the first hurdle was

cleared when the co-op leaders flew toWashington, D.C., to be interviewedabout the loan application at the officesof business consultant Deloitte, HHS’scounselor in the selection process. Allfive directors participated, along withthe co-op’s interim third-partyadministrator, actuary and CEO. Theinterview went extremely well, thanksto the group’s careful listening to theexpectations that Deloitte laid out forthem, as well as thorough preparation(both in Denver and upon their arrivalin Washington the day before theinterview). The expertise of the co-op’sinterim third-party administrator,actuary and CEO also provedinvaluable during the interview.

By mid-June we had achievedsuccess. HHS notified the co-op boardpresident that the co-op had beenaccepted for ACA’s CO-OP loanprogram, subject to successful“negotiation” of loan particulars. (Thebasic loan terms — such as interestrates and repayment requirements —were non-negotiable, while others, such

as business plan milestones, neededfurther discussion or clarification.)

Just a short time later, the U.S.Supreme Court ruled in favor of ACA’sconstitutionality, and in late July the co-op’s loan documents were signed, thetransaction closed and the award wasmade public.

Permanent staff hiredThe board expanded to seven in

May, with the addition of a ruralhospital administrator and theadministrator of a rural, FederallyQualified Health Center. By mid-August, the board and the interim CEO(now being paid) hired a humanresources consultant, a project manager,a legal counsel, a regulatory-compliancespecialist, an accounting firm and apublic relations firm. All were hired asindependent contractors.

Interviews were also begun for a full-time CEO (six candidates passed theinitial review and a CEO was hired inSeptember). Job descriptions weredrafted and posted for the co-op’s chieffinancial officer, regulatory complianceofficer and director of consumerservices (all considered senior staffpositions).

Meanwhile, RMFU was planning tohire at least two outreach/educationstaff members, to assist in the essentialcommunity organizing, grassroots work

necessary to promote and develop theco-op throughout Colorado.

The co-op will begin marketingpolicies in the fall of 2013, with the firsteffective date Jan. 1, 2014.

Hard work, but co-op has huge potential

This process shows that there is anincredible amount of work to do whenstarting an insurance company. But withhealth care such a critical issue for somany rural Americans, it is an effortthat has to be made in more places.

To reiterate the themes mentioned atthe start of this article, the co-op’ssuccess has depended on enlisting thehelp of amazing people with a uniquevariety of interests, all of whom have apassion for helping people throughcooperative businesses. They also allhave an abiding commitment toimproving rural health care, andexperience and knowledge of healthinsurance and health care issues. Theyalso had strong connections built onlasting trust.

In short, they are really smart,passionate people who know everybodyin the health care field and are willingto work for free!

With that as a base, those whodream of dramatically changing thehealth insurance world for the betterreally can succeed. n

Iowa State students team with co-ops to develop new businessesBy Carly Cummings, Program Assistant, Iowa State University

TCO-OP MONTH


Pushing business concepts to the front burner

“The thought behind our program isthat managers at rural cooperatives havebusiness development projects thatoften are difficult to move off the backburner,” says Kevin Kimle, director ofthe AgEI at Iowa State. “Some of thoseprojects can be moved forward bystudents and faculty, teamed withmanagers from cooperatives.”

The program started in 2011 withthree interns working at FarmersCooperative Co. in Afton, Iowa. Thestudents conducted market research andfinancial analysis and reviewedengineering processes for a new feedbusiness the cooperative wanted todevelop.

“With the high price of corn andalfalfa, farmers are looking foralternative sources of energy and fiberin their feed rations,” says Randy Pettit,Farmers Cooperative feed manager.“Developing a product at a lower cost iswhat the market is demanding.”

The three interns, all students in theCollege of Agriculture and LifeSciences at Iowa State, completed aplan for the new business.

In 2012, the AgEI and the IACBDplaced another three interns withHeartland Cooperative in central Iowa.Their objective was to develop alogistics model and business plan forHeartland’s fertilizer business. MarcMelhus, Heartland vice president ofoperations, served as the project lead.

“The purpose of this project was tocompare and determine the best way forHeartland to provide custom fertilizerapplication services to our customers bylooking at the two distinct models wecurrently employ,” explains Melhus.“The students were challenged withexploring the economics of each modeland to consider the other factorsinvolved in consolidating the twomodels into one.”

Conducting market research After being briefed on the company’s

goals and objectives for this project, thestudents conducted market research andfinancial analysis and made locationvisits to familiarize themselves with thefertilizer market and Heartland’sbusiness structure.

Throughout the summer, thestudents collaborated with Iowa Statefaculty members Bobby Martens andGeorgeanne Artz to evaluate theefficiencies of alternative facilitystrategies. Many factors were built intothe analysis, including travel distances,building maintenance, fertilizer pricesand custom application costs. Theinterns were challenged with evaluatingeach of these factors and combiningthem to determine the optimal businessmodel for Heartland’s fertilizerbusiness.

“The students gave us the jump-startthe organization needed to pursue thebest decision for further developing our

fertilizer business,” says Melhus. “It wasalso a great way for students toparticipate in a high-impact businessdevelopment project at a cooperative.”

The program’s continuing goal is topartner with Iowa cooperatives andgenerate rural economic impact. Thepublic/private partnership modelcreates valuable opportunities forparticipating cooperatives as well as thestudents and faculty from Iowa State.

For more information on thisprogram, contact Stacey Noe, programcoordinator, at 515-294-4945, or:[email protected].

The IACBD is a USDA RuralCooperative Development Centerlocated at Iowa State that focuses onapplied research and agriculturalcooperative development. The AgEIprovides training and guidance tostudents for the development of high-growth agricultural businesses. n

These Iowa State University students have gained real-world experience in what it takes to run asuccessful cooperative. Touring a Farmers Cooperative Co. warehouse are student interns (fromleft): Nicole Jennett, Erica Lundy and Casey Clemens. Photo by Ronda Driskill


Editor’s note: Keeton is a Kentucky-basedwriter who produced this article on behalf ofthe Kentucky Center for Agriculture andRural Development.

entral KentuckyGrowers Association(CKGA) began in 1998as a vegetable market-ing cooperative when a

small group of growers decided todiversify away from tobacco, which hadbeen a mainstay on farms in the area.The new focus of their efforts was onhorticulture production.

“I began growing pumpkins for theco-op in ‘98 or ’99, I believe,” saysKevan Evans, owner of Evans Orchard.“I had already begun transitioning awayfrom tobacco into vegetable and fruitproduction, selling at farmers marketsand from a small farm market. Becom-ing a member of the co-op gave meanother marketing option to expand myhorticulture production before we reallystarted to grow our agri-tourismbusiness: Evans Orchard.”

The co-op became a key marketingoutlet for current CKGA president,Zeldon Angel. He began producinghorticulture products as he saw thechange looming for Kentucky’s tobaccoindustry. As a co-op member, Angelhas worked closely with themanagement to help identify newmarketing opportunities for the co-op.

“Over the years, we have triedalmost every marketing approach thatexists,” says Angel. “Some have worked,and others haven’t. But we have alwaysbeen open to hear new ideas.”

Currently CKGA is working withCastellini and Cabbage Inc. to market

Central Kentucky Growers helps members transition from tobacco to vegetablesBy Kara Keeton

CCO-OP MONTH

“Between the determination and willingness to sacrifice on our [members’] part, and KCARD’sdedication to work with us, we were able to pull out of the red,” says Zeldon Angel, president ofthe Central Kentucky Growers Association (CKGA). Photo courtesy CKGA


co-op products. The primary crops forCKGA are cucumbers and peppers —which can be packaged across theprocessing line at its facility — but ithas also had success with green beansand producing cabbage under contractfor Cabbage Inc., a fresh producecompany based in Sheffield Lake, Ohio.

“In the early years our members hadto step up financially to get the co-opgoing,” explains Angel. “Over the years,we have seen that level of financialcommitment from our members andthe community. It has been thatdetermination that kept us going evenwhen other co-ops were closing thedoors.”

Seed money helps co-op expand

In 2001, CKGA received a boostwhen it was awarded nearly $500,000 inKentucky Agricultural DevelopmentFunds for the purchase of equipmentand market development. These fundsallowed CKGA to work with moregrowers and buyers.

Soon, the growing co-op was in needof another expansion. In 2003, thegroup received an additional $300,000to update a production line, expand toyear-round marketing, and to meet theneeds of new and existing growers.

Evans admits that the funds from theAg Development Board (ADB) werecritical to the early development andgrowth of CKGA. But serving ascurrent secretary and one-timepresident of the co-op, Evans alsorecognizes that there were challengesthe group faced in those early yearswith inexperienced members,production problems, retaining buyersand general management issues thatneeded more than just money to fix.

“One of our biggest issues was thetobacco mentality,” said Angel. “Thethought was that if we grow it, there isa market for it; but it is not that way inthe vegetable business.”

Evans and Angel both point toCKGA’s involvement with the KentuckyCenter for Agriculture and Rural

Development (KCARD) as the keyfactor to helping the organizationovercome the challenges along the way.

“In 2005, we were struggling withseveral issues at the co-op and wentback to the Ag Development Board forfunding assistance; we received about$121,000 as a forgivable loan tostabilize management and purchasenecessary equipment,” explained Angel.“Yet, what made the difference with thisround of funding was that we began

working with Larry Snell [KCARDexecutive director] and KCARD to geta handle on financials.”

Angel explains that working withKCARD helped the CKGA board ofdirectors realize what needed to doneeach year to make accurate projectionsabout how to run the business. Theyfollowed KCARDs recommendationand brought in an outside company in2006 to run the business for a year togive them ideas on management.

“When we began working withKCARD, we were in the red. But LarrySnell and the staff just kept workingwith us on what we needed to do on thefinancial side to get a better handle on

things and to make accurate projectionsso we could pull enough out to balancethe budget,” says Angel. “Between thedetermination and willingness tosacrifice on our members’ part andKCARD’s dedication to work with us,we were able to pull out of the red.”

Strong working relationship with KCARD

Since that experience, the co-op hascontinued to work with KCARDperiodically to review finances, policesand general management. Recently, thegroup had to turn to KCARD onceagain as it met with the AgricultureDevelopment Board to review the termsof the forgivable loan.

“If we hadn’t worked with KCARDduring this evaluation of our agreementwith ADB, then the deal probablywouldn’t have gotten done,” Angel says.“KCARD’s knowledge of the industryand the fact that they were workingwith us to address the terms of theagreement brought to the table a levelof credibility that helped us to achieve aworkable agreement.”

“The major strength of CKGA is theleadership and unwavering commitmentof its board of directors over the years,”says Snell. “They are determined thatthe cooperative will succeed andprovide a reliable market forcommercial vegetable growers inCentral Kentucky.”

Angel realizes there will continue tobe challenges for CKGA. This year themajor challenge has been the weather.Dry, hot conditions have made itdifficult for the group to producequality products to take to the market.But he believes that the commitment tothe CKGA remains.

“As much hard work as we have allput into the co-op, I hope we are stillgoing strong in five to ten years,” saysAngel. “We want to make it self-sustaining and keep it going. It willwork, but we just need to find a fewmore growers who are willing to makethe sacrifices to produce a qualityproduct for the market.” n

Butch Case is vice president and a long-timemember of CKGA, which was launched in1998 to help tobacco growers switch tovegetable and fruit crops.


Editor’s note: This is a condensed andslightly adapted version of an article byShlomit Auciello that was originallypublished in the Aug. 16, 2012 edition ofThe Lincoln County News. It isreprinted here with permission.

The Cooperative Development Institute(CDI) (www.cdi.coop) is the Northeast’scenter for cooperative business education,training and technical assistance. It hasbeen serving New England and New Yorksince 1995. This year, CDI formed apartnership with the Genesis Fund to bringmore resident-owned cooperativedevelopment to the state of Maine.

“We look forward to helping moreresident-owners build communities and takecontrol of their circumstances,” says NoemiGiszpenc, CDI executive director. “Whenco-ops pay attention to their members’ needsand leverage their collective resources, theycan become the seedbed of new cooperativeactivities that benefit their owners and thecommunity.”

he story of Medomak Mobile Home

Cooperative illustratesthat when residentsgain control over theirshared land, they areable to mobilize greater

trust and care, which can translate intosuch tangible benefits as affordable localfood and better maintained homes andgrounds. This in turn makes the park adesirable place to live, ensuring lowerturnover and quicker filling of vacancies— which benefits the co-op’s bottomline.

When the board of the 32-unitMedomak Mobile Home Cooperativein Waldoboro, Maine, heard asuggestion last summer to create acommunity garden, treasurer LindaNorwood took action.

Norwood, who has lived at the parksince 1995, went next door to theHannaford supermarket to research thecost of a salad, pricing the lettuce,tomatoes, cucumbers and onions. Whenshe compared the result against what it

would cost to grow the vegetables athome, she asked the board for support.

With the help of the Genesis Fund,which had supported the park’sconversion to a co-op in 2006, andcontributions from businesses andindividuals, co-op members built sixraised plant beds. They filled them withsoil, planted seeds and seedlings, andlearned how to use organic methods.

The project was just one of manyways the co-op works to build a close-knit community. Last year, membersworked side-by-side with volunteers onrepair projects to improve the safety ofindividual homes. In addition, residentshost work days approximately once amonth to maintain the grounds, clearabandoned home sites and makeimprovements to common facilities.

“There’s tremendous communitybuilding,” says Liza Fleming-Ives,associate director of the GenesisCommunity Loan Fund. At the end of awork day, residents gather for acommunity meal.

“People live busy lives,” Fleming-Ives says. “Many in the park workmultiple jobs, all kinds of shifts, haveyoung children or are elderly.” In spiteof the efforts residents undergo just tomake ends meet and take care of basicresponsibilities, they work hard to meetthe challenges of community living, shesays.

Norwood says the formation of acooperative has meant that residentstake a greater interest in the well-beingof their neighbors.

“Since the co-op has taken over,there’s been a big change,” says John

TCO-OP MONTH

Public garden latest addition at resident-owned community in Maine

The community garden at the MedomakMobile Home Cooperative has helped improvethe diets of members with more freshproduce.

ne of the major limitingfactors on growth ofthe nation’s organicdairy and livestockindustries is the

availability of quality organic feeds at anaffordable price. That’s why a new co-op of dairy farmers in northern Indianais pursuing the purchase of an organicfeed mill to help ensure the future

viability of their farms andcommunities.

Co-op seen as vital for community

The Indiana CooperativeDevelopment Center (ICDC) wascontacted in early 2011 by Wisconsin-based Organic Valley — the nation’slargest organic cooperative — and asked

to assist a group of 80 organic milkproducers in northern Indiana form acooperative to purchase a local organicfeed mill in Wolcottville, Ind. Thefarmers are also members of OrganicValley.

Most of these producers have smallorganic farms with fewer than 50 dairycows. The majority of the milkproducers belong to the local Amish


Flaherty, a veteran who serves ascooperative president and has lived atMedomak since 1996.

Gardens help residents help each other

“Most of the people in this park areon low- and fixed-incomes,” Norwoodsays. “Many are on food stamps(SNAP). I wondered how they wouldeat if prices kept going up.”

She sited the garden on land that istoo wet for mobile homes, and soughtdonations of money, lumber and plants.She used the cash to buy tomato cages,sticks, twine, chicken wire andmarigolds.

“Everything else has been donated,and happily donated,” she says.

Seedlings came from a local gardencenter, along with more advice andsupport. A signboard, next to the plantbeds, lists 17 sponsors who helped makethe gardens a reality.

“They grew like you couldn’tbelieve,” Flaherty says. Next year thecommunity hopes to have 18 raisedbeds. He says he plans to have two bedsnext year, so that he can grow food togive away to his neighbors.

“I’m happy just sitting on a stoolwith a jar of mayonnaise and a loaf ofbread in the cucumber patch,” says

Norwood, who is now head of theGarden Committee.

When Flaherty was hospitalized,early in the summer, Norwood andother neighbors kept an eye on hishouse and watered his garden. For hispart, Flaherty brings a daily basket ofcherry tomatoes to a couple who do nothave a garden. Norwood says that is

representative of changes in thecommunity since residents took overownership.

“Here, we care about everybody.Everybody owns this now. People takecare of what they own. That’s what thisis all about,” Flaherty said. n

Co-op members use this sign by the community garden to thank their sponsors. Seen here areLinda Norwood, co-op treasurer, and John Flaherty, co-op president. Photos by Shlomit Auciello

Feed mill seen as key to success of Amish dairy farmsBy Debbie Trocha, Executive Director, Indiana Cooperative Development Center

OCO-OP MONTH


community, a group which usuallyprefers to avoid public exposure.

Their leaders are mostly elders ofthe community (although there are alsosome younger producers in their 30srising to leadership positions) and theytypically do business on a handshakeagreement, which can be problematic intoday’s business world.

Social responsibility is more than abuzz word for the Amish — it’s a way oflife for them. They are thus developingthe cooperative for “the community” —not only for their community, but fortheir neighbors as well. They look atthe organic model as the best way tokeep their small farms profitable andsustainable.

An initial two-day meeting of allinterested parties was held in lateMarch 2011. A five-member executivecommittee was formed, and funds werecommitted for initial expenses for theformation of a cooperative.

Future linked to reliable feed supply

These milk producers wereconcerned about their ability to obtain areliable supply of high-quality organiclivestock feed and supplies — with adegree of price stability — forthemselves and for future generations.The Wolcottville Organic Feed Mill is

a major source oforganic feed fortheir dairy herds.The continuedoperation of themill is thusviewed as key tothe expansion of

the area’s organic dairy/livestockindustry and the profitability ofproducers.

Following the initial meeting, ICDCstaff worked with the co-op organizingcommittee to explore the possibility ofpurchasing the Wolcottville OrganicFeed Mill. ICDC staff helped thesteering committee review andunderstand the financial statements ofthe existing mill operation and toidentify a firm that could provide a fairappraisal of the mill’s value.

An attorney experienced in co-op lawwas identified, and ICDC staff assistedin the development of the co-op’sarticles of incorporation and bylaws.

By 2012, the steering committee wasmeeting every two weeks to completethe co-op organizational documents. InApril 2012, the cooperative — theW.O.L.F. (Wolcottville OrganicLivestock Feed) Cooperative — wasregistered with the Indiana Secretary ofState, and its first board was elected.

Because a number of producers inMichigan are interested in becomingmembers of the cooperative,incorporation in Michigan is also beingconsidered.

Equity drive meets goal Membership documents were then

developed and the equity drive began inmid-summer. It took only a few weeksfor the co-op to reach more than 50percent of its goal of raising $250,000.The directors have established a goal ofhaving a 50-percent equity stake priorto the purchase of the mill.

ICDC provided training in July forthe board to ensure that membersunderstood their fiduciaryresponsibilities to the co-op.

As of this writing, in earlySeptember, the co-op expects topurchase the feed mill by the first of theyear, helping to ensure the futureviability of organic dairy productionamong this community of farmers.

“Our producer-members knew theywanted to form a cooperative from thebeginning.,” says Dan Mosgaller,regional coordinator for Organic Valley.“Without the assistance from theIndiana Cooperative DevelopmentCenter, W.O.L.F. Cooperative wouldnot be at this stage of development.” n

Amish dairy farmers in Indiana have formed a co-op to pursue the purchase of an organic feed mill. Most Amish farmers, such as this one inPennsylvania, rely on horses or mules to work their crops. USDA photo by Dan Campbell


he loss of a grocerystore in a ruralcommunity can be adevastating blow,especially when it is the

only, or at least major, source of localgroceries. Not only do people then haveto travel farther and expend more timeand money to get their groceries, but itcan also be a serious blow tocommunity pride and make it harder toattract new residents and businesses.

When the only grocery store inElwood, Neb., closed last January,community leaders quickly responded,organizing a community meeting thenext month to consider opening acooperatively owned grocery store. Themeeting attracted more than 100people, almost all of whom felt that agrocery store was vital to the future ofthe community.

Following the meeting, communityleaders developed and distributed asurvey to gauge interest in opening aco-op grocery store, which revealedwidespread support for the concept. Acommitted, hard-working steeringcommittee was then formed to pursuethe project.

This steering committee formed sub-committees that focused on facilities,business and finance issues, andincorporation options. Expert advicewas sought from a local attorney,insurance agents, former store owners,neighboring stores and managers ofgrain co-ops in nearby towns (one grainco-op also owned a grocery store). Ideaswere also sought from cooperativeaccountants, area economic developersand grocery suppliers.

A financial plan was developed forremodeling the store, and morecommunity-wide meetings have beenheld, showing that there continues to be

widespread support for opening a newgrocery store.

The cooperative was incorporated inMay as the Elwood HometownCooperative Market. The board ofdirectors is conducting a membershipdrive. If the drive is successful, theformer store location will be purchasedand remodeled, with operationsanticipated to begin before the end ofyear.

The Nebraska CooperativeDevelopment Center (NCDC)provided the outline for this process, aspreadsheet for the financials, referralsfor attorneys and guidance for eachcommittee. It has been working hand inhand with the steering committee eachstep of the way.

Farmers’ Market AssociationThe Farmers’ Market Association

was proposed in 2010 as a way ofcreating a network that would connectNebraska farmers markets andmanagers. The need for such anorganization was underscored by adoubling in the number of farmersmarkets in Nebraska during the past 10years.

NCDC hosted anexploratory meeting incentral Nebraska, invitingall farmers’ marketmanagers from across thestate. The meetingexplored the potential of astatewide association andthe kinds of programs andservices an associationcould provide its members.These services couldinclude: consumereducation; groupmarketing opportunities;assistance with funding(such as grants and

fundraising); market manager training;statewide networking; and how toaccept SNAP (food stamp) benefits, anddebit and credit cards for payment atfarmers markets.

A steering committee was formedand has continued to meet regularly toplan an organizational structure thatcould be a model for a futureassociation. The committee successfullyapplied for a Specialty Crop BlockGrant from USDA this year to improvefood safety in Nebraska’s farmers’markets. In partnership with theUniversity of Nebraska–Lincoln, aseries of GAP (Good AgriculturalPractices) workshops were held acrossthe state for vendors and marketmanagers. Market managers wereprovided with food safety tool kitswhich included educational materialsfor market customers and marketingideas.

NCDC awarded the committee asmall grant in 2012 to assist it withpaying incorporation legal fees,membership recruitment and annualmeeting planning. It is anticipated thatthe committee will complete its work

Nebraska town striving to recover from loss of grocery store By Amanda Lynne Bergstrom, Graduate Assistant, Nebraska Cooperative Development Center

TCO-OP MONTH

The number of farmers markets in Nebraska has doubledduring the past 10 years, leading to the formation of theFarmers’ Market Association. Photo courtesy Nebraska Co-op Development Center

Editor’s note: Smith is executive directorat the Keystone Development Center inYork, Pa.; Fogarty-Harnish is a co-opdevelopment consultant at Keystone. Theauthors thank Gef Flimlin, professor andmarine extension agent with RutgersCooperative Extension, for his assistance.For more information about Keystone,contact: [email protected].

ne of the KeystoneDevelopment Center’smost exciting newprojects involves oysterand clam growers in

New Jersey. This group is employingstate-of-the art technology to raiseoysters and clams in a controlledenvironment — first in laboratorysettings, then in coastal waters and inDelaware Bay, leased from the state ofNew Jersey.

Shellfish are spawned in New Jerseyhatcheries, where they are fed specially

grown phytoplanktonand nurtured until theyare large enough to benourished on bay waterin land-based nurseries.After that, the clams (8to 15 millimeters insize) are planted on thebay bottom andcovered with ¼-inchplastic mesh, wherethey remain until readyfor harvest in abouttwo to three years.

The oysters gothrough a similar land-based rearing process,but are grown in heavymesh bags, which areusually raised off thebay bottom, until theyreach market size in twoyears. Constant cleaningand management of the


and formally organize the associationsometime this fall.

Co-op Business Assessmentand Evaluation Program

As cooperatively owned businessesdevelop and implement their businessplans, many return to NCDC in theirsecond through fifth years of operation,seeking assistance in taking another stepforward in development of theirbusiness. These co-ops, which typicallyhave accomplished their initial goals,have encountered obstacles andidentified opportunities for furtherbusiness development.

NCDC has now developed a formalbusiness assessment and evaluation toolfor use with cooperatively or mutuallyowned companies in Nebraska. It isbased on the model developed by the

Kentucky Center for Agriculture andRural Development (KCARD).

The “Nebraska model” forcooperative business assessment wastested in 2011, and the program wasimplemented in 2012. The businessassessment program is called CoBAsE(Cooperative Business Assessment andEvaluation). It is a fee-for-serviceprogram from NCDC.

One such study was completed in2012 for a co-op that began business in2005, and NCDC has also assisted twoother groups, formally and informally,under the program.

The business assessment programnormally consists of:• Initial meetings with board andcritical partners;

• Interviews with the board andemployees, cooperative members,

business partners and resourceproviders;

• Review of several years of financialstatements;

• Review of past business plans, ideasand studies;

• Review of marketing materials,website and social media use;

• Review of physical facilities andprocesses;

• Review of past and current feasibilitystudies.Following the formal report of the

findings to the board, NCDC providesa list of recommended “action steps” aswell as a timeline for action. As a partof its “normal” work process, NCDCwill continue to work with CoBAsEclients for follow-up of businessdevelopment and growth. n

Jersey shellfish co-op well situated for growth By Cathy Smith, Peggy Fogarty-Harnish

OCO-OP MONTH

Shellfish grower Charlie Cummings directs a jet of water as hecleans his new crop of clams. Co-op members also raise oystersin New Jersey coastal waters and Delaware Bay. Photoscourtesy Keystone Development Center


crop is necessary to reduce mortalityfrom predation or bio-fouling, causedby seaweeds. (Author’s note: thisdescription is a simplified version of theprocess).

A major competitive advantage forthe New Jersey shellfish growers is theproximity of their production areas toroughly 40 percent of the U.S.population along the New York-Washington D.C. corridor, which alsocontains eight of the nation’s top 10counties for median income.

Keystone Development Center(KDC) is helping the group tocooperatively develop its marketthrough a variety of strategies. RutgersCooperative Extension of OceanCounty (Marine Extension), the NewJersey Sea Grant Consortium and theNew Jersey Department of Agricultureare KDC’s partners in the developmentof the shellfish cooperative.

Shellfish farming createsenvironmental benefits

A growing body of scientificinformation is documenting theenvironmental benefits of shellfishfarming. These benefits include: marinehabitat creation; removal of excessiveamounts of nutrients from water;carbon sequestration; shoreline andbottom stabilization; reduction in theimpact of waves on coastal areas; and

more productive natural shellfish beds. Shellfish farmers pay permit and

lease fees for the privilege of conferringthese benefits to the public through thecourse of producing their product.There has been discussion aimed atgenerating revenue for shellfish growersin exchange for the environmentalbenefits that result from shellfishproduction. The growers hope that avalid strategy is to leverage theseenvironmental benefits toward the goalof generating a greater connection with

customers who value local foodproduction. Access to newmarkets and price premiums is apositive business outcome offorging these local foodconnections.Eight to 10 clam growers and

12 oyster growers in New Jerseyhave begun the process ofdeveloping a marketing,purchasing and shared-servicescooperative for their products.KDC is currently assisting thegroup with a logistics study forlocating a shellfish aggregationcenter. KDC is also assisting itspartners in the development of asurvey that would gauge

production volume and is examining theexisting infrastructure and potentialmarkets available to producers.

The current transportation anddistribution assets of shellfish growersare predominantly built to serveconventional sales to wholesalers incoastal and shore-oriented retail outlets,which are highly seasonal. One of theirgoals is to expand their year-roundmarkets.

Forging links with food co-opsIn the next year, KDC will continue

to assist the group with logistical plansfor siting aggregation points,identifying area markets and developingtransportation plans for efficientmarketing. This includes connectingshellfish producers with foodcooperatives in the area — a primarygoal for the group.

The growers identified thedevelopment of effective, direct-marking strategies that emphasize thelocal aspect of farm-raised shellfish astheir most significant marketingchallenge. Emphasis on local foodproduction is, likewise, a viable strategyfor shellfish growers in other regions.Currently, more than 85 percent of theseafood consumed in the Unites Statesis imported, so the market is open forlocal products.

The MidAtlantic Alliance ofCooperatives (MAFCA) is being used asone resource to help develop theconnections to food cooperatives.MAFCA, in its third year of operation,is a network of food cooperatives in theMid-Atlantic area. KDC has beeninstrumental in the formation of theorganization and continues to supportthis important organization.

MAFCA currently has 22 membercooperatives and has identified anadditional 20 potential members.Within this group are 10 start-upoperations, most of which KDC hasbeen advising.

The food cooperative members havean estimated total membership of nearly39,000 individuals or households.Current aggregate gross sales are morethan $100 million, not including theprojected sales of the start-ups.

MAFCA estimates that its membersare already purchasing more than $16million annually in local products.Representatives of the shellfish grouphave met with several food cooperativesin the area through MAFCA, and theresponse has been very positive.

“Through this project, our memberswould have improved access to localseafood, as well as the knowledge thatwe are contributing to a sustainable,local, cooperative economy,” says SueWasserkrug, an MAFCA boardmember. “This project would be animportant component in expandingaccess to local shellfish for thousands offamilies in the Mid-Atlantic region,while ensuring the vibrancy of thecoastal New Jersey economy.” n

A co-op member’s oyster hatchery near Atlantic City, N.J.

Use of joint ventures by ag co-ops on rise

By Bruce J. Reynolds Ag EconomistUSDA Rural Development

oint ventures andsubsidiaries offeralternative ways forcooperatives to testmarket opportunities or

to gain expertise about new industrieswithout having to build a new divisionwithin their organizations. In somecases, providing a new service mayinvolve such large economies of sizethat sharing costs in a joint ventureproduces substantial savings.

The types of businesses thatcooperatives establish as joint venturesare examined in a recent researchreport, Joint Ventures and Subsidiaries ofAgricultural Cooperatives, ResearchReport 226, available for downloadfrom USDA at: www.rurdev.usda.gov/BCP_Coop_RRs.htm; or, for a free

hard copy, send e-mail to: [email protected]. This article is based onthat report.

Survey methodologyThe collection of data for this report

combined a mail survey with follow-upby telephone of cooperatives thatreported involvement in joint ventures.The 185 co-ops reported having 108wholly-owned subsidiaries and 209 jointventures.

The follow-up by telephoneinterviews identified the names of thejoint ventures, enabling the eliminationof any duplicate reporting of jointventures. In addition, details on thetypes of businesses that cooperativesorganized in joint ventures wereobtained; the same information was notcollected for wholly-owned subsidiaries. The distribution of different types ofbusinesses for joint ventures is

presented in the pie chart.Several distinctive developments are

identified in the report, of which threeare highlighted in this article: theprevalence of the Limited LiabilityCompany (LLC) as a legal form fororganizing, using joint ventures tocombine all business operations ofseparately owned partners and thestrategy of spawning new businesses.

Use of Limited Liability Companies (LLC)

Cooperatives have establishedsubsidiaries and participated in jointventures over many decades, but theavailability of the LLC as a legal formof organizing during the mid-1990ssignificantly increased their number. Ina survey from 2010/2011, agriculturalcooperatives reported participation in240 LLCs, of which 172 were jointventures. A corporation was the second

J

The Scircleville Grain and Fertilizer hub in Indiana is part of Co-Alliance LLP, ajoint venture of five cooperatives. Photo courtesy Co-Alliance LLP.



most used form, followed by limitedliability partnerships.

A 1975 study of cooperativesinvolved in food marketing andprocessing identified 22 joint ventures,as compared to almost 100 federatedcooperatives in operation at that time.Comparing those findings with theresults of USDA latest research suggeststhat the LLC form of organization isbeing used in many cases as a substitutefor incorporating as a federatedcooperative.

Many cooperatives have jointventures that include non-cooperatives.Although a federated cooperative can beestablished with non-cooperatives, it ismore common today to have jointventures instead. The 1975 studyidentified six joint ventures with bothcooperatives and non-cooperatives outof a total of 22 such businesses. Bycontrast, the recent study showed thatthere were 83 joint ventures thatincluded non-cooperatives partners outof 175 joint ventures that reportedpartner information.

The availability of organizing as anLLC may not only increase thefrequency of joint ventures but also

accommodates more of them betweencooperatives and non-cooperatives. Ofcourse, other market forces have alsoplayed a part in increasing theparticipation of cooperatives with non-cooperatives in joint ventures since1975.

Most of the joint venture activitywith agricultural cooperatives did notinvolve numerous partners (more than20). Joint ventures with 7 to 20agricultural cooperatives as memberswere mostly organized for purchasingsupplies, obtaining regulatory compli-ance services or sharing marketingagents.

The survey identified 17 farm supplypurchasing joint ventures, with oneorganized as a cooperative and theother 16 as LLCs. By contrast, thereare several examples of purchasingcooperatives organized by non-agricultural small businesses (asreported in USDA’s CooperativeInformation Report 63). They mostlyoperate nationwide, with membershipswell in excess of 100.

Examples include Imark, whichpurchases supplies for electricalequipment distributors, and Carpet

One, with a large membership of storeowners who retail carpet and floorproducts.

Organizing large memberships incooperatives rather than in LLCs mayhave advantages for empowering aboard of directors. Delegating decision-making authority to a small board ofdirectors in a cooperative is sanctionedby incorporation statutes. Grantingsuch authority to a few partners in anLLC with a large membership mayinvolve more complex legal provisions.

Business combinations Since the early 1990s, there have

been several instances of neighboringcooperatives combining a division, suchas their agronomy units, into a singleoperating unit. These joint actions areoften precursors to mergers of thecooperatives. A recent development forsome local grain and farm supplycooperatives is to form joint ventureswith similar businesses that combine alloperations into an LLC operatingentity with one trade name. In thesecases, there is no plan for a futuremerger. Instead, each cooperativefunctions as a holding company for the

Processing 30

Marketing agent 21

Other 29

Bioenergy 16

Fuel distribution 21

Joint ventures by type of business operation

Business combination 6Agronomy 29

Feed mills 21

Supplies purchasing

Grain terminals 19

joint venture and retains its separatemembership for distributing patronagedividends.

The survey identified six jointventures that combine all grainmarketing and farm supply servicesunder one trade name. Four of theseventures include cooperativespartnering with one non-cooperativefrom different multi-nationalagribusiness companies.

When operating with non-cooperatives under a new trade name,cooperative identity may be diminishedor lost for future generations offarmers. Two of these business-combination joint ventures exclusivelyhave cooperatives as partners andpromote cooperative principles to theirmembers.

Business spawningIn contrast to combining business

operations of two or more cooperatives,joint ventures can also be organized for

entering businesses in which thepartners have not had previousinvolvement. One form of this type ofdevelopment is called “spawning,”which refers to a business that helpsothers start up a new activity that itdoes not want to exclusively own andoperate within its organizationalstructure.

The survey identified a few examplesof spawning. Large regionalcooperatives participate in some jointventures for facilitating directinvolvement and ownership by localcooperatives in new businesses. Forexample, several feed milling jointventures involved a large regionalcooperative working in joint ownershipwith local cooperatives.

There were also examples of ruralelectric cooperatives participating inpropane distribution joint ventures withfarm supply cooperatives to assist in thestart-up of those businesses. The ruralelectric co-ops eventually left the joint

ventures once these propane businesseswere firmly established. Apart fromjoint venture partnering to spawnbusinesses, utility cooperatives also havea role in helping USDA RuralDevelopment implement renewableenergy programs and new enterprises.

Working togetherUSDA Cooperative Programs’

Research Report 226 updates thecurrent status of cooperativeinvolvement in joint ventures andsubsidiaries. It reports a variety ofdifferent types of businesses wherecooperatives have identified advantagesof lower costs and better performanceby working with others.

As cooperatives represent farmersand ranchers working together, thisresearch shows that they can extend thesame idea in forming joint ventures withother cooperatives and businesses. n



‘The pillar of my home’

By Anja Tranovich

Coffee co-ops brewbetter quality oflife for Ethiopianfarm families

Editor’s note: Anja Tranovich is editor and media relations seniorspecialist for ACDI/VOCA, a nonprofit organization promotingeconomic and cooperative development around the world. ACDI/VOCAhas worked in 145 countries since 1963 implementing projects fundedby USDA, the U.S. Agency for International Development (USAID),ACDI/VOCA member cooperatives and farm credit banks, the Bill &Melinda Gates Foundation and others.

It has been a long, bumpy road for members of the FerroCooperative in Ethiopia, seen here sorting and dryingtheir crop. But the co-op is helping growers earn a betterreturn for their coffee. Photos courtesy ACDI/VOCA


n 2005, the Ferro coffee cooperative inEthiopia accomplished a remarkable feat: itsShirkina, dry-processed coffee was designatedas a Starbucks’ Black Apron exclusive coffee.It was only the eighth coffee in the world to

receive the designation. Starbucks introduced the Black Apron label in 2004 to

designate “rare, exotic and cherished coffees…that representStarbucks’ expertise in coffee and dedication to the farmerswho grow the finest beans.”

The Seattle coffee giant has worked closely with the co-op, buying the first year’s crop even when it ultimately had tobe thrown away due to problems during the sun- dryingprocess. But the second year’s harvest produced an

I


extraordinary, limited-issue coffee that Starbucks marketedwith great success. The company also provided a $15,000grant to the Ferro co-op’s community and extended $5million in financing through a nonprofit associate, EcoLogicFinance.

For the co-op members, it had been a long, bumpy pathfrom Ferro’s small “backyard coffee gardens” to upscalecoffee shops in the West, glowing reviews and a rarefiedretail price of $26 per pound.

World’s 2nd most valuable commodity

Much is at stake in the global coffee market. Coffee is the

world’s second most valuable commodity, trailing onlypetroleum. Today, most coffee lovers don’t blink at thepremium prices fetched by Ethiopian specialty-roast coffee inhigh-end shops. But it wasn’t always that way.

Ethiopia, the birthplace of coffee, once had a reputationfor producing mediocre quality coffee. Its coffee wasaggregated and sold as a bulk commodity instead of as avalue-added, specialty food. Government intervention,limited availability of capital to farmers and carelessprocessing kept Ethiopian coffee — and its growers —marginalized.

A number of U.S. development organizations,cooperatives and volunteers worked with USDA, the U.S.

“Without cooperatives, Ethiopian coffee growerswould be out of the market.”

Ethiopia, considered to be the birthplace of coffee, is regaining its reputation as a producer of premium coffee beans, seen here being dried.


Agency for International Development (USAID), theEthiopian government and Ethiopian farmers for nearly twodecades to reform the cooperative sector. That workpropelled the development of the entire coffee value chainupward, enabling cooperatives such as Ferro to reach new,vastly expanded markets.

“Without cooperatives, Ethiopian coffee growers would beout of the market,” says Asnake Bekele, general manager ofthe Sidama Coffee Farmers Cooperative Union, whichrepresents 80,000 smallholders. There are now 37,647primary cooperatives in Ethiopia, with 5.9 million individualmembers. Cooperatives directly benefit 39 percent of thecountry’s farmers.

U.N. recognizes promise of cooperativesThe United Nations (U.N.) has designated 2012 as the

International Year of Cooperatives, and the U.N.’s Food andAgricultural Organization (FAO) is celebrating World FoodDay on Oct. 16 with the theme: “Agricultural Cooperatives:Key to Feeding the World.” These efforts resonate deeply ina place like Ethiopia, where growers’ needs are virtuallyunlimited and food shortages constantly loom. Co-ops hereare a critical organizing medium and a catalyst for economicgrowth.

With a history of recurrent drought and regular structuralfood deficits, Ethiopia faces serious agricultural challenges.Half of the country’s gross domestic product is based onagriculture, but a lack of technical know-how, widespread useof out-dated agricultural practices and a co-op system thatwas previously more of an entity of the state than a modernbusiness model all combined to inhibit economic growth.

On-the-ground training and development

After the collapse of the authoritarian Derg regime in1991, the United States began providing Farmer-to-FarmerProgram volunteers and other assistance to boost Ethiopia’sagricultural sector. ACDI/VOCA and Land O’Lakes wereamong the organizations that sent U.S. volunteer experts totrain local cooperatives in management, accounting andoperations under Farmer-to-Farmer and other developmentprograms.

Volunteer Brad Perry, the president of an agribusinessconsulting firm in Omaha, Neb., has completed fiveassignments in Ethiopia. His first trip was to Yirgalem, anarea in the heart of the country with rich soil and a dampclimate. Working all day in a university classroom, with onlyshort coffee breaks during the intense heat of the day, hetrained about 40 cooperative members in financialmanagement.

The trainees were “extremely capable and competentpeople,” Perry recalls. “The highest compliment I couldgive,” he continues, “is that I’d hire them in a heartbeat.”

But the Ethiopian marketplace presented many barriers.Labor is cheap in Ethiopia, while capital — especially duringthe 1990s — was nearly inaccessible, acutely so for farmers.

In his classes, Perry would set aside time to work throughcase studies, each of which identified an actual problemfacing their co-ops. It seemed that nearly all his projectsbecame feasibility studies on how to amass capital to purchasea truck, expand coffee processing or build a warehouse.

Cooperative unions provide breakthrough

Co-op capacity building took place both person-to-personand insti-tutionally. In 1997, ACDI/VOCA began a USAID-funded program to consolidate primary cooperatives intounions in order to increase their leverage and impact throughincreased bargaining power, management capacity andeconomies of scale. This helped them access capital.

One of the first apex organizations — the LummeFarmers’ Cooperative Union — initiated a competitivebidding process and bought inputs directly from importers tosave $175,000 in fertilizer costs for all cooperatives in theOromia region.

Over two years, the success of this union model wasreplicated in other districts of the region, reducing overallfertilizer costs by $4 million for 47,000 coffee and cerealfarmers. For the first time in Ethiopian cooperative history,farmers were also paid a dividend on their production.

These dividends had direct impact: they allowed memberssuch as Etensesh Mekonen to cover her thatched-roof housewith corrugated iron sheeting. Other union membersinvested dividends back into their coffee ventures, startednew businesses or paid for their children’s education.

Strengthening co-ops’ capacity to scale up

Ethiopian cooperatives worked with U.S. businesses andagencies to build a reputation as a source for high-quality,organic and fair trade coffee for the global market. It was acomprehensive, value-chain approach that addressedopportunities and constraints at each level of the industry.The emphasis was placed on strengthening cooperationamong small-scale producers, as well as establishingsecondary cooperatives or unions to achieve the economies ofscale needed to reach international markets.

The coffee unions won the right to sell outside of the stateauction process. Once international roasters and buyers couldpurchase specific lots of coffee instead of undifferentiatedcommodity, there was a revolution in coffee quality.Suddenly growers had incentives to produce carefully tendedand processed coffee; quality standards soon skyrocketed.

In 2005, the California-based Ecafe Foundation workedwith local stakeholders to organize a co-op coffee



Land O’Lakes acquires Kozy Shack

Land O’Lakes has acquired KozyShack Enterprises Inc., a market leaderin the chilled dairy desserts category inNorth America. “Kozy Shack is a strongstrategic fit with our value-added dairyfoods product portfolio,” says LandO’Lakes President and CEO ChrisPolicinski.

Kozy Shack, based in New York, wasfounded more than 40 years ago andmarkets dessert products in the UnitedStates and Canada, with a smallpresence in Ireland. Its plant inHicksville, N.Y., produces 70 percent ofits product volume. It also has a plant inTurlock, Calif. The company also ownsand operates a logistics servicescompany, Freshway Distributors, whichserves various third-party manufacturersand distributors.

“The acquisition of Kozy Shackrepresents a new category for Land

O’Lakes — refrigerated desserts —which offers our retail customers aneven wider selection of premium dairyfood products,” Policinski says. LandO’Lakes will apply its extensive sales,marketing, distribution and customerservice expertise to expand sales of theseproducts, he adds.

Co-op conference toexplore global market trends,innovation

Ways in which agriculturalcooperatives can strategically positionthemselves for sustainable growth willbe the focus of this year’s FarmerCooperative Conference, Nov. 8-9 inMinneapolis. Now in its 15th year, thisannual national conference regularlyattracts top cooperative business leadersand industry experts. They cometogether to share the latest research,trends and innovative approaches byagricultural cooperatives.

The conference is organized by theUniversity of Wisconsin Center forCooperatives, with assistance from aplanning committee of industry andacademic experts.

This year’s conference theme is“Leading Change: Envisioning theFuture.” Sessions will address theimpact of the global economy on co-ops, federal policy developments,valuing cooperative businesses inmergers and acquisitions, trends in theenergy marketplace and successfulcooperative leadership programs.

“This is one of the few events whereacademics, service providers, directorsand employees of cooperatives have anopportunity to interact in the sameforum,” says Michael Boland, aprofessor of agricultural economics atthe University of Minnesota. He isexamining the culture of safety withincooperatives and will be moderating apanel at the conference on developing

NewslineSend co-op news items to: [email protected]

Co-op developments, coast to coast


better practices relating to risk andsafety.

Support for the program comes fromCoBank, CHS, Dorsey & Whitney,Farm Foundation, GROWMARK,Land O’Lakes, Lindquist and Vennum,NCFC Education Foundation, StoelRives, CliftonLarsonAllen and theRalph K. Morris Foundation.

“The University of WisconsinCenter for Cooperatives has puttogether another outstanding programthis year, and we urge cooperativeorganizations to attend the conferenceand to support its ongoing success,”says Peter Rudeen of CoBank’sRegional Agribusiness Banking Group.The two-day conference will be hostedat the Radisson Plaza HotelMinneapolis. More information aboutthe conference program and

registration is available at:www.uwcc.wisc.edu or by contactingAnne Reynolds at 608-263-4775 [email protected].

Established in 1962, the UW Centerfor Cooperatives focuses on education,research and outreach on all aspects ofthe cooperative business model,including development, finance,structure and governance.

Linn Co-op to get boost with E15 sales

The Linn Co-op Oil Co. in Marionwill be one of the first Iowa fuelretailers to offer E15 (gasolinecontaining 15 percent ethanol) for latemodel vehicles. The Iowa RenewableFuels Association announced in earlySeptember that it has launched anadvertising campaign to promote E15.

CoBank announced Sept. 13 that it is launching newinitiatives to assist agricultural borrowers and othersimpacted by the 2012 drought. CoBank’s base ofcustomers includes hundreds of grain and farm supplycooperatives in the central region of the country, as wellas a large number of customers in the protein and dairysectors, where impacts from the drought have been theworst. In addition, the bank’s affiliated Farm Creditassociations serve over 70,000 individual farmers andranchers in 23 states across the nation, including manydrought-impacted areas.

“We’re committed to supporting our customer-ownersat a time of significant challenge for U.S. agriculture,”says Robert B. Engel, CoBank’s president and CEO. “Ouragribusiness customers are, in general, in good financialcondition and accustomed to dealing with weather-related volatility that is a fact of life for their industry. Thesame is true of the farmers and ranchers who borrowfrom our affiliated Farm Credit associations. But webelieve having this program in place will help us betterfulfill our mission as the impacts of this historic droughtare felt over the balance of the year.”

CoBank’s drought relief initiatives will include

expedited review and processing of any customer’s loanrequest stemming from the drought, as well as workingcollaboratively with borrowers experiencing drought-related distress on a case-by-case basis. In addition, thebank will partner with its affiliated associations toprovide support for local drought relief programsestablished to assist farmers, ranchers and other ruralborrowers within their individual service territories.

“As a cooperatively owned, mission-based lender,CoBank’s core purpose is to provide dependable creditfor agriculture and the other vital industries we serve inrural America,” Engel says. CoBank and the nation’sthree other Farm Credit banks issued a joint statementsaying that despite the challenges presented by thedrought, the Farm Credit System remains well positionedto meet the financial needs of the farmers, ranchers,cooperatives and other rural borrowers.

CoBank also announced it will contribute $1 million toFeeding America, the nation’s leading hunger reliefcharity. The funds will be designated to support programsin areas of the country where the bank and its affiliatedassociations have significant operations. n

CoBank announces drought assistance initiatives


The campaign is co-sponsored by theIowa Corn Growers.

Billboards announcing theavailability of E15 at Linn Co-op havebeen erected. The billboards were to bechanged to a branding message on Sept.24, and are to stay up until Oct. 7. Theslogan for the campaign will be: “Theroads of Iowa will never be the same.”Campaign messages will emphasize thecost savings and performance benefitsof E15, according to associationofficials.

In June, the U.S. EnvironmentalProtection Agency approved rulesallowing retailers to sell the 15-percentethanol fuel blend for 2001 and latervehicles. Linn Co-op was among thefirst five retailers to receive an EPAapproval letter to sell the fuel.

Robert Hawk new CEO atblueberry co-op

Robert E. Hawk assumed duty Aug.1 as CEO and president of MBGMarketing, a blueberry cooperativebased in Grand Junction, Mich. Duringhis 35 years of professional experience,Hawk has worked in a variety ofproduction and senior managementpositions at leading consumer productscompanies, including Weaver PopcornCo. Inc., CROSSMARK Inc. andNorthland Cranberries.

“Bob’s experience in value-addedproduct development and plantoperations are an excellent fit for ourrecently completed strategic plan,” saysPat Goin, chairwoman of the MBGboard.

Hawk says he is impressed thatMBG, established in 1936, “has had theforesight to invest in new innovationsand expanded capabilities. We willcontinue to focus on growing anddelivering a high level of qualityproducts and services that lead to solidcustomer relationships, loyal consumersand long-term grower profitability.”

In 2013, MGB will be exploringopportunities for new, value-addedproducts and will open an IQF(instantly quick frozen) berry processingplant in Bloomingdale, Mich. The co-op will be offering several new

proprietary blueberry varieties that havebeen developed by its in-house plantbreeders. “These berries have incredibleflavor, size and improved vigor forbetter shelf life,” Goin says.

“As a growers’ cooperative, we alsofocus on attracting additional high-quality growers into the organization sothat we can provide a consistent supplyof delicious berries to our clients,” saysGoin, who credited Hawk for “hittingthe ground running” in August as theco-op was handling a record 2012 crop.

MBG Marketing – also known as“The Blueberry People” – is aproducer-owned blueberry marketingcooperative with many multi-generationfarm families growing primarilyblueberries in Michigan, Indiana,Georgia, Florida, New Jersey, NorthCarolina, Oregon, Washington andBritish Columbia. In conjunction withits three partners in grower-ownedNaturipe Farms, MBG is the largestmarketer of fresh and processedblueberries in the world.

MFA expandsoperations in Kansas

MFA Enterprises, a wholly ownedsubsidiary of MFA Inc., has purchasedIrsik & Doll’s feed mill and grainelevator in Emporia, Kan., as well asEmch Feed and Elevator Co. Inc. inMadison, Kan. The new additions willstrengthen its feed manufacturing andgrain merchandising operations in the

region, the co-op says. MFA, which had net sales of $1.3

billion in 2011, also recently added aretail outlet in Osage City, Kan., to theAg Choice Agri Services centers MFAalready operates in eastern Kansas andnortheastern Oklahoma through itsAGChoice retail stores.

“Buying the Emporia and Madisonfacilities allows MFA to expand itsscope of agricultural products andservices to a wider geographical areaand to strengthen service to MFA’sexisting farmer and rancher customersin eastern Kansas, Missouri and theMidwest,” says Alan Wessler, MFA vicepresident of feed operations and animalhealth.

MFA serves 45,000-plus activefarmers in Missouri, eastern Kansas,northeastern Oklahoma and adjacentstates. Founded in 1914, MFA has 131company-owned locations and 25 localMFA affiliates with 23 branches. Thecooperative also serves about 400independent dealers and localcooperatives not affiliated with MFA.

USDA loans to help co-opsdeploy smart grid technology

U.S. Agriculture Secretary TomVilsack in August announced that ruralelectric utilities in 18 states will receiveloan guarantees to make improvementsto electric lines and transmissionfacilities, and to reduce peak-demandelectric loads by deploying “smart grid”technologies. USDA Rural UtilitiesAdministrator Jonathan Adelstein madethe announcement on Vilsack's behalfwhile visiting the offices of one of therecipients, Southside ElectricCooperative (SEC) in Crewe, Va.

This consumer-owned, Virginiapower cooperative is using the USDAfunds to build and improve adistribution line and a transmission line;it will also invest nearly $7.4 million forsmart grid system enhancements. In all,service will be upgraded for about 1,500SEC members.

“Maintaining and upgrading ruralelectric systems improves systemreliability, creates jobs and supportseconomic development,” Vilsack says.

Robert Hawk


“With these loans, we are continuing tohelp cooperatives provide reliableservice to rural residents. A significantportion of this funding will go to smartgrid technologies, helping consumerslower their electric bills and reducingpeak demand for producers.”

The awards announced in Augustinclude support for nearly $29 millionin smart grid projects, helping USDARural Development move closer toreaching Secretary Vilsack’s goal ofproviding more than $250 million forsmart grid technologies. In all, USDA isinvesting more than $420 million inrural electric infrastructure.

Farm Credit supportsGardening for Greenbacks

Three of the nation’s leadingagricultural lenders have joined forcesto provide financial support forbeginning urban farmers in Clevelandas part of the city’s “Gardening forGreenbacks” program. Minneapolis-based AgriBank, Denver-based CoBank

and Louisville-based Farm Credit Mid-America each committed $45,000 to theprogram for a total donation of$135,000.

All three institutions are members ofthe Farm Credit System, a nationwidenetwork of producer-owned banks andassociations chartered to meet thecredit needs of agriculture and otherkey rural industries.

Gardening for Greenbacks is an

initiative developed by the city ofCleveland to increase the production oflocal foods and establish Cleveland as amodel for local food systemdevelopment. By providing financialassistance to local entrepreneurs for thedevelopment of for-profit urban foodgardens, the program aims to encourageeconomic development while helping toensure that every resident has access tofresh, healthy and affordable food.

“Our contribution to Gardening forGreenbacks is a great way for us toserve farmers in an urbanenvironment,” says Bill York, AgriBankCEO. “We recognize the value urbanfarming offers to local communities as asupplement to more traditional forms ofagriculture. Cleveland is at theforefront of this movement and we areproud to help further their efforts.”

“As a mission-based lender, we arecommitted to encouraging thedevelopment of local food systems,including urban farming. We’redelighted to be partnering with other

Farm Credit organizations in support ofthis innovative program,” adds AndrewJacob, executive vice president atCoBank.

The Farm Credit donation will fundgrants of up to $5,000 to enableprogram participants acquire thenecessary equipment for urbangardening, such as tools, fencing andirrigation systems. Grant recipients arerequired to successfully complete a

market gardener training class offeredby the Ohio State University Extensionand to sell their produce locally.

For nearly a century, Farm Credithas been a national provider of creditand related services to rural Americathrough a cooperative network ofcustomer-owned lending institutionsand specialized service organizations.

Book says co-ops best way to re-charge U.S. economy

E.G. Nadeau, a well-knowncooperative development consultant,has written a new book: “The Cooperative Solution: How the

United Statescan tamerecessions,reduceinequality andprotect theenvironment.”It focuses onthe widespreadrole ofcooperatives inthe U.S.

economy and makes the case for greatlyexpanding their role in the future as ameans to stabilize the economy andimprove the quality of life for itscitizens.

Despite the major presence of co-opsin the world economy and in theUnited States, this democraticallyowned part of the private sector isinadequately understood and greatlyunderappreciated, Nadeau says. Hisbasic tenet is that co-ops aredemocratically controlled and aremotivated primarily by the goal ofproviding services to their members,not by generating profits for theirowners and investors. As a result, co-ops are much more likely to avoid thenegative consequences of economicinstitutions that are primarily driven bythe quest for ever-increasing profits.

Nadeau, who has a Ph.D. insociology from the University ofWisconsin-Madison, has spent the past40 years researching, developing,teaching and writing about cooperativesin the United States and in 20 other

Cleveland Mayor Frank G. Jackson (far left) gathers with Farm Credit and CoBank officialsand other city council members during a ceremonial check presentation made in support ofthe city’s Gardening for Greenbacks program. Photo courtesy Farm Credit


countries. For more information, sende-mail to: [email protected].

Minn-Dak expanding sugar plant

Minn-Dak Farmers Cooperative isplanning a $70-million expansion to bebuilt over two years at its sugar beetprocessing plant in Wahpeton, Minn.,according to the Wahpeton DailyNews. The molasses de-sugarizationplant will turn byproduct beet molassesinto products used in food, pharma-ceuticals and feed supplements. The co-op says the project will create 20 full-time jobs.

The Richland County Commissionhas approved a tax break for theexpansion, under which property taxeswill be waived the first five years andcut in half the next five years, thenewspaper reported.

Eric Erba new strategy officer at California Dairies

California Dairies Inc. (CDI), thenation’s second largest dairy processingcooperative, has appointed Eric Erba assenior vice president and chief strategyofficer (CSO). He will report to AndreiMikhalevsky, president and CEO.

Erba is the former senior vicepresident of administrative affairs forCDI, based in Visalia, Calif., where hehas worked since 2006. Before that, hewas the assistant director for theDivision of Animal Health and FoodSafety Services at the CaliforniaDepartment of Food and Agriculture.He holds a doctorate degree fromCornell University in ag economics(dairy markets and policy specialty).

The co-op has also appointed DavidTreiber as senior vice president of fluidbusiness development. In his new rolewith CDI, Trieber will manage all fluid,condensed and cream sales. He hadbeen vice president and divisionmanager for food ingredients atChallenge Dairy Products, a whollyowned subsidiary of CDI, since 1999.

CDI is the largest member-ownedmilk marketing and processingcooperative in California, producing 43percent of the state’s milk. It is owned

by more than 420 dairy producers, whoship more than 17 billion pounds ofmilk annually to their co-op, whichmanufactures butter (including theDanish Creamery and Challengebrands), fluid milk products and milkpowders.

USDA issues expandedfarmers market directory

There has been a 9.6 percentincrease in the past year in the numberof farmers markets listed in USDA’sNational Farmers Market Directory,U.S. Agriculture Deputy SecretaryKathleen Merrigan announced inAugust to help kick off NationalFarmers Market Week. Many farmersmarkets are organized as cooperatives,and many others operate on cooperativeprinciples.

USDA’s farmers market directory canbe viewed on-line at:farmersmarkets.usda.gov. It identifies7,864 farmers markets operatingthroughout the United States, up from7,175 markets listed the year before.The information collected in thedirectory is provided voluntarily byfarmers market managers through anannual USDA outreach effort.

“Farmers markets are a criticalingredient to our nation’s food system,”Merrigan said at the kickoff event.“These outlets provide benefits notonly to the farmers looking forimportant income opportunities, butalso to communities looking for fresh,

healthy foods. The directory is an on-line tool that helps connect farmers andconsumers, communities and businessesaround the country.”

The states with the most farmersmarkets are: California (827); New York(647); Massachusetts (313); Michigan(311); Wisconsin (298); Illinois (292);Ohio (264); Pennsylvania (254);Virginia and Iowa (tied with 227) andNorth Carolina (202). Together, thesestates account for nearly half of thefarmers markets listed in the 2012directory.

USDA’s Food and Nutrition Serviceis helping more farmers markets gainthe ability to accept SNAP(Supplemental Nutrition AssistanceProgram, formerly food stamps). It hasmade $4 million available to equipfarmers’ markets with wireless, point-of-sale equipment. Currently, morethan 2,500 farmers markets are usingElectronic Benefit Transfer technology.

CHS, Mountain View Co-opbuilding warehouse

Energy, grains and foods co-op CHSInc. and Mountain View Co-op ofBlack Eagle have formed a limitedliability company to build a 35,000-tondry fertilizer warehouse at Collins,Minn. Warehouse construction isunderway, with completion expectedmid-summer 2013.

Mountain View Co-op will be thefacility’s exclusive fertilizer retailer,serving growers throughout their tradearea. Products stored at the new facilitywill include urea, phosphates, potash,ammonium sulfate and micronutrients,and all agronomic products routinelyused by area growers.

“Over the years, we’ve noticed acontinued shift to earlier planting andan increase in the time it takes fertilizermanufacturers to get products to us tomeet growers’ needs,” says Bruce Clark,general manager of Mountain ViewCo-op. “This new facility will enable usto meet our growers’ increased demandfor nitrogen and sulfur products, toensure healthy, profitable cropproduction.”

Located in north-central Montana,

Farmers markets such as this areincreasingly popular with shoppers.


Mountain View Co-op operates10 agronomy locations within a100-mile radius of Great Falls,serving farmers growing drylandwinter wheat and irrigated hay,malt barley and dryland barley.

“Urea normally produced andshipped from Canada isincreasingly being used locallyby Canadian farmers, greatlylimiting product availability,”says Cheryl Schmura, CHS vicepresident for its Crop Nutrientsdivision. “The strategic locationof the Collins fertilizer hubplant means customers in thisregion will have secure,competitive supply.”

In other CHS news, the co-op has announced that it willserve as the exclusive off-takecompany for urea fertilizerproduced by the Summit TexasClean Energy Project LLCplant at Penwell, Texas. CHSwill also be a minor investor inthe plant, which is expected togenerate up to 700,000 tons ofurea annually.

“The ability to source high-quality, domestically producedurea will help enhance andstreamline our operations whileproviding consistent supply tocustomers throughout the region,” saysSchmura.

USDA helping Minn. co-op build feed mill

As construction crews were busyrecently putting the finishing toucheson New Vision Co-op’s new grainelevator and feed mill in Magnolia,Minn., USDA Rural DevelopmentState Director Colleen Landkamer andother area leaders visited the site tohighlight the economic impact of theproject. “This investment by USDAmeans jobs and economic developmentopportunities,” Landkamer said.

The investment from USDA RuralDevelopment came in the form of a$740,000 Rural EconomicDevelopment Loan made to theLismore Telephone Cooperative, which

re-loaned the funds to New Vision Co-op to help pay for the $12.6-millionproject.

The facility will process about 120tons of feed an hour, employ 15 peopleand deliver swine, dairy and poultryfeed to customers from as far as 100miles away. About 200 area farmers willsupply the 3 million bushels of corn and500,000 bushels of soybean to the millannually.

“It’s a big deal,” says FrankMcDowell, New Vision’s generalmanager. The elevator is expected to beopen in November and the mill shouldbe operating by June.

USDA Rural Development alsoselected Lismore TelephoneCooperative to receive a $300,000Rural Economic Development Grant,which will be used to establish arevolving loan fund to help smallbusinesses in Rock County with “gapfinancing” and job creation projects.

As construction crews workedand heavy machinery roaredbehind him, McDowell thankedUSDA and Lismore Telephonefor supporting the project.“Because of their guidance andsupport, livestock producers willhave access to the most efficientand versatile feed mill in theMidwest.”Both the loan and the grant

were awarded through USDA’sRural Economic DevelopmentLoan and Grant (REDLG)program, which provides zero-interest loans to local utilitieswhich, in turn, provide funds tolocal businesses (ultimaterecipients) for projects that willcreate and retain employment inrural areas.

Hispanic, women farmers may seek compensation

Hispanic and women farmersand ranchers who believe thatthe U. S. Department ofAgriculture (USDA) improperlydenied them farm loan benefitsbetween 1981and 2000 becausethey are Hispanic or female maybe eligible to apply for

compensation if:1) They sought a farm loan or farm-

loan servicing during that period;2) The loan was denied, provided

late, approved for a lesser amount thanrequested, approved with restrictiveconditions or USDA failed to provideappropriate loan service; and

3) They believe these actions werebased on their being Hispanic orfemale.

To receive a claims package, visit:www.farmerclaims.gov, or call 1-888-508-4429.

For further guidance, you maycontact a lawyer or other legal servicesprovider in your community. USDAcannot provide legal advice. If you arecurrently represented by counselregarding allegations of discriminationor in a lawsuit claiming discrimination,you should contact your counselregarding this claims process. n

New Vision Co-op’s feed mill in Magnolia, Minn., duringconstruction. The grain elevator at the $12.6 million facilityis expected to open by November, with the feed mill to bein operation by June.

segment) are: farm supply co-ops (10);mixed farm supply and grain co-ops(29); grain co-ops (14); dairy co-ops(22); sugar co-ops (7); fruit andvegetable co-ops (8); and othermarketing co-ops (10).

Historical comparisonComparing total gross business

volume of these 100 cooperatives from2006 to 2011 shows that there was apeak in 2008, then total gross business

volume fell before hitting a high during2011. Total business volume increasedby almost 30 percent between 2010 and2011 as illustrated in figure 1.

Patronage income (income fromother cooperatives) increased by $12.2million in 2011, or 7.3 percent. Netincome (after taxes) grew by 38 percent,or $877 million. The value of crop andlivestock production affected theincrease in net income during 2011.

Figure 3 shows that mixed grain andsupply cooperatives account for 43percent of the revenue of the top 100co-ops while comprising only 29percent of the number of cooperativeson the list (the largest group). The

mixed grain and supply group alsoaccounted for 47 percent of the assetsof the top 100 ag-co-ops.

Dairy (22 cooperatives) accountedfor 23 percent of the revenue and 15percent of the assets (figure 4). Thisdropped from last year’s figures of 25percent and 17 percent, respectively.

Changes in the size of the functionalgroups between 2002 and 2011 areshown in figures 5 and 6. Mixedcooperatives were also the mostnumerous (29 percent) in 2002. Thenumber of co-ops in each functionalgroup shows only small fluctuationsduring the 10-year period. n

competition. The highest-scoringcoffees from the competition wereselected to participate in an Internetauction hosted by the Specialty CoffeeAssociation of America (SCAA). Thisfirst-ever Internet auction of Ethiopiancoffee generated more than $187,000for farmers in 150 co-ops, with anaverage price paid of $3.22 per pound,compared to the then-market price of$1.30 per pound.

An overall premium of $75,000 waspaid for these coffees, with all proceedsdistributed to the cooperatives. Asecond auction in 2006 earned morethan $250,000. In addition to benefitingthese limited-resource producers, thereputation of Ethiopian coffee was alsoelevated into the first rank.

As a result of the auction, WilliamBoot, co-founder of Ecafe, declared:“Farmers at the co-op level whoproduce these exemplary coffees willreceive the prices and the recognitionthey deserve.”

Building on successToday, a USDA-funded

ACDI/VOCA project is working toincrease the incomes of smallholderfarmers through improved access toconsistent, affordable and high-qualityanimal feeds that can support greaterlivestock productivity and efficiency.The Agricultural Growth Program-Agribusiness and Market Development(AGP-AMDe) — a USAID-funded,Feed the Future initiative — iscurrently strengthening Ethiopia’sagriculture sector, enhancing access tofinance and stimulating innovation andprivate sector investment. Amde means“pillar of my home” in Amharic,signaling its importance to householdwell-being. Continued cooperativedevelopment is a cornerstone of thisproject.

“…As we look across sub-SaharanAfrica, we see enormous economicgrowth, even as the global economycontinues to struggle,” U.S. Secretaryof State Hillary Clinton said inJohannesburg, South Africa, on Aug. 6during the U.S.-South Africa BusinessPartnership Summit. “Seven of theworld’s 10 fastest-growing economiesare in this region,” she added.

Ethiopia, with more than 8 percentGDP growth during the past decade, isone of the countries Secretary Clintonwas referring to. However, its rural

poor still tend to be left out.Food security in Ethiopia depends

largely on smallholder farmeragriculture. For example, most of thecountry’s coffee is produced bysmallholder farmers owning just threeto five acres of land and earning lessthan $1 per day. Ethiopia’s decision torevitalize its farmer cooperatives andhelp them transition to market-oriented, private business organizations– coupled with ongoing USAID- andUSDA-funded programs – hasestablished a framework for futuresuccess.

Interventions to date through theseprograms have had a big impact. AnACDI/VOCA program assessmentshowed that farmers reported having:• Improved diet (64 percent of farmers);• Better educated children (84 percent); • Increased purchasing power forconsumer goods (77 percent);

• Improved homes (67 percent); • Increased numbers of livestock (54percent) and

• Newfound ability to hire labor (51percent).

Revolutionizing Ethiopia’s co-op movement

“The bureau, supported byACDI/VOCA with USAID funding, is


‘The pillar of my home’continued from page 43

Top 100continued from page 12


Succession plans, like any businessplan, involve numerous factors thatrequire careful consideration. Seekprofessional advice from to your lender,accountant and attorney whenformulating a succession plan.

Succession planning resources from Farm Credit

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• Visit farmcredit.com/locations to finda Farm Credit location and additionalresources near you. �

Management Tipcontinued from page 19

revolutionizing the cooperativemovement in Ethiopia,” says ZerihunAlemayehu, former head of thecooperative promotion bureau in theEthiopian prime minister's office.Cooperatives under the previous regimewere poorly managed, he says

“The new model cooperativescurrently being promoted by thegovernment and ACDI/VOCA,”

Alemayehu continues, “are democratic,business-oriented and professionallymanaged with increased income tomember farmers as the primaryobjective.”

Brad Perry agrees with Alemayehuregarding the impact of cooperatives,both in Ethiopia and the United States.The work he did in Ethiopiareinvigorated his appreciation of the

value and worth of cooperatives, whichhas also benefited his work in theUnited States, he says.

“It’s been a refresher course for meon co-op theory and education,” Perrysays. “Because they really believe it [thevalue of cooperatives] in Ethiopia; toomany times in the U.S., we’ve lost sightof it.” �

“The Nature of the Cooperative” is a collection of five articles reprinted from Rural Cooperatives Magazine that examine cooperatives and their place in our free-market economy.

Author Charles Ling explains co-op economic structure, theory and practice, as well as the economics of cooperative marketing and co-ops’ relationships with other market participants through their roles in transaction governance.

Available as hard copy or online. For hard copies, email: [email protected]. Request Publication CIR 65 and indicate quantity needed. Or call: (202) 720-8381. Or write: USDA Co-op Info, Stop 0705, 1400 Independence Ave., SW, Washington DC 20250.

To download from the Web, visit: www.rurdev.usda.gov/rbs/pub/cir65.pdf

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