rural cooperatives usda / rural development ...rural cooperatives / november/december 2000 3 rural...

COOPERATIVESRura

lCOOPERATIVESUSDA / Rural Development November/December 2000USDA / Rural Development November/December 2000

C h e r r C o b a r g a i n i n g c o - o p b r i n g s s t a b i l i t y t o m a r k e t

C h e r r y G r o w e r s U n i t e

2 November/December 2000 / Rural Cooperatives

Farmers and ranchers who bargainfor price when they are united andrepresent a large share of their indus-try — rather than as individuals whocontrol only a tiny fraction of the sup-ply – negotiate from a position ofstrength, rather than weakness. Thiswas true during the earliest years ofthe cooperative movement, andremains just as true today in the face ofa food industry being concentratedinto fewer and fewer hands. Due tothis trend, I foresee a growing role forbargaining cooperatives in the 21stcentury. Not only do bargaining co-ops help secure a fair price for farmersand ranchers, they help bring stabilityto markets by better coordinating theproduction of their members with theneeds of the marketplace.

Bargaining cooperatives have beenused by agricultural producers fordecades as a self-help tool. Many ofthese associations grew out of pricingchallenges encountered in the 1960s byfruit and vegetable producers. By band-ing together, producers worked to getlegislation changed so they could formrecognized associations that could bar-gain with processors.

CherrCo, our cover story, is aprime example of a bargaining co-opthat has brought stability to an agri-cultural market. This relatively newtart cherry bargaining association wasdeveloped at about the same time anew federal marketing order for tart cherries was put into place. Bylicensing sales agents and workingconfidentially between growers andprocessors, this organization – a fed-erated association with 28 membercooperatives – has helped to bringsome order to the tart cherry

industry. Had CherrCo not been cre-ated, many observers feel that theranks of cherry producers would havebeen decimated.

Bargaining associations in Califor-nia also play a critical role linkingfarm fields with the family dinnertable. In an upcoming issue, we willlook at how some bargaining co-opswork in the Golden state. From apri-cots and peaches to olives, raisins andtomatoes, bargaining associations haveenhanced the income that producerscan realize from the sale of their

crops. They extend across state linesand commodity sectors as effectivetools that help farmers earn fair pricesfor apples, plums, raw milk, ryegrass,potatoes, sugar beets, hazelnuts andmany other crops.

These associations do not invest cap-ital in buildings or equipment. Theydon’t own a consumer brand name orimplement marketing campaigns. But

what they do possess is the ability togalvanize producers in a union of common purpose.

The real power behind successfulbargaining associations is that they area tool for producers to become pricemakers, rather than price takers. Theseassociations work to secure a fair pricefor producers. For these co-ops towork, producers need to agree to lettheir association negotiate a price, andthen hold to that commitment. Eventhe largest producer of a commoditywill find it extremely difficult to go italone in a global marketplace whereprocessors can source product fromaround the world.

Bargaining associations have proventime and again that they are a valuabletool for producers committed to work-ing together to remain competitive andprofitable in an increasingly globalmarketplace. The time is ripe for fur-ther use of this invaluable tool.

Jill Long Thompson Under Secretary USDA Rural Development

C O M M E N T A R Y

Bargaining co-ops help level field, stabilize markets

“The real powerbehind successfulbargaining associa-tions is that they area tool for producersto become pricemakers instead ofprice takers.”

Rural Cooperatives / November/December 2000 3

RURAL COOPERATIVES (1088-8845) is publishedbimonthly by Rural Business–Cooperative Service,U.S. Department of Agriculture, 1400 IndependenceAve. SW, Stop 0705, Washington, DC. 20250-0705.The Secretary of Agriculture has determined thatpublication of this periodical is necessary in thetransaction of public business required by law of the Department. Periodicals postage paid atWashington, DC. and additional mailing offices.Copies may be obtained from the Superintendent ofDocuments, Government Printing Office, Washington,DC, 20402, at $3.50 domestic, $4.38 foreign; or byannual subscription at $15.00 domestic, $18.75 for-eign. Postmaster: send address change to: RuralCooperatives, USDA/RBS, Stop 3255, Wash., DC20250-3255.

Mention in RURAL COOPERATIVES of company andbrand names does not signify endorsement overother companies’ products and services.

Unless otherwise stated, contents of this publica-tion are not copyrighted and may be reprintedfreely. For noncopyrighted articles, mention ofsource will be appreciated but is not required.

The United States Department of Agriculture (USDA)prohibits discrimination in all its programs and activities on the basis of race, color, national origin,sex, religion, age, disability, political beliefs, sexualorientation, and marital or family status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means forcommunication of program information (braille, largeprint, audiotape, etc.) should contact USDA’s TARGETCenter at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA,Director, Office of Civil Rights, Room 326-W, WhittenBuilding, 14th and Independence Avenue, SW,Washington, D.C. 20250-9410, or call (202) 720-5964(voice or TDD). USDA is an equal opportunityprovider and employer.

Dan Glickman, Secretary of Agriculture

Jill Long Thompson, Under Secretary,Rural Development

Wilbur Peer, Administrator,Rural Business–Cooperative Service

Gladys Rodriguez, Director of Public Affairs

Dan Campbell, Managing Editor

Vision 2000/Kota, Design

Have a cooperative-related question?Call (202) 720-6483, orFax (202) 720-4641, Information Director,

This publication was printed with vegetable oil-based ink.

United States Department of Agriculture

COOPERATIVESRura

l

COOPERATIVESNovember/December 2000 Volume 67 Number 6

O n t h e C o v e r :

Michigan-based CherrCo is helping stabilize the tart cherry industry bynegotiating prices at a level that keeps growers and processors in business.Story on page 4. Grant Heilman Photo

F E A T U R E S

4 CherrCo helps bring market stability to tartcherry industryBy Pamela J. Karg

8 Trading UpPlains Cotton Co-op uses computer technology to pursue business-to-business strategy.By Pamela J. Karg

14 Consolidation in the heartlandA closer look at grain co-op mergers and acquisitions, 1993-1997.By Anthony Crooks

20 Are you a good leader?Director assessments are building blocks to productive board-management relations.By James J. Wadsworth

24 Cooperative Agro Pastorale SegbeyaAfrican swine raising cooperative struggles to survive and prosper.By Azanmasso Joseph, Steve Graham

D E P A R T M E N T S7 LEGAL CORNER

11 MANAGEMENT TIP

26 IN THE SPOTLIGHT

27 NEWSLINE

31 ANNUAL ARTICLE INDEX


By Pamela J. KargField Editor

ife can change quickly inagriculture. At othertimes, it takes manyyears of hard work todevelop necessary

changes — including new cooperativeorganizations. Yet leaders of the tartcherry industry were persistent intheir work and have created an innov-ative cooperative marketing organiza-tion as well as a new federal market-ing order program.

Both the new order and the neworganization — called CherrCo — did-n’t happen as quickly as life can change.It took years of hard work. Some previ-ous attempts at organizing newapproaches had succeeded, and somehad their ups and downs. For example,an earlier supplymanagement federalmarketing order had been discontinuedin the early 1980s.

But a number of the industry’s keyunderlying problems — includingsurplus supplies, fluctuating produc-tion and weak pricing arrangements –did not go away. So leaders exploredalternative programs and organiza-tional arrangements to try to improvetheir industry. Their efforts includedin-depth discussions during the late1980s and early 1990s about develop-ing a new marketing order for supplymanagement and a new, broad-basedcooperative.

Throughout the early 1990s, theindustry often grappled with surplussupplies and low cherry prices. Theonly exception was in 1991 when therewas a short crop. Prices temporarilyrose to exceptionally high levels – 80-

plus-cents-per-pound for frozen cher-ries. But the temporarily high priceswere a deterrent for some users. Moreproblematic than one season of highprices, though, were the years tartcherries drew very low prices.

In 1995, for example, prices hadtumbled to 25 cents per pound forfrozen cherries. By contrast, the costsfor production, harvesting, processingand freezer storage were about 60cents a pound.

“Another year or two [of lowprices] and we estimate that about halfour growers and a good share of ourprocessing plants would have gone outof business,” says CherrCo PresidentJames Jensen, who has been aroundthe cherry business for 39 crops. “Weknew we needed a consistent supplyfor the marketplace and pricing thatwas relatively stable. We knew by1996 that, if the conditions thatoccurred in 1995 continued, many ofour growers and processing plantswould go out of business.”

These kinds of difficult economicconditions set the stage for change.Growers and processors found them-selves engaged in many industry-widediscussions that eventually led to thedevelopment of a new federal market-ing order to help reduce some of thesurplus supply problems. And discus-sions continued into the subject of anew federated cooperative for tartcherry growers.

“By 1996, we knew we’d have a mar-keting order in place. It was a new toolwe could use to help turn the situationaround. And we thought that, if wewere ever going to put together a‘super cooperative’ like we’d talkedabout for years in this industry, this was

the time to do it,” Jensen says. The industry credits the creative

thinking by some growers and proces-sors who were willing to develop astrategic plan for CherrCo. Whilegrain and livestock producers havedeveloped “new generation” coopera-tives, these fruit growers decided tostay the course by developing a “supercooperative” that bargained on behalfof its members rather than processingvalue-added products. Yet the tartcherry industry borrowed ideas fromsome of these other facets of agricul-tural cooperatives to put together itsown organization.

In early 1997, CherrCo organizersbrought Jensen on board as presidentof the “super cooperative.” Months ofhard work and many discussions acrossthe country in cherry circles resulted in78 percent of the industry willing togive the idea a try by a self-imposeddeadline of June 1997.

During those grower and processormeetings, Jensen communicated Cherr-Co’s two goals. First, CherrCo proposed

C h e r r C o h e l p s b r i n g m a r k e ts t a b i l i t y t o t a r t c h e r r y i n d u s t r y

L


to stabilize the price of the industry’scommodity products – No. 10 cannedor hot-pack tart cherries and frozentart cherry products. Second, CherrCowanted that stable price to be at a levelthat helped keep growers and proces-sors in business.

On July 1, the first CherrCo boardvoted to move ahead. By July 6, Wash-ington state cherries were rolling into aprocessing plant.

As a federated cooperative, CherrConow has 28 member cooperatives in theUnited States and Canada. It represents75 to 80 percent of Michigan’s tartcherry production and significant por-tions of the production in New York,Utah, Washington, Wisconsin andOntario. Members range in size from

producing about 600,000 pounds tomore than 10 million pounds annually.

The cooperative’s primary directiveis to establish minimum prices for vari-ous grades and packs of frozen and hot-pack tart cherries. Once a minimumprice is set, individual members selectsales agents, all of whom are licensedby the cooperative. Sales agents canrepresent more than one member.

But it is imperative that sales information be treated as proprietaryand not shared with other members.Information about who is selling towhom and at what price is also confi-dential. By licensing the agents,CherrCo can ensure they follow procedures as well as abide by theestablished minimum price.

CherrCo concentrates its efforts on No. 10 canned or hot-pack tart cherries and frozen tart cherries. Photo by Forest McMullin,/Agrilink

“Another year or two[of low prices] and weestimate that about halfour growers and a goodshare of our processingplants would have goneout of business.”–James Jensen

CherrCo also tracks and keeps a handle on the nation’start cherry inventory. When and where possible, CherrCoand the licensed agents work to pool production to meetcustomer demands. Before cherries are processed, they aresent to storage facilities. At that time, the fruit is consignedto CherrCo.

However, the cooperative never has the cherries in itsphysical possession. Rather, the fruit remains in storageuntil a sale is made. If the minimum price requirement hasbeen met, CherrCo releases the cherries. The cooperativethen bills the buyer, collects from the buyer, subtracts anadministrative charge to cover its expenses, and sends thebalance of the proceeds to the cherry’s growers.

“We’re not in the retail business,” Jensen emphasizes.“We don’t have a brand name. We don’t own any process-ing plants. Our members decide what they’re going to dowith their cherries and whom they’re going to sell to. Theyhire their own sales staff licensed by CherrCo. We con-centrate on ensuring wecan maintain a price forour members.”

Even though the issueof price is taken out of the marketing equation,CherrCo members findother avenues on which tocompete against each oth-er. Some members offer amix of tart cherry andother farm-grown pro-duce. Others specialize injust frozen or hot-packedtart cherries. Still otherstry to differentiate them-selves from CherrCocompetitors by buildingon their reputations in theindustry, product quality,processing plant standardsand capabilities, and anyother special services theymay develop to attractcustomers.

“But I think what wedidn’t realize, whenputting this together, is athird thing that wouldhappen. We’re facilitatingbetter discussions, bettercommunication, throughout our industry. We’re all at the table together and, while we are not all holding hands,we are at least not throwing things at each other,” Jensen says. “There have been a lot of things happening in the tartcherry industry that have benefitted many that were enabledby CherrCo. Several times I’ve heard, ‘Five years

ago, we would never have this conversation.’”People never really knew each other, even in an industry

with only a couple thousand growers across the nation. Butwhat they did know about each other was that it was always“the other guy’s fault” for the marketing problems the indus-try faced. Now the individual members are getting to knoweach other and understand the collective power that occurswhen they can work together.

CherrCo’s 28 members each hold a seat on the board, andthose directors meet quarterly in addition to serving on com-mittees that include marketing, quality, grower relations andstrategic planning. “It allows us to involve all our members indiscussions and decisions. It doesn’t mean we all agree oneverything even now, but we’re at the table,” he adds.

Yet, despite the developments and progress that havebeen made through organizations such as CherrCo andthe new federal marketing order, the industry continues to be challenged by a number of ongoing fronts. Work is

needed to expandexports. More could be done to fine-tunesupply managementmechanisms. And bothcould help to stabilizeprices even further forgrowers as well as theircustomers. Talkingthrough these chal-lenges has become crit-ical in this specialtyfruit industry whosegrower numbers areeasily dwarfed by othersegments of U.S. agri-culture.

A commitment tocontinued, industry-wide communication byorganizations such asCherrCo was the moti-vation behind a majorconference this pastspring. During theirtime together, industryleaders looked at thevarious problems ormajor gaps in the tartcherry industry, and howvarious programs and

parts of the industry could work together more effectively toprovide continued progress. And expectations are runninghigh that events such as the conference, formation of organi-zations such as CherrCo and an ongoing dialog could act ascatalysts to create even more changes. They may not happenovernight. But they certainly will require hard work. ■


CherrCo would like to increase exports and fine-tune supply manage-ment mechanisms. Grant Heilman Photo


By Donald A. FrederickProgram Leader, Law, Policy &GovernanceUSDA Rural Development

he rash of consolidationstaking place throughoutthe food industry is plac-ing pressure on all partic-ipants, including cooper-

atives, to become both more efficientand more effective in protecting andenhancing their market position. Pub-lic documents concerning a recentnegotiated settlement between a majordairy marketing cooperative and theUnited States Department of Justiceprovide insight into how some cooper-atives are dealing with changes in foodmarketing and how antitrust enforce-ment officials may react when coopera-tives become the dominant players in aparticular line of business.

Justice challenges dairy plan On Dec. 15, 1999, Dairy Farmers of

America (DFA) entered into a letteragreement to purchase SODIAALNorth American Corporation (SODI-AAL). DFA and SODIAAL where twoof the three firms which accounted forover 90 percent of branded butter salesin the Philadelphia and New York met-ropolitan areas. The third firm in themarket is Land O’Lakes Inc. DFA andLand O’Lakes are the two largest dairymarketing cooperatives (as measuredby sales) in the United States. SODI-AAL is a privately held subsidiary of aFrench cooperative.

Section 7 of the Clayton AntitrustAct (15 U.S.C. § 18) provides that onebusiness shall not acquire another busi-ness when the effect of the acquisition

may be to substantially lessen competi-tion or tend to create a monopoly. InMarch 2000, the United States Depart-ment of Justice filed a civil antitrustaction to block the proposed acquisi-tion. The Justice Department allegedthat DFA’s purchase of SODIAALwould substantially lessen competitionin the butter market in Philadelphiaand New York and therefore violatedSec. 7 of the Clayton Act.

Impact of Capper-VolsteadThe Capper-Volstead Act provides a

limited exemption from the antitrustlaws for agricultural producers toprocess, handle, otherwise prepare formarket, and market their farm productson a cooperative basis. Capper-Volsteadspecifically authorizes separate andcompeting cooperatives to form a com-mon marketing agency to set prices andmarket member products as if the coop-eratives were a single entity. Severalcourt decisions have held farmers,through a single cooperative or a com-mon marketing agency, may acquiresubstantial or even monopoly controlover the sale of products they produce,so long as only farmers are involved inthe scheme and the decision to worktogether is a voluntary one (not theresult of coercion or intimidation by thecooperative(s) against nonmembers).

As part of the settlement process,the Justice Department published aCompetitive Impact Statement sum-marizing its case. When reviewing theproposed acquisition, Justice gave spe-cial emphasis to two legal standards forinterpreting Capper-Volstead. First,Justice noted that if the purchase wentthrough as proposed, DFA and LandO’Lakes would control more than 90

percent of the branded butter marketin Philadelphia and New York. Sinceboth DFA and Land O’Lakes are agri-cultural cooperatives they could agreeon the price and other terms of sale fortheir butter in these areas free fromantitrust scrutiny.

Second, Justice took the positionthat SODIAAL, as a private subsidiaryof a French cooperative, is not coveredby Capper-Volstead. Thus the govern-ment was free to challenge its purchaseby DFA as a violation of Sec. 7 of theClayton Act. (65 Federal Register44825, July 19, 2000).

The settlementThe United States (with the acqui-

escence of DFA) asked the court toapprove a final judgment in the casethat permits DFA to complete itsacquisition of SODIAAL but prohibitsDFA from joining with Land O’Lakesin any joint effort to market brandedbutter. Procedural rules that apply tosettling antitrust cases require a 60-dayperiod for public comment after theProposed Final Judgment and Com-petitive Impact Statement are pub-lished in the Federal Register. Nocomments were filed. In November2000, the judge signed an order imple-menting the proposed final judgment.

Under the settlement, DFA agreesto transfer all of its assets necessary tomanufacture and market its brandedbutter on the East Coast, includingDFA’s interest in the “Breakstone’s”brand, and all of the assets acquiredfrom SODIAAL, including the“Keller’s” and “Hotel Bar” brands, intoa new limited liability company to becalled Keller’s Creamery, LLC. The

B u t t e r s e t t l e m e n t : a g l i m p s e i n t ot h e f u t u r e o f a n t i t r u s t e n f o r c e m e n t ?

L E G A L C O R N E R

T

continued on page 30


By Pamela J. KargField Editor

ike many computerusers, Plains CottonCooperative Association(PCCA) decided thisspring it was time to

trade up to the next business model.With non-cooperative partners,

PCCA created an Internet-based,business-to-business (B2B) marketingvenue for cotton and cotton-relatedproducts. The partners include Allen-berg Cotton Co., a division of theLouis Dreyfus Corporation, Duna-vant Enterprises and Cargill’sHohenberg division. Leaders fromeach organization believe the B2Bventure creates a comprehensive,independent, electronic exchange forboth prospective cotton suppliers andcotton customers.

The courage it takes to look into thefuture and imagine what could be isnothing new to the Lubbock, Texas,farmer-owned organization. That’show PCCA started in 1953 and that’show it greeted the new millenniumwhen it announced the new venture –theSeam — that would take its produc-ers to the next technological level inthe world market.

Since 1975, PCCA members hadused TELCOT, a mainframe-basedcomputerized extension to the way pro-ducers had traded their cotton fordecades. The online, real-time cottonmarketing system was a centralizedplace where buyers and sellers couldmeet to trade cotton via computers con-nected to PCCA’s servers.

Conceptually, it operated similarlyto the New York Stock Exchange.

TELCOT gave producers a number ofoptions to sell their cotton and it gavethem access to major buyers. With thistool, farmers could receive the mostcompetitive price available at the timeof sale. TELCOT guaranteed eachproducer payment for the cotton soldand it guaranteed each buyer deliveryof the cotton purchased.

PCCA President and CEO Van Maysays this year’s new venture is a logicalstep for his marketing cooperative, onewhich prides itself on using new tech-nologies, developing innovative andaggressive marketing strategies, andachieving the best possible prices fortheir farmers.

“PCCA has a legacy of innovationand industry leadership,” says May.“Our 25-year commitment to the elec-tronic marketplace has clearly demon-strated the many efficiencies andadvantages of electronic trading. Andwe think this new venture – the Seam— is a catalyst for positive changes inour entire industry.”

The initiative gained momentum inearly summer with the addition of twoprominent U.S. textile mills: AvondaleMills of Monroe, Ga.; and ParkdaleMills of Gastonia, N.C. Avondale andParkdale are the largest U.S. con-sumers of cotton.

The new B2B marketplace isdesigned by and for the cotton indus-try. It operates as an independent com-pany and the four initial investors eachown an equal share. Their ownershippercentages will decline as additionalpartners come on board.

Buyers and sellers of products andservices get a single, convenient placeto connect, conduct and facilitatetransactions and better manage their

supply chains on the Seam. The B2Bmarketing system allows any merchantmeeting necessary criteria and agreeingto pay the commissions to trade cotton.With just the TELCOT system,PCCA earned just one commissionfrom the time the producer sold thecotton until it was delivered to a textilemill. But cotton typically changeshands an average of five times, andMay says the Seam will garner commis-

T r a d i n g u pPlains Cotton Co-op uses computer technology to pursue business-to-business strategy

L


sions at each trade. As one of the part-ners, PCCA and its members will sharein those commissions.

The new venture also significantlyexpands the scope of PCCA’s TELCOTsystem, which serves 53 buyers. Howev-er, May says there are approximately200 cotton buyers in the United Statesand the new system is aimed at captur-ing a greater share of their business.

“We believe this new marketplaceprovides more choice, not less, forusers, and they can instantly compareprices. This allows both sides of thesupply-demand equation to buy orsell more efficiently because it’s anopen market,” May says. “It shiftssome competitive advantages to pro-ducers who now have immediate,online access to prices and otherinformation. As we attract more buy-ers, this means more choices for farm-ers who want to sell their product.”

Additionally, PCCA members andtheir co-op gins see little difference inthe way they sell cotton and receivepayments.

“Our members continue to dealdirectly with PCCA,” May says,though the new Internet- based com-pany has a more modern look and feelto it. “We have changed TELCOT toa ‘Windows’-based program, andwe’re now trading cotton over theInternet. Our members can still tradeequities on the TELCOT system, andthe service they’re accustomed tocontinues, but TELCOT is reallybecoming the foundation on whichtheSeam is being built.”

At first glance, it could appear thattheSeam is the perfect opportunity forPCCA to expand its membership. ButMay says that’s not the motive behindthe B2B venture.

“Growers in other territories out-side Oklahoma, Kansas and Texas willnot become members of PCCA simplyby trading their cotton on the newwebsite,” he explains. “Nor will they be

“[This system] shiftssome competitiveadvantages to pro-ducers, who now haveimmediate, onlineaccess to prices andother information.”—Van May

Over 22 million bales of cotton have been traded through PCCA’s existing computerized system. PCCA spins muchof that cotton into textiles in its Texas plants. Photos courtesy PCCA


eligible to participate in any of PCCA’sdividends.”

Rather, the site should improvethe cotton industry’s efficiencieswhich, in turn, can improve pricespaid to producers. PCCA and theother partners agree that the multi-billion-dollar cotton industry hassome inefficiencies that make it ideal-ly suited to benefit from a B2B mar-ketplace. May notes that the cottonindustry is fragmented among pro-ducers, merchants and manufactur-ers, all of whom deal with incompati-ble, labor-intensive logistical systems.In many areas, cotton transactionsstill involve multiple, redundant faxesand phone communications. Anonline marketplace allows manufac-turers and merchants to more effec-tively purchase and sell cotton and toexpose producers to a far broaderrange of buyers and services.

“Competition should increase basedon the number of merchants across thecountry, and this increased competitionwill have a positive impact. When cot-ton buyers compete, cotton producersbenefit,” May adds.

Texas and the other portions of thesouthwest served by PCCA is big,wide-open country. Services can be fewand far between, including U.S.Department of Agriculture ServiceCenters. PCCA has developed a quasi-governmental role for itself, and willcontinue to do so even with the SeamB2B business.

Currently in its software system,PCCA differentiates between cottonplaced in the Commodity Credit Cor-poration (CCC) loan program and non-loan cotton, and notifies buyers wherethe cotton was ginned and stored. Inaddition, it offers producers a loanadvance program. Through it, produc-ers can tender their cotton to PCCAand receive an interim cash advanceequal to the CCC loan price. When themarket is right, producers then notifyPCCA to offer the cotton over TEL-COT to obtain the best price available.In essence, the producer has an imme-diate cash advance available, and thecotton can be marketed at a later date.

Over 22 million bales of cottonhave been traded over TELCOT. Thenetwork has more than 300 remotesites supporting over 1,000 devices.The computer processes an average of10 transactions per second and han-dles 175,000 to 350,000 transactionsper day. In peak trading periods, more

than 25 transactions per second havebeen sustained.

“When you look at the numbers ofwhat we’ve accomplished alone withour TELCOT marketing system, itdoesn’t take too much imagination toenvision what an expanded B2B sitecan do for cotton,” May adds. ■

The creation of theSeam e-trading place help could help lower costs of moving cottonfrom the field to the textile mill.


By David Cummins, Ag EconomistUSDA Rural Development

Editor’s note: This is Cummins’ finalManagement Tip column. He is retiringJan. 1, 2001, after more than 38 yearswith USDA, including 19 years with theCooperative Services unit of USDA RuralDevelopment and its predecessor agencies.Prior to that he worked with USDA’s Eco-nomic Research Service and Federal GrainInspection Service. His retirement homewill be in Virginia’s Shenandoah Valley,west of Staunton.

rain and total sales con-tinued to slide down-ward in 1999 for cooper-atives that arefirst-handlers of grain in

the Northern Plains, where wheat-barley-oats co-ops are prevalent.Grain volume marketed by these co-ops was significantly higher in 1999than in 1998 – up 20 percent formedium-sized co-ops (those with totalsales of $5 million to $14.9 million)and up more than 15 percent for largeco-ops (those with total sales of morethan $15 million).

Commodity prices, however, con-tinued a sharp downward trend thathas been ongoing for the past three tofour years. Farm supply sales averageswere considerably higher in 1999 forlarge grain co-ops and about the same in both years for medium-sizedco-ops.

Net savings for large grain co-ops

averaged $352,637 in 1999, comparedwith $461,975 in 1998, a drop ofnearly 24 percent. This followed a17-percent drop in 1998. Net savingsfor the medium-sized co-ops aver-aged 12 percent higher, $78,587 vs.$70,142 in 1998.

Sixty-two percent of large grain co-ops and 64 percent of medium-sizedgrain co- ops in the Northern Plainsreported lower net savings for 1999.The average decline in net savings forlarge co-ops was $338,580, while medi-um-sized co-ops reported an averagedecline of $105,192. Large co-ops thatimproved their bottom line in 1999 didso by an average of $438,049, whilemedium-sized co-ops reported an aver-age gain of $102,390.

For large grain co-ops in theNorthern Plains, gross income aver-aged more than 5 percent higher in1999, but operating costs were morethan 12 percent higher than in 1998.While grain margins were down,margins on total sales and service rev-enue were both up. Non-operatingincome dropped significantly, plung-ing 89 percent.

For medium-sized grain co-ops inthis region, gross income averaged 15percent higher, as increases in margins(for grain and farm supplies) and ser-vice revenue more than offset substan-tially lower non-operating income(patronage received from other co-ops). Operating expenses averagedabout 15 percent higher.

Patronage refunds received fromother co-ops declined 41 percent for

large grain cooperatives and dropped35 percent for medium-sized co-ops.These refunds are a key component ofnon-operating income for co-ops, par-ticularly for medium-sized operations.In 1999, these refunds accounted for44 percent of net savings from totaloperations for large co-ops and 62percent of net savings for medium-sized co-ops.

Nearly 7 percent of the medium-sized grain co-ops in 1999 had lossesaveraging more than $261,000 per co-op. The loss rate, however, was downfrom nearly 23 percent in 1998. Anadditional 21 percent of medium-sized co-ops would have had losses(averaging about $35,000 per co-op) ifit hadn’t been for patronage income.The loss rate for large grain co-opswas about the same in both years: 11to 12 percent.

Southern Plains co-opsLarge Southern Plains wheat-

sorghum co-ops averaged net savingsof $847,274 per co-op, up slightly from1998 and the highest since at least1982. Net savings for the medium-sized co-ops averaged $250,022, downabout 5 percent, but the second highestsince at least 1982. Grain margins andservice revenue increases were key factors for the large grain co-ops; farmsupply margins and service revenueincreases were key for the medium-sized co-ops. For large co-ops, an 8-percent increase in gross incomemore than offset 10 percent higheroperating expenses. For medium-sized

D o w n w a r d s p i r a l f o r c o m m o d i t yp r i c e s c o n t i n u e s ; b o t t o m l i n em i x e d f o r P l a i n s c o - o p s

G

M A N A G E M E N T T I P


co-ops, an 18-percent increase in grossrevenue fell short of covering 23 per-cent higher total operating expenses.

Lower net savings in 1999 wasreported by 62.5 percent of large and61.5 percent of medium-sized grain co-ops. Corresponding dollar declinesaveraged $331,072 and $168,040.Large and medium-sized grain cooper-atives showing higher earnings in 1999had increases of $263,551 and $94,859,respectively.

In 1999, as in 1998, grain price aver-

ages were down 14 percent for largeco-ops and 17 percent for medium-sized co-ops. Grain volume marketedincreased 18 percent for large and 16percent for medium sized co-ops.Grain sales climbed an average 1 per-cent for large co-ops, but droppedmore than 3 percent for medium-sizedco-ops in 1999.

The incidence of losses amongwheat-sorghum grain co-ops was 13percent for the medium-sized co-ops,with no losses reported by the large

co-ops. As in 1998, fewer than 5 per-cent of the co-ops would have hadlosses if it had not been for patronageincome received from other co-ops.This was in spite of sharply lowerpatronage income in 1999 – downmore than 24 percent for large anddown nearly 29 percent for medium-sized co- ops.

Producers continued to adjust tochanging weather conditions and rela-tive commodity prices in 1999. Thiswas reflected in a change in the relative

Table 1 - Compare your wheat-sorghum cooperative with averagesfor similar cooperative operations

Total sales group (million dollars)Group/Item Unit 5-14.9 15 or more 5-14.9 15 or more Your

(1998 Data) (1998 Data (1999 Data) (1999 Data) Cooperative

Storage capacity Million Bu. 1.782 4.478 2.125 5.028 ____________

Grain marketed Million Bu. 2.098 6.672 2.441 7.875 ____________

Turnover rate Times 1.18 1.49 1.15 1.57 ____________

Proportion grain Percent 67.6 67.3 64.7 69.3 ____________

Total assets Million $ 3.585 11.225 4.276 12.244 ____________

Long-term debt1/ Percent 6.6 8.0 6.8 9.4 ____________

Member equity1/ Percent 63.0 54.8 63.0 52.3 ____________

Total sales Million $ 9.385 30.018 9.448 29.425 ____________

Margins on sales Million $ .847 2.634 1.014 2.954 ____________

Total expenses Million $ 1.151 3.401 1.419 3.732 ____________

Net savings (losses) Million $ .262 .842 .250 .847 ____________

Labor of total expenses Percent 47.8 46.8 48.7 46.7 ____________

Net savings paid in cash2/ Percent 38.4 34.5 38.6 39.3 ____________

Current ratio Number 1.60 1.41 1.57 1.35 ____________

Debt/assets Ratio .17 .24 .21 .29 ____________

Net savings(loss)/tot. sales Percent 2.8 2.8 2.6 2.9 ____________

Gross margins/total sales Percent 9.0 8.8 10.7 10.0 ____________

1/ Of total liabilities and member equity. 2/ Of total patronage allocation.


proportions of the grains/oilseeds mar-keted by their co-ops.

A general shift from grainsorghum to primarily wheat and (to alesser extent) corn was evident inthe Southern Plains, particularly bylarge grain co-ops. In the NorthernPlains, large grain co-ops handledsignificantly more corn and soy-beans, along with more wheat, at theexpense of barley, in 1999 than in1998. Noteworthy for the medium-sized co-ops were an 84-percent

increase in “other crops” (mainlyoats, sunflowers and rye) sold and a34-percent increase in barley sold, atthe expense of wheat.

How does your co-op measure up?Benchmarks are common in busi-

ness management to measure how wellyour cooperative is performing. How-ever, such figures don’t reveal how yourcooperative compares with others.

If your cooperative is primarily afirst-handler of wheat and sorghum or

handles wheat, barley and oats as itsmajor function, comparative data for1999 are now available. Tables 1 and 2contain selected average financial andstructural data compiled from a surveyof Southern Plains and Northern Plainscooperatives marketing wheat and grainsorghum and wheat, barley and oats,respectively. Most cooperatives in thestudy were diversified, also handlingfarm supplies and providing related ser-vices. Fill in the blanks for your cooper-ative and see how it measures up. ■

Table 2 - Compare your wheat-barley-oats cooperative withaverages for similar cooperative operations

Total sales group (million dollars)Group/Item Unit 5-14.9 15 or more 5-14.9 15 or more Your

(1998 Data) (1998 Data) (1999 Data) (1999 Data) Cooperative

Storage capacity Million Bu. .661 1.843 .863 2.560 ______________

Grain marketed Million Bu. 1.888 6.768 2.267 7.818 ______________

Turnover rate Times 2.86 3.67 2.63 3.05 ______________

Proportion grain Percent 79.0 84.6 78.9 80.0 ______________

Total assets Million $ 3.068 12.611 3.796 13.056 ______________

Long-term debt1/ Percent 7.5 6.9 8.7 8.1 ______________

Member equity1/ Percent 46.5 41.6 48.8 39.5 ______________

Total sales Million $ 8.430 26.573 8.391 25.952 ______________

Margins on sales Million $ .436 1.740 .526 1.812 ______________

Total expenses Million $ .593 1.940 .684 2.178 ______________

Net savings (losses) Million $ .070 .462 .079 .353 ______________

Labor of total expenses Percent 43.7 45.3 43.2 46.2 ______________

Net savings paid in cash2/ Percent 36.9 29.0 35.8 27.6 ______________

Current ratio Number 1.33 1.17 1.36 1.14 ______________

Debt/assets Ratio .11 .11 .11 .11 ______________

Net savings(loss)/tot. sales Percent 0.8 1.7 0.9 1.4 ______________

Gross margins/total sales Percent 5.2 6.5 6.2 7.0 ______________

1/ Of total liabilities and member equity. 2/ Of total patronage allocation.


Anthony Crooks, Agricultural EconomistUSDA Rural Development

hen the directors of two small cooperativesin North Dakota approached USDA RuralDevelopment in July 1997 for technicalassistance regarding a possible merger, theyprobably had little idea of how large a trend

they were joining. About 95 other grain cooperatives alsomerged or were acquired in 1997.

Both of these Dakota cooperatives — one a petroleum andfarm supply cooperative with grain assets, the other a grainelevator cooperative — were seeking to strengthen theiroperations and improve financial performance. In addition toconsolidating assets, these cooperatives wanted to expand arail load-out facility owned by one of the cooperatives andadd to an agronomy center near another facility. They alsowanted to reduce grain shipping costs and to generate addi-tional revenues from spring fertilizer sales. Both goalsappeared to be financially rational at the time.

However, both cooperatives and their plans were soonsuperseded by an even bigger merger: that of Cenex andHarvest States Cooperatives. The merger of two giant,regional co-ops was the biggest wave in the recent tide ofmergers, consolidations, alliances, joint ventures and acquisi-tions that has swept over the U.S. grain industry (as reportedin this magazine in the Sept./Oct. 1998 and 1999 issues).

The small Dakota petroleum cooperative was an affiliate

of Cenex and a competitor of Harvest States. And thus themerger and improvement plans of these two small Dakotacooperatives was placed on an indefinite hold because of themerger of the two regional cooperatives.

About this time, a $4 million joint venture was announcedby Harvest States and one of its Dakota affiliates, a movewhich would lead to the construction of a terminal facilityjust down the road from where the two local co-ops hadplanned to expand their load-out facility.

Except for their relative size, the two planned mergersshared many similar characteristics. Each merger involvedfarm supply operations merging with grain marketing opera-tions. Each co-op hoped that the merger would offer new busi-ness opportunities in one partner’s specialty area while helpingthe other to restructure its operating costs. In addition, the co-ops were attempting to link their farmer-members into a pro-duction-marketing chain which would take the grain from fieldto buyer. They wanted to lower operating costs, share or redis-tribute business risk and expand operations.

It is easy to focus on the more sensational aspects of thisstory: two small, seemingly independent cooperatives beingswept onto the economic sidelines by the decisions of themuch larger regional cooperatives they belonged to. How-ever, it is more instructive to view these four cooperatives asrole players in the ongoing, widespread economic consolida-tion trend in agriculture. Strikingly similar occurrences havebeen witnessed repeatedly in recent years.

A soon-to-be-released report from USDA Rural Devel-

C o n s o l i d a t i o n i n t h e h e a r t l a n dA closer look at grain co-op mergers and acquisitions, 1993-97

W

opment (Research Report 180, “Consolidation in theHeartland, 1993-97: A Closer Look at Grain CooperativeMergers and Acquisitions”) analyzes the operational andfinancial characteristics of co-ops that were merged, consol-idated, went bankrupt or were closed for other reasons dur-ing those years. These businesses will be referred to as M/C(“merged or consolidated”) co-ops in the balance of thisarticle, which presents M/C and surviving cooperatives in

the context of agriculture’s economic restructuring. Lessonslearned from mergers, consolidations or other reasons forcooperative closures also provide some insights into thechallenges that lie ahead for grain cooperatives hoping tothrive. Some of the highlights of this research follow.

Tracking co-op closures The Rural Business-Cooperative Service, an agency of

USDA Rural Development, began keeping detailed statis-tics on mergers, acquisitions, consolidations, bankruptciesand related activities in 1993 (table 1). During 1993-97, itcounted 367 M/C events. On average, this is equal to about8 percent of all large co-ops and 10 percent of all mid-sizedcooperatives each year. In general, the majority (198, or 64percent) of these M/C events occurred in 1996 and 1997and among cooperatives having less than $15 million intotal sales. Most activity was in the nation’s heartland.Eighty-seven percent occurred in the Corn Belt and South-ern Plains regions (table 2).

Of the 367 cooperatives that were merged, consolidated orotherwise went out of business, 330 had total sales of at least$5 million and were located in four principle grain- produc-ing regions. The USDA research into this issue focuses onthese 330 cooperatives.

Figure 1 illustrates the number of cooperatives involvedin each type of M/C activity during the 1993-97 period.Almost 74 percent (246 of 330) involved cooperatives thatmerged with other cooperatives. A small number of cooper-

atives were involved with investor-owned firms (IOFs) ineither a merger (8 of 330) or an acquisition (14).

Financial characteristics The goal of the study was to answer some general ques-

tions about the financial health of grain cooperativesinvolved in mergers, acquisitions and other activities.Cooperatives that were involved with other co-ops and

those that merged with, or were acquired by, IOFs arecompared to each other. To compare M/C cooperativeswith national averages for grain co-ops of their same rela-tive size, a five-previous-year average was constructed foreach (remaining) cooperative for each year of observation.In this way, M/C cooperatives were compared only withtheir cohorts. Grain cooperative balance sheets and operat-ing statements were used to construct a set of generallyrecognized financial ratios. The ratios selected are associat-ed with four general aspects of a business: profitability, liq-uidity, efficiency and solvency (table 3).

Profitability indicators generally compare the returns of thebusiness (local net savings, from the operating statement) withanother aspect of the cooperative’s business By each of the fourprofitability measures, M/C cooperatives, regardless of the sizeof the surviving firm, accrued modest returns over the five-yearperiod. In every measure, M/C co-op performance was lessthan both the benchmark (used by CoBank) and the nationalaverage among grain cooperatives remaining in business.

Cooperatives and their creditors have a strong preferencefor a margin of safety against the operating uncertainties towhich they are subject. Liquidity refers to a cooperative’s abili-ty to generate short-term cash in case of unexpected expenses.M/C cooperatives had liquidity difficulties. Except for largecooperatives that joined IOFs, M/C cooperatives failed tomeet either national or benchmark standards for liquidity.

The relatively strong working-capital-to-sales performanceposted by large cooperatives that merged with IOFs suggests a


Table 1 — Number of Grain Co-ops In and Out of Business, 1992-97, by Year and Size in Total Sales

Year Grain cooperative size in Total Sales Year Grain cooperative size in Total Sales$15 million Between $5 Less than $15 million Between $5 Less thanor greater and $15 million $5 million ALL or greater and $15 million $5 million ALL

Number of cooperatives In Business Number of cooperatives “Out of Business”1992 419 570 204 1,1931993 405 537 203 1,145 1993 14 33 1 481994 384 495 191 1,070 1994 21 42 12 751995 370 463 191 1,024 1995 14 32 0 461996 326 408 186 920 1996 44 55 5 1041997 286 357 183 826 1997 40 51 3 94

Average 354 452 191 997 Total 133 213 21 367


very good reason for these cooperatives’relative attractiveness as merger targets.Of course, it’s possible that these valuesreflect relatively low sales. On the otherhand, what firm wouldn’t like to acquirea ready stream of working capital as partof the bargain?

Efficiency indicators provide somemeasure of how well the firm is man-aged. Because there is no direct mea-sure for “management ability,” theseindicators serve as a proxy for twoaspects of a manager’s job: holdingdown costs and making the best use ofthe business’ resources. M/C coopera-tives showed relatively strong perfor-mance in efficiency. Regardless of oth-er shortcomings, these co-ops wereapparently blessed with managementthat made sure overall expenses (par-ticularly labor) were kept low com-pared with income and that salesincome was kept high compared withinventory. Efficient operations mayhave been the single most attractivefeature to firms aspiring to acquirethese cooperatives.

Solvency indicates a cooperative’slong-term financial health. Solvencyindicators include guidelines for thefirm’s interest expenses and liabilitiesrelative to its income and equity.M/C cooperatives generally hadmixed results regarding solvency.While large cooperatives that mergedwith IOFs were more solvent thanthose merging with other coopera-tives, mid-sized cooperatives mergingwith other cooperatives were more

financially stable than those thatmerged with IOFs.

Are best co-ops cherry-picked?A common perception is that the

most promising cooperatives are quick-ly purchased by IOFs. This studyrefutes that belief in two ways.

First, while both groups of coopera-tives were in poor financial health,those that merged with other coopera-tives outperformed those that mergedwith IOFs. Table 3 reveals that forlarge cooperatives, those that mergedwith other cooperatives outperformedthose that merged with IOFs in 8 of 13indicators. Medium-sized cooperativesthat merged with other cooperativesoutperformed their counterparts thatmerged with IOFs in 9 of 13 indica-tors. In other words, cooperatives thatmerged with other cooperatives weregenerally more profitable, liquid, effi-cient and solvent than their those thatmerged with IOFs.

Second, a very broad measure offinancial health was given to the 330cooperatives that went out of businessand their merging partners. Firms thatperformed no worse than 90 percent ofthe benchmark level for at least six ofthe 13 indicators were consideredhealthy. Firms that failed to achieve the90 percent performance level for sevenor more indicators were considered inpoor financial health.

Table 4 summarizes the financialhealth of the 330 M/C cooperativesand their partners. Sixty-five percent

(82 of 126) of mergers that occurredamong large cooperatives during 1993-97 involved two firms in poor financialhealth. Thirty-one percent (39) of themergers occurred among a healthy anda not-so-healthy firm. And only 4 per-cent (5) of all large cooperative merg-ers during that period involved twohealthy firms.

While a slightly larger percentage ofmedium-sized cooperative mergers (38percent, or 63 of 204) involved at leastone healthy firm, the implicationremains the same for both groups. Forthe most part, cooperatives that wentout of business during 1993-97 wereperforming poorly, or at least not aswell as their surviving neighbors. Inmost categories, whether the averageM/C cooperative was involved with acooperative or becoming part of anIOF, its financial indicators were weak-er than national averages and well shortof benchmark values.

When a cooperative went out ofbusiness, it was in poor financial con-dition. To become part of anotherbusiness — whether as a cooperativeor an IOF – the co-op tended to acceptthe terms offered by its benefactor, notto dictate the terms. Few, if any, nego-tiations were carried on by these coop-eratives from a position of strength.

Roughly two-fifths of the 291 coop-eratives that stayed in the “cooperativefamily” were financially sound. Howev-er, of the 22 cooperatives that mergedwith or were acquired by an IOF, therewas only one solid performer. So, if welook at the best among a group of rela-tively weaker cooperatives and ask ifthey were “cherry picked” or “stayed inthe family,” the answer is that theystayed. Of the 121 available “cherry”cooperatives that went out of businessduring the period, only one was“picked” by an IOF.

Predicting mergers and acquisitions USDA wanted to know if a grain

cooperative’s financial health is able tosay something about how likely it is tomerge with, or be acquired by, anotherfirm. An economic model was con-structed to evaluate the likelihood of a

Table 2 — Number of Grain Cooperatives Out of Business, 1993-97,by Region and Size

Region Grain Cooperative Size in Total Sales$15 million Between $5 Less thanor greater and $15 million $5 million ALL

Number of cooperatives “Out of Business”Corn Belt 102 156 12 270Southern Plains 8 40 . 48Northern Plains 15 4 7 26Pacific Northwest 1 4 . 5Other 7 9 2 18

Total 133 213 21 367


grain cooperative going out of businessin the near term, given its financialperformance record.

Each of the 14 financial ratios listedwas used as a predictor to determinewhich variables, if any, could do a bet-ter job than the rest of predicting acooperative’s failure. A three-variable“best fit” was selected from among the14 ratios using a special statistical pro-cedure (RBS Research Report 180 pro-vides specific details).

The odds of large grain cooperativesgoing out of business were most suc-cessfully predicted by the three ratios:return-to-total assets (-), expenses-to-sales (+), and labor-to-income (+). The“minus” sign after the “return-to-totalassets” variable indicates that the likeli-hood of a cooperative going out ofbusiness increases as return-to-total-assets decreases. The results also showthat it’s more likely a cooperative willgo out of business as the value of

expenses-to-sales and labor-to-incomeincrease, hence the “plus” signs afterthose variables.

The fact that out of all 13 variables,these three were selected as having themost power for predicting which largegrain cooperatives will go out of busi-ness says a lot about the challenges thatconfront remaining cooperatives. Thatone variable indicates profitability andthe other two efficiency speaks to therelentless marked pressure in which

Table 3 — Financial Indicators: National Means and “Out of Business” Co-ops, By Size and Type,5-year Means With Benchmark

Total Sales of $15 million or greater Total Sales between $5 and $15 million Out of Out of Out of Out of

National Business - Business - National Business - Business -In Business to a to an In Business to a to anAverage Cooperative IOF Benchmark Average Cooperative IOF

ProfitabilityReturn to Total Assets 0.08 0.01 (0.03) 0.08 0.06 0.00 (0.02)Return to Fixed Assets 0.27 0.02 (0.01) 0.30 0.22 (0.00)* (0.07)Return to Equity 0.16 0.01 (0.06) 0.10 0.11 (0.00)* (0.05)Local Return to Local Assets 0.07 (0.02) (0.04) 0.03 0.05 (0.02) (0.05)

LiquidityCurrent Ratio 1.32 1.16 1.37 1.50 1.56 1.50 1.22Quick Ratio 0.68 0.47 1.05 0.80 0.85 0.71 0.59 Working Capital to Sales 0.04 0.03 0.05 0.07 0.06 0.05 0.04

EfficiencyProfitability 0.08 0.08 0.10 0.10 0.08 0.09 0.10 Labor to Income 0.37 0.38 0.32 0.35 0.39 0.37 0.39Farm Supply Sales to Inventory 8 12 3 10 8 9 6

SolvencyTimes Interest Earned 3.84 0.15 0.91 3.00 4.02 0.04 (0.65)Total Liabilities to Total Assets 0.45 0.47 0.32 0.50 0.36 0.31 0.41 LT Liabilities to Equity 1.17 1.32 0.95 1.00 0.80 0.75 1.28

Negative values are in parentheses.* Value rounded to zero (0).


survival hinges on paper-thin profitmargins. Managers are faced withseemingly impossible goals: makingevery asset a source of revenue whilesimultaneously reducing operatingcosts. The bigger challenge still is toremain in the game as every player getsbigger and more competitive.

This analysis suggests that mergertargets among large grain coopera-tives are likely to have the followingfinancial characteristics: a positive,but relatively low return-to-total-assets (3 - 4 percent range), expenses-to-sales approaching 10 percent, andlabor-to-income significantly exceed-ing the 35-percent benchmark (40percent and above). Given these con-ditions, another 32 large cooperativesare likely candidates to go out ofbusiness in marketing year 2000.

Medium-sized grain cooperativesthat went out of business were mostsuccessfully predicted by the threeratios: return-to-local-assets (-),expenses-to-sales (+), and return-to-fixed-assets (-). Again, the negative signattached to two of the variables (localreturn-to-local-assets and return-to-fixed assets) indicates that, as theseratios increase, the likelihood of a co-op being forced into a merger, consoli-dation or some other reason for ceasingto operate as an independent entity.

Much like their larger counterparts,medium-sized cooperatives must bal-ance profitability and efficiency. How-ever, while the large cooperatives con-cern themselves more with efficiency,medium-sized co-ops must shift theiremphasis toward profitability. It is sig-nificant that two of the three mostimportant variables involve returns.

Of particular importance is the rela-tive contribution of return-to-localassets. It is well known that many oth-erwise struggling local grain coopera-tives have managed to survive from oneyear to the next on patronage receivedfrom regional cooperatives. The resultsof the model suggest, however, thatthose days are ending. Local returns areprimary to a grain cooperative’s success.

Merger targets among medium-sizedgrain cooperatives are likely to have the

following financial characteristics: alocal return-to-total-assets of less than 2percent, expenses-to-sales approaching10 percent and a return-to-fixed assetsof significantly less than the 30-percentbenchmark (18 percent or less). Underthese circumstances, another 60 medi-um-sized cooperatives are likely targetsfor consolidation in 2000.

To survive, large cooperatives need tobe profitable and efficient, with anemphasis on efficiency, while medium-sized co-ops need to be efficient and prof-itable, with an emphasis on profitability.And — even more importantly — whatdoes “survival” mean for grain coopera-tives in the context of agriculture’s wide-spread economic restructuring? Perhapswhat has been learned about M/C coop-eratives will provide some important keysto the challenges that lie ahead.

Consolidation implicationsEven the most cursory look at the

M/C cooperatives during the 1993-97period suggests two predominant pat-terns: cooperatives in poor financialhealth seeking a partner to avoidbankruptcy; or, strong cooperativesseeking out stronger partners and/orexpanding internally to position them-

selves strategically for the future. In regard to both patterns, histori-

ans looking back on the late 1990s mayvery easily conclude that the “farm”crisis of two decades earlier simply“moved further up the food chain.”Many smaller farms were “shaken out”of the industry in the past generation.Now, even among the largest playersremaining in agriculture, there is nearuniversal agreement that “only thelowest cost operations will remain.”

The buildup of surpluses anddeclining export demand have drivenprices to their lowest levels in decades.Expectations for their recovery areequally as bleak. What was once a cost-price squeeze may now be likened to ahammer and anvil.

Paper-thin profit margins and lowexpectations are forcing grain coopera-tives, and the rest of agriculture, tolower operating costs. That means afirm must grow in size so as to spreadoperating costs over a larger businessvolume to gain “scale economies.”

A merger with another cooperativeis often perceived as a way of gaining astep on the economic treadmill. Byacquiring additional assets (such asstorage facilities, unit-train loadout

Is there a story to tell about a cooperative you worked for, or were a mem-ber of, which has merged, consolidated, went bankrupt or for some other rea-son ceased to operate as an independent business? USDA is developing a his-torical account of “consolidation in the heartland” and would like to add yourstory to the record.

Tell us briefly about your cooperative’s activities along with the circum-stances that led to the merger, consolidation or other action taken. Your noteshould also tell us what has happened to the membership and the communitysince the co-op ceased operations as an independent business. We will treatyour information confidentially, if you so advise us.

Send your story (or questions) to the author of this article by e-mail: [email protected], or by regular mail to: USDA/RBS, “Cooperative Consoli-dation,” Stop 3252, Washington, D.C. 20250-3252. If you don’t have time towrite out your account but would be willing to be interviewed, we would stilllike to hear from you. Send a phone number where you can be contacted.

USDA seeking more accounts of co-opmergers and closures


facilities, etc.) relatively cheap, by com-bining two sales forces or accountingdepartments and other consolidationmeasures, firms hope the benefits ofsize will help them to structure theiroperating costs a notch lower.

This cost-saving behavior amongtwo or more firms at the same level, or“link,” along the supply chain is char-acterized by economists as horizontalintegration. Vertical integration, on theother hand, involves the forward orbackward linking of two or more firmsat different levels of the supply chain.

While supply chain integration isnot a new event in agriculture, itsincreasing pervasiveness in recent yearsis prominent.

A supply chain is formed when onefirm — usually a significantly domi-nant player or “integrator”— worksto control (contractually or throughownership) the activities of firms(groups of firms) at each level of theproduction process, up to and includ-ing delivery to the consumer. Thesechains seek control.

Integrators assume command ofthe production and delivery processto assure themselves: a) that productquality meets their customers’ specif-ic needs; b) that costs are driven tothe absolute minimum, subject tomeeting the quality specifications;

and c) that the associated risks aremanaged within acceptable levels.

Supply chain integration — long afact of life in the poultry/broiler indus-try and becoming one in the porkindustry — is now underway in thegrain industry. The grain delivery sys-tem is not quite as complete as in thepoultry/broiler industry. A handful offirms have yet to completely dominateseed development, production, pro-cessing and marketing with every coor-dinated step up and down the chain.

However, in recent years, we wit-nessed the harvest and marketing of her-bicide-tolerant corn and soybeans. Theso-called “Roundup®-ready” varietiesare just the first of many crops derivedfrom seed stock that was modified at thegenetic level to garner specific proper-ties. Moreover, we also watched severalalliances of seed corporations with phar-maceutical firms formed with the specif-ic interest of developing geneticallymodified seed stock. And, while bothinternational and domestic markets haveproved to be less than enthusiastic forgenetically modified corn and soybeans— at least during the 1999-2000 market-ing year — continued progress in bio-engineering is expected.

In short, the best available geneticswere combined with the best (i.e., mostprofitable) production processes to

deliver products intended to meet theneeds of an increasingly discriminatingconsumer.

The final choiceAs the marketing chain structure

dominates the grain industry, bothcooperatives and their producer mem-bers are faced with a straightforwardchoice: build new partnerships or beleft behind. Survivors in the poultryand pork industries successfully adjust-ed to a shift in emphasis from “com-modity marketing” to “product deliv-ery.” For producers and cooperatives inthe grain industry, this will meanrealignment to become an “integrator”themselves, such as Dakota GrowersPasta Cooperative of Carrington,N.D., or, at the very least, a reliablesupplier to a cooperative integrator, forexample, producers with membershipand delivery rights of corn for GoldenOval layers in Renville, Minn. ■

References CoBank, National Bank for Cooperatives, “Analyzing a Coopera-

tive Business: Designed for Midwestern Grain or Farm Supply Coop-eratives,” self-published instructional pamphlet for directors andmanagers of agricultural cooperatives, undated.

Drabenstott, Mark “Consolidation in U.S. Agriculture Leading toNew Rural Landscape and Public Policy Considerations,” Feedstuffs71:19, May 17, 1999, pp. 33,34,43, and 44.

Hanson, Mark “Grain Co-op Votes in Favor of Terminal at Ster-ling; South Central Has Elevators in Three Towns,” Bismark Tribune,March 21, 1998, Metro Edition, pg. 8.

Merlo, Katherine “When Cooperatives Combine,” Rural Cooper-atives 65:5, Sept./Oct. 1998, pp. 18-23.

Wadsworth, James J. “Large Cooperatives Unifying: A StrategicTrend to Monitor,” Rural Cooperatives 66:5, Sept./Oct. 1999, pp. 21-25.

Table 4 — Financial Health of Out of Business Co-ops and Their Partners: National, Regional, and Reason,by Size and Relative Condition

Out of Business Cooperatives Total Sales of $15 million or greater Total Sales between $5 and $15 million Both Poor One Healthy Both Healthy Total Both Poor One Healthy Both Healthy Total

Number of cooperatives Number of cooperativesNational 82 39 5 126 123 63 18 204Corn Belt 60 37 5 102 102 45 9 156Southern Plains 6 2 8 13 18 9 40Northern Plains 15 15 4 4Pacific Northwest 1 1 4 4By Reason:Merged w/ Co-op 46 29 5 80 89 59 18 166Acquired by Co-op 19 19 15 15Consolidated w/ Co-op 10 10Merged w/ IOF 4 4 4 4Acquired by IOF 5 5 9 9Bankruptcy 4 4 6 6Unknown Reason 4 4 4 4


By James J. WadsworthProgram Leader, Education andMember RelationsUSDA Rural Development

Editor’s note: This article is excerptedfrom a forthcoming report, CIR 58“Assessing Performance and Needs ofCooperative Boards of Directors.” Thereport includes three board assessmentexercises: (1) Director’s self-assessment, (2)Full board performance assessment, and (3)Board meeting productivity assessment.This article discusses the first-directorassessment; a subsequent article to appearin a future issue of this magazine will dis-cuss the latter two assessments.

common concernamong cooperatives isthe need to enhance orimprove the relation-ship between manage-

ment and the board. This does notnecessarily imply that there are perva-sive problems among the relationshipsof these cooperative leaders. But itdoes indicate that, at times, issuesarise between managers and directorsthat may be detrimental or disruptiveto smooth governance and manage-ment of cooperatives.

Managers and directors have dis-tinct responsibilities. While managersare hired with the qualifications to runthe cooperative and meet their manyresponsibilities, directors come fromdiverse backgrounds and experiencelevels. Many directors find their manyresponsibilities challenging. They arenot often fully trained or completelyable to perform the many dutiesrequired when elected to the board.

A learning curve is involved,and gaining necessary experienceand skills takes time for directors.Differences in experience levels,ability and points of referencebetween directors and manage-ment sometime create instancesof misunderstanding or conflictthat may lead to weakened rela-tionships.

Director assessment can helpbridge such differences by providing ameans for directors to enhance theirabilities and better understand theirdistinct role in the cooperative.Assessments allow directors to visitboth the vastness of their responsibili-ties and the limits imposed. They pro-vide building blocks for more produc-tive relationships between directorsand their hired management.

Director assessment can be a veryuseful tool for all directors. Directorswho lack experience and ability canlessen the time needed to gain thepertinent knowledge and skills forbeing an effective director by com-pleting a self-assessment and thendiligently working on areas that needimprovement. And experienced direc-tors, who certainly can use improve-ment in some areas, can accuratelypinpoint weaknesses to address.Assessment makes this process easierthrough a plan specifically tailored toaddress identified weaknesses.

Knowledgeable, skilled directorsbetter understand their roles andare better able to effectively serve.These directors are more likely tohave a professional and productiverelationship with management andother directors.

Related responsibilitiesAssessment should correspond to

directors’ distinct responsibilities andduties. To set the stage for assessment,let’s review some often-cited directorresponsibilities/duties (from Donald A.Frederick, Co-ops 101: An Introduc-tion to Cooperatives, RBS CooperativeInformation Report 55).

Working as a group, directors havethe responsibility of setting the policiesand objectives for the cooperative, andmaking decisions that set the course thecooperative will follow to achieve thoseobjectives. More specifically, directors:• Hire a competent manager, deter-

mine the salary, outline duties andauthority of the position and for-mally review his/her performance atleast annually;

• Adopt broad, general policies toguide the manager;

• Develop and adopt short- and

A r e y o u a g o o d l e a d e r ?Director assessments are building blocks to productive board-management relationships

A


long-range business strategies;• Require written monthly financial

reports and operating statementsfor board meetings to be informedof adverse as well as favorableoperations;

• Direct the manager to prepare,

before the close of each year, anoperating budget for the next fiscalyear for board approval;

• Employ a qualified auditor to makean independent audit at least onceeach year;

• With the aid of the manager, planand conduct the annual meeting tokeep membership informed about thestatus of their business, includingoperations, finances and policies;

• Determine the patronage refund allo-cation and per-unit retain level;

• Assure that the cooperative has com-petent legal council;

• Keep and review records of theboard’s actions.

Directors are called on to completemore specific duties as well. Someexamples include:• Approving and disapproving major

capital expenditures;

• Establishing the cooperative’s finan-cial structure and the authorization ofany basic change in structure;

• Determining the boundaries of dis-tricts, divisions, locations of opera-tions offices, etc.;

• Establishing appropriate electionand voting procedures tomaintain proper representationof members, including fillingvacancies on the board or anyother corporate body, commit-tee, or organization that resultsfrom resignation, death, dis-qualification, etc.;

• Making decisions about theproper relationship with otherfarmer cooperatives and farmorganizations;

• Making decisions about corpo-rate membership in otherorganizations, associations andfederations;

• Establishing the responsibili-ties and duties assigned toindividual division boards andthe individual committees;

• Establishing basic policies with regard to legislative or adminis-trative decisions on local,

state, national and international lev-els that affect the welfare of themember-producer.

Directors should not expect toreceive special favors from the manageror employees and a director does not:• Act independently on matters that

should be decided by the entireboard;

• Represent special interests, factions,or political entities.

These are some of the majorresponsibilities of most cooperativedirectors. To carry them out, direc-tors conduct a host of actions as indi-viduals, as a group during boardmeetings and in other membershipmeetings. They are required to learnand carry themselves as directors,conducting necessary tasks and func-tions. They must be competent, dili-gent and active. They use the cooper-

ative and lead it. They need to havean in-depth understanding andknowledge of cooperatives and asso-ciated issues.

Areas and items to assessSimply asking directors if they are

able to meet a defined responsibilityis too general a question. So, anassessment should include a series ofspecific statements under several keyareas. Director responsibilities andduties can be broken down into asmaller number of significant knowl-edge and ability areas such as: man-agerial skills, finance, policies andplanning, member relations, boardoperations, leadership and personalcompetence. In an assessment, direc-tors determine what areas, or parts ofareas, they need to improve.

An assessment is not a complicatedexercise. Directors simply react to aseries of items or statements associatedwith each key area to clarify wherethey have ability and where they needimprovement. For example, a numberof items (gleaned from work fromHarold E. Chapman’s “The Contem-porary Director: A Handbook forElected Officials of Co-operatives,Credit Unions, and Other Organiza-tions,” Saskatchewan Cooperative Col-lege of Canada, 1986) are identifiedhere under the “seven knowledge/abil-ity areas.” These areas and statementsare directly associated with variousdirector responsibilities and duties.

Managerial Skills • I am able to help establish the job

description for the general manager,including the specific duties andresponsibilities;

• I am able to participate in therecruitment, selection and hiring ofa general manager;

• I am able to participate in a perfor-mance review and appraisal of thegeneral manager;

• I am able to participate in establish-ing the compensation for the generalmanager.


Finance• I am able to define financial objec-

tives and develop policies to guidecapital and operational financial decisions;

• I am able to analyze and approve cap-ital expenditure plans;

• I am able to interpret the coopera-tive’s financial statements and toassess the viability of the cooperative;

• I am able to understand financialratios and analyze trends;

• I am able to analyze budget proposalsand approve the annual budget;

• I am able to analyze proposals andparticipate in discussions on majorfinancial matters;

• I am able to compare actual financialperformance to the budget;

• I am able to analyze and participatein decisions involving the distributionof net savings or losses;

• I am able to understand and analyzethe cooperative’s financial invest-ments;

• I am able to explain the cooperative’sfinancial position to others whenrequired;

• I am able to explain the coopera-tive’s equity redemption program tomembers;

• I am able to analyze equity redemp-tion requests and establish equityredemption policy.

Policies/Planning• I am able to help establish objectives

and policies for operations and ser-vices of the cooperative;

• I am able to appraise the adequacy ofoperations and services of the coop-erative;

• I am able to understand feasibilitystudies and analyze proposed changesand their implications for long-termoperations and member-service;

• I am able to analyze and approveannual plans for services, operationsand facilities;

• I understand the cooperative’s plan-ning system and am able to activelyparticipate in the process;

• I am able to develop objectives in line

with member needs and the coopera-tive’s resource base and operations;

• I am able to take part in brainstorm-ing sessions and provide ideas/strate-gies relevant to the cooperative’sobjectives;

• I am able to evaluate the effectivenessof the cooperative’s performanceagainst its plans.

Member Relations• I am able to analyze proposals and

approve a program and budget for

member and public relations in thecooperative;

• I am able to evaluate the effectivenessof the member relations program;

• I am able to communicate well withmembers;

• I am able to represent the coopera-tive at public functions whenrequested;

• I am able to receive ideas and expres-sions of concern from members andto initiate appropriate action on theirbehalf;

• I am able to analyze and approveobjectives, policies and strategies formaintaining effective relations withthe public, other cooperatives andgovernment agencies;

• I am able to assist in planning theannual meeting program to maximizemember involvement and input;

• I am able to encourage members toattend annual and other meetings ofthe cooperative;

• I am able to analyze and make deci-sions on applications for membership;

• I understand the cooperative’s oper-ating territory and membership dis-tricts and boundaries.

Board Operations• I am able to work well with other

directors and the managementteam;

• I fully understand the procedures forappointing officers and take an activepart;

• I am able to plan, prepare and articu-late my thoughts to maximize groupparticipation in board decisions;

• I am able to participate as a memberof a committee and chair it, ifrequired;

• I am able to effectively communicatemy opinions and feelings to the board;

• I am able to take part in all importantboard discussions, fully representingmy member constituents;

• I am able to analyze and recom-mend appropriate per diem, traveland sustenance allowances fordirectors.

Leadership • I am able to inform others of the his-

tory, values, principles, organizationand functioning of the cooperative;

• I am able to actively support and pro-mote cooperative activity in the com-munity;

• I actively patronize the cooperativeand display active cooperative mem-bership;

• I understand the cooperative’s systemof governance;

• I fully understand the qualificationsfor board leadership positions;

• I keep attuned to agricultural, busi-ness and environmental issues andwork to be knowledgeable in all con-cerns effecting the cooperative;

• I take my role of director seriously andwork to improve my performance;

• I do my best to help my fellow direc-


tors and members when asked;• I understand that when the discus-

sion and decision of an issue is com-pleted, I am responsible to supportthe board’s majority’s decision;

• I elicit feelings of confidence, trustand respect from fellow members.

Personal Competence• I am able to assess my personal train-

ing needs for the role of director;• I fully understand the role (responsi-

bilities, duties) of a director and feelcompetent to fulfill it;

• I contribute to the productivity ofmeetings by participating effectively;

• I am on time and present at all boardand committee meetings (emergen-cies being exceptions);

• I am able to effectively inform mem-bers and the public of the purposes,structure, financing, services, legalframework and operations of thecooperative;

• I am able to listen and speak effec-tively with individuals and groups;

• I am able to prepare and presentwritten and oral reports;

• I am able to prepare plans for car-rying out activities and to measurethe results;

• I am able to direct the affairs of thecooperative consistent with thebylaws, articles of incorporation,and other relevant regulations andstatutes;

• I am knowledgeable about the poten-tial liabilities of being a director.

Use of statements such as thesecan provide a comprehensive assess-ment of directors’ abilities. Directorsmust be candid in rating their knowl-edge, ability and performance inaccordance with each statement. Aconsistent system for evaluationshould be used. For example, state-ments could be evaluated as: yes —this is not a problem and training isnot needed; unsure — I’m unsureabout this and could use some train-ing for improvement; or no — I needtraining and improvement.

Evaluating statements on an individ-ual basis is the first part of assessment.Following evaluation, directors reviewand identify those statements to whichthey did not assess a “yes.” Then theyshould provide input on how theymight improve some of their self-diag-nosed weaknesses.

Individual cooperative boards maywish to re-word some of these state-ments, add others or subtract some to better fit their unique circum-stances. The idea is to create an exer-cise that will effectively evaluatedirectors, given their distinct associ-ated responsibilities and duties totheir cooperative.

Develop training, track progressThe major goal behind director

assessment is not merely to pinpointindividual weaknesses, but to find waysthat directors can improve their abilityand performance — to be better direc-tors. The theme for improvement issimple. Cooperative boards need toproactively identify weaknesses to findand to implement appropriate methodsfor correction. They need to seek nec-essary resources and take advantage ofmaterials, programs, classes, work-shops, seminars, conferences and othereducational activities.

Informal training may be all that’sneeded. Simply providing the directorswith pertinent reading materials orsome type of individual or group tutor-ing may make some improvements. Directors can also help each other.Experienced, effective directors can bevaluable resources for some types oftraining. Management may also partici-pate in tutoring certain areas.

There are many informational andeducational materials available. USDA’sRural Business-Cooperative Service pro-vides many related publications and mate-rials and other cooperative-oriented orga-nizations have readily available resources.Visit the Cooperative Services website athttp://www.rurdev.usda.gov/rbs/pub/cooprpts.htm.

Formal training may be required,

too. Director training workshops arean easy way to target numerousweaknesses and teach a number ofdirectors at once. Workshops, ofcourse, are not a new idea. Manyhave been held in various locationsand times over the years. State,regional and national cooperativeorganizations and educational institu-tions organize workshops.

For example, state cooperativecouncils and regional centers oftenprovide this service. Representatives ofstate departments of agriculture andgovernmental agencies such as USDAand university personnel also becomeinvolved. Cooperative-related institu-tions also hold other classes, confer-ences and seminars.

The board of directors shouldconsider discussing some of themajor weaknesses identified fromthe self-assessments to surface ideason best methods for developingimprovement programs. Sometimesa single program can alleviate aproblem area identified by a numberof directors.

Once training has been developedand implemented, it is important thatthe board track past director needs andthe types of training used. Such infor-mation will be useful for future assess-ments and training programs.

Director assessment should be anongoing process. Director assess-ments need to be completed and thenactively monitored. Assessmentsshould be active instruments by whichprogress is regularly checked duringthe course of a director’s tenure.Directors should review their assess-ments on a regular basis. Most direc-tors will be able to clearly see wherethey’ve made progress or need furtherimprovement. However, a directorshould feel free to take a new self-assessment at any time. Learning tobe a competent director with a pro-fessional and productive relationshipwith management is a continuingprocess — which is the goal of self-assessment. ■


By Azanmasso Joseph andSteven Graham

Editor’s note: Joseph is president of Coop-erative Agro Pastorale Segbeya; he metGraham when both worked with the PeaceCorps in West Africa in the 1970s; Gra-ham was administrator of the KansasWheat Commission from 1980-95, andhas since then served as assistant to thedean and director of agriculture at KansasState University.

he “Cooperative AgroPastorale Segbeya” wasstarted in 1994 by swineproducers in Benin,West Africa. The co-op

faces many challenges to develop andgrow, not unlike many facing coopera-tives in the United States.

Benin is slightly smaller than Penn-sylvania, with a population of 6.3 mil-lion. It is located west of Nigeria andeast of Togo. As a former Frenchcolony, the country’s official language isFrench, but there are eight major triballanguages spoken within its borders.

Benin is primarily an agriculturalcountry, producing ample fruits, veg-etables, peanuts, corn, cotton, and live-stock for its own use plus limitedexport. The southern half of Beninreceives rain in two periods each year,and thus two growing seasons. Thenorthern half is drier and only has onegrowing season. Commodity exportsfrom Benin include cotton, crude oil,palm products, and cocoa.

The population in the southern halfof Benin is more affluent than in thenorth, and one of the meats consumed

in large quantity is pork, especially inthe County of Toffo in the AtlantiqueProvince, or Department of SouthCentral Benin. Other preferred meatsare poultry, fish and beef. This richagricultural region is located just northand west of Cotonou, the country’smost populous city.

Subsistence farmersAgriculture in Benin is primarily of

the subsistence-type, with the excep-tion of a few palm or fruit tree planta-tions. Farmers usually clear a coupleacres and plant a mixture of tall andshort crops on the land for a fewyears. That land is then allowed to gofallow and another piece of land iscleared. Livestock is primarily allowedto range free and forage for whateverfood can be found. Beninese produc-ers do not talk in terms of productiondays for livestock but rather in termsof months or years.

A rudimentary Agricultural Exten-sion Service exists and provides thevery slimmest of technical informationand assistance. The assistance availabledepends greatly upon the knowledgebase of the local extension agent andwhether the agent is reaching out tothe producers through meetings intheir local villages.

There is no system of banks ororganizations providing credit to thesubsistence farmers who might want totry some new type of crop or livestockproduction system. Money is trans-ferred to local villages through themany Post, Telegraph & Telephoneoffices (PTT) throughout the country.If people receive checks from overseasand do not live in one of the few cities

in Benin and have a bank account, theywill not be able to cash those checks.Instead, they must receive their moneyin the form of international postalmoney orders, which can be cashed attheir local PTT.

Many roadblocks slow progressSmall producers wanting to try new

ideas which cost money face a very diffi-cult situation. Either they need to bandtogether and form a cooperative or findsome backer with money.

Those wanting to form a coopera-tive in Benin discover many of thesame roadblocks as in the UnitedStates. For example, previous coopera-tives that have failed reduce chances fornew ones to begin. There are alsoissues such as finding the right mix offarmers to join, deciding on a reason-able and attainable business plan, anddetermining how to direct and managethe cooperative to a profitable position.

Even when producers form a coop-erative, they have great difficulty con-vincing authorities to take the groupseriously and provide technical orfinancial assistance. The following sto-ry is about a cooperative in Benin,West Africa, that faced the difficultiesand has continued to operate.

Editor’s note: The following portion ofthis article is told in the words of the coop-erative’s president, Azanmasso MenaiJoseph, translated from French.

Genesis of the co-op“Realizing the affluence of the pop-

ulation in the neighboring OuemeProvince for the purchase of pork andthe great consumption by the popula-

C o o p e r a t i v e A g r o P a s t o r a l eS e g b e y aAfrican swine-raising cooperative struggles to survive and prosper

T


tion in the Atlantique Province, espe-cially by persons of Toffo County and,in particular, the Community of Ouag-bo, I had an idea. On April 11, 1994, Iinvited 10 farmers to come togetherand create a cooperative for the pur-pose of producing swine. Seven of theinvited farmers responded favorablyand created a cooperative: the Cooper-ative Agro Pastorale Segbeya-which, tothis day, is working together as a coop-erative and a team.

“With our own resources, webought a piece of land and paid for theconstruction of a new semi-confinedhog operation, including a building andwalled lot. It opened on June 1994.

“Through the life experiences ofeach cooperator and using whatevertechnical, financial and human mea-sures and methods possible, the coop-erative hoped to create a more modernand rational system of producing swinein the community of Ouagbo.

“The cooperative’s objectives wereto: 1) Satisfy the demands of the localpopulation for pork meat; and 2) Pro-vide reasonable income to the coopera-tors who initiated the cooperative.

“In addition, we wanted to pull fromthis experience the lessons that wouldpermit us to aid other farmers whomight want to abandon the traditionalways of raising swine and become moreself-sufficient in the production of

animal protein in Toffo County andour community of Ouagbo.

Goals of the Cooperative“The overall goal of the Cooperative

Agro Pastorale Segbeya is to change thetraditional system of raising swine inthe County of Toffo and, in particular,in the community of Ouagbo, by devel-oping a new swine-raising system thatmixes a local breed of swine with animported breed. The cooperative raisescrossbred swine, using imported malesand local females.

Co-op’s accomplishments“Based on the planned objectives

and purposes for the cooperative, theresults have been positive, thoughincome did not increase as much asdesired because three-fourths of theannual receipts are destined to pay forthe animal feed and the veterinary ser-vices. Therefore, we decided to buyone hectare of land to cultivate andraise food for the swine. We received agift of money from Steven and CheriGraham to buy the land. I had workedwith Mr. Graham when he was a PeaceCorps volunteer in my country from1974-76, and we have stayed in contactover the years since he left.

“From 1994 when the cooperativestarted, until November 1997, morethan 75 head were in our production

system. But in November 1997, a dis-ease killed many swine in Benin. Thecooperative faced great losses and bigdifficulties. Previous receipts were usedto take care of the remaining swine, butthe government was eventually forcedto order all swine killed to stop thespread of the disease.

“We were finally allowed to restartproduction in 1999. The governmentimported swine, which we wererequired to purchase, and authorizedour new efforts. We purchased threefemales and one male. The femaleshave now had one litter apiece.

Future Plans“Despite all the difficulties, we still

have the desire and the will to succeedin livestock rearing. We hope to addanother animal to our mix and spreadthe risk. Also, we would like to pur-chase more farmland to use in produc-ing feed for the animals. We investi-gated what it would take to raisechickens, fish or agouti, a local, rac-coon-sized, wild animal that is consid-ered a delicacy.

“We thank those who have assistedus over the years for the opportunity towork together as the Cooperative AgroPastorale Segbeya. We appreciate theopportunity to share our story withfriends in other parts of the world. MayGod bless us all.” ■

Readers with suggestions that could helpfarmers’ organizations in Benin or otherWest African nations can contact StevenGraham at: 1603 Little Kitten Avenue,Manhattan, KS 66503-7543. His phonenumber is 785-532-5729 and his e-mailis [email protected].

Recognizing the wealth of its neighbors and their willingness to buy pork, seven WestAfrican producers — including Azanmasso Joseph — have joined forces to raise andmarket hogs. Photo courtesy CAPS


Personal, farm and education: O.Glenn Webb and his wife, Phyllis, haveraised three children on a fruit and cat-tle operation. He earned a bachelor’sdegree in agriculture from the Univer-sity of Illinois in 1957. Webb went onto earn a master’s degree and a Ph.D. ineducation administration from South-ern Illinois University.

Co-op service: At age 25, this Tun-nel Hill, Ill., native was elected to theFruit Belt Service Co. board to fill theseat vacated by his father Ray, who wasretiring from the board. Over the next38 years, Webb served on the boards ofFS Services Inc. and then the IllinoisGrain Corp. before becoming FS Ser-vices board secretary and then its vicepresident. In 1980, when GROW-MARK was formed through the merg-er of FS Services and Illinois GrainCorporation, Webb was elected boardchairman and president. He retiredfrom that post at the end of the cooper-ative’s 2000 annual meeting on Aug. 31.

Other leadership posts: Webbhas served on the boards of CoBank,Federal Farm Credit Banks FundingCorp., Archer Daniels Midland,ADM/GROWMARK, CF Industries,Graduate Institute of CooperativeLeadership, Illinois AgriculturalLeadership Foundation, NationalForum on NonPoint Source Pollutionand the American Institute of Coop-eration. “I hope to continue to stayinvolved for a while in the FarmCredit system, maybe serve on theADM corporate board for awhile.And, of course, be involved in thecommunity here and in the church. Itwill just be a different balance. I amfully aware there are so many thingsto do that I certainly don’t plan to

pull up a rocking chair and be a spec-tator as the world goes by.”

Co-op honors: Webb was namedNational Cooperative Statesman in1988. In April 2000, he was inductedinto the Cooperative Hall of Fame.

Why such a commitment to edu-cation? “I think it’s unfair to a directorto be elected, to come on board forwhat, today, are multi-million-dollarcompanies and not provide for thatdirector some level of education, somelevel of training that helps them under-stand their role better and gives themmore confidence in terms of doing thejob that shareholders expect of them.”

What legacy do you leave behindat GROWMARK? “ I hope I’ve leftthe impression and developed the cul-ture that we’re not afraid to take actionbecause we’re afraid we’re going tomake a mistake. I think you just like tothink that, after you’ve left a leadershiprole, people would reflect back and say,‘Yeah, that leadership was responsible.

That leadership was forward-thinking.That leadership was genuine. That itwas sincere. That it was people direct-ed.’ I think those are some of the thingsI would hope would be viewed as myimpact here.

“I believe that GROWMARK is ata time in which we need to continueto have sustained, strong leadership. Ifeel very good about the quality ofthat leadership that’s on the board ofdirectors of GROWMARK at thepresent time, and those who will comeon. So I don’t have any concernsabout any vacuum of leadership onthe GROWMARK board. It’s there.Very top quality people there. I justfelt it was probably the right time forme and the right time for GROW-MARK, and probably the latter moreso than the former.”

What has been the strength ofGROWMARK? “I think the greateststrength we have is the cohesion of themembers in the system. Our visionstatement discusses how we want to bethe best cooperative system in NorthAmerica. I think the key word is sys-tem, and I think the strength has beenthat we’ve acted as a system. Now,have we always done that? No. Buthave we done it to the extent that it’sgiven us great strength? Yes. And I amencouraged that that will continue tobe a strength of the GROWMARKsystem. If we lose that inter-depen-dence of one cooperative memberwith the other in the GROWMARKsystem, and the inter-dependencebetween those member cooperativesand GROWMARK, then I think wewould have lost a tremendous elementof our past success and a potential forthe future.” ■

G l e n n W e b bFormer Board Chairman and President GROWMARK, Bloomington, Ill.

I N T H E S P O T L I G H T

Glenn Webb


Nation’s largest local co-op to reorganize

Problems associated with rapidgrowth through consolidations andmergers during the past decade haveforced Farmers Cooperative Associa-tion (FCA) – the largest cooperative inKansas and probably the largest localco-op in the country – into Chapter 11bankruptcy. However, the co-op’s con-tinued operation has been assured by afederal judge.

FCA, based inLawrence, Kan.,filed its reorgani-zation plan withthe U.S. Bank-ruptcy CourtJudge John Flan-nagan in KansasCity, Kan. Con-tributing to theco-op’s financialproblems werethe depressed agricultural economy,dwindling federal subsidies, elimina-tion of crop-storage programs anddeclining sales. The co-op’s salestotaled $76.2 million in 1997, $62.7million in 1999, and will drop furtherfor 2000.

CoBank — the co-op’s largest credi-tor, holding $10 million of the co-op’s$20 million in debt – appointed DonDumler as FCA chief operating officerand president after his predecessor wasdismissed in June. Dumler said thecooperative already has sold some of itsfacilities and will eliminate or transfersome of its 130 employees.

At one point, the cooperative had tostop buying grain for lack of money topay for it. But limited purchases fromFCA’s 3,500 members in northeastern

Kansas have resumed, to the extentthat cash has been available. The co-opreported having 3.5 million bushels ofgrain in storage and $30 million inassets. Reorganization is expected totake months to accomplish.

Gold Kist offers skillet mealsGold-Kist, an Atlanta-based poultry

processing cooperative, has introduceda new line of “Dish in a Dash” skillet

meals. The fullycooked dinnersfeature all-naturalchicken with veg-etables, gourmetsauce and rice orpasta. “The nutri-tious, single-stepdinners are conve-nient meal solu-tions that today’sconsumerdemands,” says

John Bekkers, Gold Kist president andchief operating officer. The dual serv-ings in a 24-ounce bag can be preparedin minutes in a skillet or microwave.

Sugarbeet co-opeyes purchase ofWestern Sugar

Rocky Moun-tain Sugar Grow-ers Cooperative(RMSGC) hassigned a letter ofintent to pay $78million to buyWestern SugarCo.’s six sugarbeetprocessing plants.Western Sugar isowned by a sub-

sidiary of Tate and Lyle LLC, an Eng-lish firm that purchased the plants in1980 from the holdings of the bankruptGreat Western Sugar Co.

RMSGC growers say with sugarprices depressed this year, they hopeowning the plants that process theircrop will help them farm more prof-itably. “This is a pretty bad time forus,” Frank Eckhardt of La Salle, Colo,told the Denver Post. “Prices are down,and we’re looking at some way to helpourselves,” added Eckhardt, treasurerof the Colorado Sugarbeet GrowersAssociation. The purchase plan hingeson the co-op obtaining financing andgetting enough crop delivery commit-ments from growers to keep the plantsoperating at near capacity.

The co-op will have to find bankfinancing for about $52 million, withgrower members investing the remain-ing $26 million, based on payments of$180 per acre.

Western Sugar currently has 185,000acres of sugarbeets under contract infour states and 600 employees. About1,000 family farms are represented in

the five participat-ing beet-growergroups in Nebraska,Wyoming, Col-orado and Montanawho plan to con-clude the sale withinsix months, pendingfinancing and grow-er investment.

The plan mirrorsan earlier coopera-tive effort to buyGreat Western Sugar in 1973. Thatplan failed amid

N E W S L I N E

Rocky Mountain Sugar Growers is pursuingthe purchase of six Western Sugar plants.

opposition from North Platte Valleygrowers. Great Western was forced toseek bankruptcy protection in 1985.Sugar beet prices have plummeted sinceDecember 1999 due to over-production.

Fremont Co-op joins AMPIMembers of southern Minnesota’s

Fremont Cooperative voted to mergewith Associated Milk Producers Inc.(AMPI), New Ulm, Minn. The mergeradded about 30 million pounds of milkproduced by 40 farmers to AMPI’s 5.1billion pounds of milk produced by5,000 members.

Dan Olson, Fremont board chair-man, said the merger resulted fromchanges in the dairy industry. A dairyproducer from Lewiston, Minn.,Olson said his cooperative had beenserving farmers for nearly 10 years.“AMPI will provide a stable marketfor our milk, member services, andsecure our cooperative’s equity,” hesaid. Milk from Fremont will beshipped to AMPI’s manufacturingplant at Rochester, Minn. Last Octo-ber, Glencoe (Minn.) Butter & Pro-duce Association merged with AMPI.

Meanwhile, AMPI broke ground fora $3 million expansion of its cheese cut-ting, wrapping and processing opera-tion at Portage, Wis. When completednext spring, it will increase the plant’scooler pallet capacity by 85 percent andadd 25,000 square feet to the facility.Each month the Portage plant convertsabout 13 million pounds of bulk cheeseinto processed cheese loaves, cheeseslices, shredded cheese and natural cuts.

Youngdahl new CEO at Blue Diamond The board of directors at Sacramen-

to-based Blue Diamond Growers haschosen Doug Youngdahl as its seventhpresident. He will assume responsibili-ties Feb. 1, 2001, when current Presi-dent Walt Payne retires from the 90-year-old California almond marketingcooperative.

Youngdahl has been with the cooper-ative since 1997. He said he is “commit-ted to making Blue Diamond the world’spremier tree-nut company in terms ofgrowth and return on investment to our

growers.” Cur-rently, Young-dahl is directorof the Americ-as IndustrialBusiness andserved on theAlmond Boardof California.The new exec-

utive wasexpected to dis-

cuss his plans for the cooperative withmembers attending their 90th annualmeeting November 30.

Michigan blueberry co-op launchesventure with Chile

MBG Marketing, a berry marketingcooperative in Grand Rapids, Mich., isjoining with Hortifruit, Chile’s largestberry grower, in a new joint venture.MBG and Hortifruit have formed anew fresh marketing venture calledGlobal Berry Farm LLC. It will supplyberry markets around the world. Glob-al Berry will exclusively representgrowers from the United States, Chile,Mexico and Guatemala. The firm willbe based at Naples, Fla., and marketfresh blueberries, raspberries, blackber-ries, strawberries, and golden raspber-ries under both companies’ existinglabels. Requested photo or logo

Agri-Mark opens whey plant “Our goal is to squeeze every drop of

profit from every drop of milk we mar-ket for our farmer-owners,” stressedPaul Johnson, Agri-Mark’s president

and chief executive officer, during theOctober grand opening of the coopera-tive’s $20 million whey processing plantat Middlebury, Vt. The facility is adja-cent to the largest of the cooperative’stwo cheddar cheese plants.

The cooperative has been scram-bling for whey markets ever since Ver-mont Whey closed its plant two yearsago. “Rather than paying to dispose ofcheese whey, we are now producingvaluable whey protein isotopes thatwill add profits in years to come,” saidCarl Peterson, Agri- Mark’s chairmanfrom Delano, N.Y.

Growing Cabot cheese sales is forc-ing Agri-Mark to operate its cheeseproduction plants six or seven days aweek. With more cheese productioncomes more whey, the natural by-product of the cheesemaking process.So the cooperative signed an agree-ment with Century Foods Internation-al, Sparta, Wis., which will purchaseand market all the whey proteins andde- proteinated whey powders Agri-Mark can produce. Century Foods isthe largest manufacturer and distribu-tor of whey-based products in theUnited States. It also markets productsin more than 46 foreign countries.

Minn. canola co-op looks to Mexican market

Equipped with a small plastic bagcontaining some seed meal, Art Brandli,a farmer from Warrod, Minn., recentlyjoined several dozen Minnesota busi-nessmen on a trade mission to Mexico.During a stop at a Guadalajara egg pro-


Agri-Mark’s new plant is isolating, drying and packaging lacto-ferrin from proteins found inwhey, the natural by product of the cheesemaking industry. Photo courtesy Agri-Mark

Doug Youngdahl

cessing plant, Brandli, chairman ofFarmConnect, a new Minnesota servicecooperative, heard canola mentioned.Out popped his plastic bag containing aseed sample so his hosts could see howproductive their chickens would be din-ing on northern Minnesota canola meal.

It was a perfect meeting for both thefarmer and his new cooperative. TheMexican egg plant manager asked ifBrandli could supply 2,000 metric tonsper month throughout the year. Brandlihanded him his businesses card andtold him that FarmConnect membersshould be able to grow and ship prod-uct that would meet the processor’sspecifications.

The trade mission was headed byMinnesota Governor Jesse Venturaand included Carl Wittenburg ofNorthern Pride, a turkey processor atThief River Falls, Minn. Wittenburgsaid the doors opened by the trademission put him in contact with Mexi-can companies that may offer jointventure opportunities. While thecooperative already sells dark turkeymeat in Mexico, Wittenburg said Min-nesota’s labor shortage and Mexico’slow wages suggested that a Mexican-based processor would benefit bothsides of the border.

Washington growers lose credit co-op Apple growers in Washington state

are losing a creditor that has servedtheir industry for the past 55 years.Growers Credit Cooperative willclose this winter. The Spokane officeof CoBank told the cooperative thissummer that it would no longerfinance its operation. Manager RonWard said many growers hadn’t madea profit for three years and more thanhalf of the 150 members were delin-quent on payments after the disas-trous 1998 season. The co-op had aloan carryover of more than $2 mil-lion from 1997, another $5.5 millionfrom 1998, and an estimated $2 mil-lion for 1999. A number of growersmay turn to USDA’s Farm ServicesAdministration, considered a lenderof last resort on commercial financ-ing, but its local loan cap is $200,000.

Faulty co-op ventures worth ‘post mortem’

New business supporters believetheir ventures will succeed. But if theydon’t, there’s a tendency to avoid talk-ing about it. A Colorado attorney whohas worked with cooperatives for thepast 20 years believes it’s worth re-examining failed ventures to learn valu-able lessons for the future.

Writing in the Colorado Coopera-tive Council’s newsletter, Attorney TedSvitavsky believes management and theboard could benefit from conducting a“post mortem” on a failed, or less thansuccessful, venture.

Svitavsky said successful venturesare periodically “rolled out to toutcooperatives working together.” Butdiscussions are avoided about failedenterprises.

“One of the harsh realities oftoday’s world is that there are very fewpeople who care whether a coopera-tive enterprise succeeds or fails. And,in fact, quite a few people would liketo see cooperatives fail at whateverthey do. It should be apparent to all ofus who do care that cooperatives musttake care of themselves. Cooperativeshave a legitimate interest in takingcare of each other and making sure theinfrastructure that has been built sur-vives,” Svitavsky said.

He suggested one way was to “cri-tique, not criticize” ventures that coop-eratives have begun but which did notmeet expectations, in order to learnfrom those experiences.”

For those cooperatives that may havestumbled while trying to better them-selves, the attorney cited PresidentTheodore Roosevelt’s observation: “It isnot the critic who counts, not the onewho points out how the strong man orwoman tumbled, or how the doer ofdeeds might have done them better. Thecredit belongs to the man or woman whois actually in the arena, whose face ismarred with sweat, dust and blood; whostrives valiantly; who errs and comes upshort again and again; who knows thegreat enthusiasm, the great devotions,and spends himself or herself in a worthycause; and who – if he or she fails while

daring greatly – his or her place shallnever be with those cold and timid soulswho know neither victory nor defeat.”

Wisconsin co-ops sponsor jointseminar for young producers

A group of Wisconsin cooperativeshave banded together to offer a joint co-op education seminar for young produc-ers. Backing the effort are: Equity Live-stock Sales Association and ForemostFarms USA, both of Baraboo; the state’sfour local Farm Credit Services associa-tions; Cenex Harvest States, St. Paul;Cooperative Resources International(CRI), Shawano; Alto Dairy Cooperative,Alto; and the Wisconsin Federation ofCooperatives (WFC), Madison.

The Young Producer CooperativeLeadership conference, “Achieving theHeights – The Power of Cooperatives,”is set for Feb. 15-17 at Wisconsin Dells.A panel of progressive cooperative lead-ers is scheduled to speak, including RodNilsestuen, WFC; Dave Lull, Richland-Grant and LaValle Telephone Co-ops;Jim Henion, CRI; Roger Chamberlain,CoBank; Anya Firszt, Williamson Street(grocery) Co-op; and Ben Brancel, co-op member and secretary of the Wis-consin Department of Agriculture,Trade and Consumer Protection.

The conference goal is to provideyoung farmers an opportunity to net-work with their peers, learn about thecooperative way of doing business,and develop their leadership and com-munication skills.

Record revenue for Southern States Record revenue topping $1.5 bil-

lion was reported by Richmond-basedSouthern States Cooperative (SSC)for fiscal 2000. That’s a 13-percentgain from 1999. The cooperative alsoreported net savings for its membersof $4.96 million for fiscal 2000 vs. a$2.1 million loss in 1999. SSC hasexpanded its farm supply business inrecent years and moved into livestockmarketing. Earlier this year, itreached an agreement with Agway,based in Syracuse, N.Y., to handle its500 dealer operations. A fish market-ing program also was initiated.


key provision requires DFA to transferpartial ownership in Keller’s Creameryto persons who are not agriculturalproducers. The purchasers are mem-bers of the pre-merger SODIAALmanagement team. This non-producerownership interest deprives Keller’sCreamery of cooperative status and theright to engage in common marketingactivity with cooperatives (includingLand O’Lakes) under the protection ofthe Capper-Volstead Act.

The agreement also enjoins DFA andKeller’s Creamery from entering intoany collaborative marketing effort ofbranded butter with Land O’Lakes andfrom disclosing any competitively sensi-tive information regarding branded but-ter to Land O’Lakes. The agreementalso contains several provisions to pre-vent DFA or Keller’s from circumvent-ing the judgment by restructuringthemselves or selling any assets toanother firm, particularly LandO’Lakes, without the court’s permission.

Outcome frames crucial issuesIn essence, DFA agreed to forfeit its

Capper-Volstead status with regard tomarketing branded butter in the rele-

vant markets in exchange for permis-sion to purchase a major non- coopera-tive competitor in those markets. Theacquisition benefits DFA members byproviding an additional market fortheir milk that will be used to producethe butter manufactured at the formerSODIAAL’s plant and by increasing theamount of value-added processingbeing undertaken by their cooperative.But in return, DFA losses the ability tocooperate with Land O’Lakes toimprove the economic return to all oftheir farmer-members.

One position taken by the Depart-ment of Justice in this case is encourag-ing for marketing cooperatives. Thismay be the first time Justice has admit-ted that “explicit collusion” betweenlarge agricultural cooperatives with adominant position in the marketplace“would be legal and could not be chal-lenged under the antitrust laws.” (65Federal Register 44827).

As the trend toward fewer but largerfirms continues in many product lines inthe food (and other) industries, coopera-tives will feel pressure to also grow.When this growth is accomplished bysimply signing up new members or

through working agreements or combi-nations with other cooperatives,antitrust concerns may be minimal.However, when deals involve joint ven-tures with, or acquisitions of, non-coop-erative firms, the Capper-Volsteadshield will not be available. The pro-posal will be subject to challenge underthe same standards as an agreementbetween two non-cooperative firms.

The deal accepted by DFA in thiscase consummates the acquisition butrestructures it to negate future accessto Capper-Volstead protection in therelevant market. Whether this willbecome a model for Department ofJustice response to future actions thatreduce competitors in a market witha strong cooperative presence isunclear. And like any approach toresolving complex conflicts, whatoperates in the best interests of pro-ducers in one instance may not inanother. But as cooperatives adjustto the changing competitive environ-ment of agri-business, antitrust issuesand the attitude of federal and stateenforcement officials, will remainimportant parts of the planning andimplementation process. ■


Electric co-ops to study clean-burning coal

The nation’s rural electric coopera-tives are sponsoring a research projectaimed at a cleaner burning coal, themain source of electricity productionin the United States. Coal plants co-produce electric power, hydrogenfrom fuel cells and commercial chemi-cals, all with little or no emissions.The ultimate goal is to have powerplants that generate no air pollutantbyproducts and negligible emissions ofcarbon dioxide, a gas implicated inglobal warming.

Lupinacci resigns from SunkistSunkist President and CEO Vincent

Lupinacci has resigned following 21⁄2years at the helm of the nation’s lead-ing citrus fruit marketer. He cited“personal and family” reasons for hisdecision, but the past several years

have been very challenging for the co-op and its members. In 1998, the Cali-fornia orange crop was devastated by afreeze, and fruit quality problems thenext year caused prices to nosedive.More recently, the decision by the co-op to market South American lemonshas been quite controversial withmembers.

Sunkist Board Chairman James H.Mast has been named as acting presi-dent while the co- op searches for apermanent president. Sunkist repre-sents about 6,500 citrus growers and 60packers in Arizona and California.

“.coop” new Internet domainThe international body that managesthe Internet has approved the use of.coop as one of seven new Internetdomain suffixes. The National Cooper-ative Business Association, whichspearheaded the effort to create the

new domain, hopes co-ops currentlyusing .com for their Internet addresswill switch to .coop, or use it as a sec-ond address. “Today’s decision byICANN [the Internet Corporation forAssigned Names and Numbers] willgive cooperatives instant recognitionon the Internet and help consumersfind the business they trust online,”says NCBA President Paul Hazen.

NCBA had also sought to register.co-op (with a hyphen, as is common-ly used in America), but that suffixwas not approved, based on commoninternational usage. The proposedregistration fee for use of .coop willbe $75, higher than many of the othersuffixes charge, but it will allowNCBA and the International Co-operative Alliance to screen applicantsto make sure they operate as truecooperatives. For more information,call NCBA at (202) 383-5456.

Legal Corner continued from page 7

TITLE FEATURES Issue—PageAre you a good leader?

Director assessments are building blocks to productive board-management relationships . . . . . . . . . . . . November/December 20

Asset growth for largest co-ops shows resilience to declining revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 28

Boosting the 3 BsEngland’s Plunkett Foundation promotes “the furtherance of rural cooperation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 4

Building a cooperative on the fast track . . . . . . . . . . . . . . . . . . . . . May/June 6Butter settlement: A glimpse into the future of antitrust

enforcement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 7CherrCo helps bring market stability to tart

cherry industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 4Consolidation in the heartland

A closer look at grain co-op mergers and acquisitions, 1993-97 . . . . . . . . . . . . . . . . . . . . November/December 14

Co-op communicators honored . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 13Cooperative Agro Pastorale Segbeya

African swine raising cooperative struggles to survive and prosper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 24

Co-ops in the 21st centuryFive writers view what lies ahead for co-ops in the new century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 7

Co-ops’ share of farm marketings up slightly in ‘98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 4

CROPP’s guiding principles . . . . . . . . . . . . . . . . . . . . . . . . . January/February 27Depressed ag sector puts squeeze on

largest co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 32End nears for tobacco warehouse co-ops . . . . . . . . . . . . September/October 23Fill ‘er up!

Pipeline flowing with new generation ethanol co-ops . . . . . . May/June 8Finding new ways to market ‘this little piggy’ . . . . . . . September/October 11Fingers and needles

Alaskan co-op turns cashmere-soft musk ox wool into hard cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 7

Foreign affairsUSDA Foreign Agricultural Service promotes U.S. agriculture abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 15

Generating rural progressStudy finds that new-generation and traditional co-ops have major beneficial impacts on rural communities . . . . . . . . . . . . July/August 16

Going globalExport certificates a valuable tool helping co-ops tap overseas markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 18

Grower co-ops to coordinate marketing . . . . . . . . . . . . . September/Otober 22History of NFO charts farm protest movement . . . . . . . . . . . . . . July/August 5How well are dairy cooperatives performing? . . . . . . . . . . . . . . July/August 25Iowa RECs reach 15-year milestone for rural development . . . . . July/August 8Joyce Kilmer Memorial Forest . . . . . . . . . . . . . . . . . . . . . . January/February 21Kentucky hog co-op to explore value-added

alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 10Land O’Lakes buys butter business . . . . . . . . . . . . . . . . . . . . . . . March/April 26Last Train Leaving?

Some say Pork America represents best, and possibly last, chance for hog farmers to gain significant market access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 6

Lower commodity prices cause drop in co-op sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 4

Maine co-op building support for economic development. . . . . . July/August 11Making its mark

Agri-Mark, New England’s largest dairy co-op, is building markets for producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 16

Missouri’s first ethanol plants will have major impact on region’s rural economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 12

Mohave Electric Co-op’s quick response attracts major source of jobs to service area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 12

The Musk Ox Farm continues Teal’s work . . . . . . . . . . . . . . . . . . March/April 10New Directions:

Co-ops help tobacco farmers transition to new crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 20

New model, old waysWisconsin farmers find new life serving burgeoning organic markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 23

Organic: a philosophy & production system . . . . . . . . . . . January/February 26Organic Valley firsts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 25Pennsylvania co-ops take development underground . . . . . . . July/August 10Power formula

Higher gas prices fuel drive for ethanol production; farmers look to co-ops to gain market share . . . . . . . . . . . . . . May/June 7

Pursuing other uses for tobacco . . . . . . . . . . . . . . . . . . September/October 24Saving an industry

Plant closure leads Michigan growers to form new turkey cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 4

Seeing the forest for its treesCooperatives promote sustainable forestry and tap green trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 17

Small co-ops and marketing groups formed in wake of hog crisis . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 8

South African village banks receive World Bank funding . . . . . March/April 11“Start with the rising sun”

Sustainable forest a tradition forMenominee Indian tribe. . . . . . . . . . . . . . . . . . . . . . . . . January/February 19

Streamlined USDA utilities program draws plaudits . . . . . . . . . . . . May/June 21Strength through unity

Bulgarian honey producers sweeeten their futurethrough cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 12

Trade takes a tumbleCooperatives trade plunges 41 percent as Asian markets cool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 18

Trading UpPlains Cotton Co-op uses computer technology to pursue business-to-business strategy . . . . . . . . . . . . . . . . November/December 8

Tri Valley Growers files Chapter 11 bankruptcy . . . . . . . . . . . . . . July/August 4USDA, Commerce join forces to boost early

warning system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 14USDA extends more help to small farms . . . . . . . . . . . . . . . . . . March/April 16USDA seeking more accounts of co-op mergers

and closures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 18When the lights came on

USDA program brought electricity and a better way of life to rural America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Auguest 6

Why U.S. agriculture should support foreign aid . . . . . . . . . . . March/April 23


A r t i c l e I n d e x 2 0 0 0

Information appearing in Rural Cooperatives magazine during calendar year 2000 has been indexed to help you find past articles. Backissues can be found on-line at www.rurdev.usda.gov. Articles are indexed by month and page.


Magazine DepartmentsA Closer Look At...Cal/West Seeds

Woodland, California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 15Hazelnut Growers of Oregon

Cornelius, Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 16Mt. Pride Cooperative Inc.

Mt. Lake Park, MD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 22

Commentary/EditorialBargaining co-ops help level field, stabilize markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 2Borders are no longer barriers for co-ops . . . . . . . . . . . . . . . . . . March/April 2Cooperatives: getting the job done . . . . . . . . . . . . . . . . . September/October 2Co-ops keep farm-generated capital at home. . . . . . . . . . . . January/February 2Putting our eggs in more than one basket . . . . . . . . . . . . . . . . . . July/August 2USDA Rural Development programs help fuel

co-op movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 2

In the SpotlightDennis M. Mullen: President & CEO

Agrilink Foods, Inc., Rochester, NY . . . . . . . . . . . . . . . . . . . . July/August 15Glenn Webb, Former Board Chairman and President GROWMARK

Bloomington, Ill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 26John Malcheski, Wisconsin’s roving co-op ambassador,

spreads cooperative skills and knowledge worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 12

Larry D. Steward: President and CEOMinn-Dak Farmers Cooperative . . . . . . . . . . . . . . . . . . January/February 22

Walley Beyer, Retired AdministratorUSDA Rural Development, Rural Utilities Service. . . . . . . . . . . . May/June 20

Management TipConsultant’s feasibility study can predict success of ‘next

great idea’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 22Downward spiral for commodity prices continues; bottom line

mixed for Plains co-ops . . . . . . . . . . . . . . . . . . . . . November/December 11How Does Your Local Farm Supply Cooperative Rate? . . . . . . . March/April 25Net savings dipped in 1999 for most corn-soybean and

wheat-barley co-ops . . . . . . . . . . . . . . . . . . . . . . . . . September/October 16

NewslineFCA Chairman Marsha Martin dies . . . . . . . . . . . . . . . . . . January/February 38DFA, Dairyworld discuss joint ventureLand O’Lakes, Mitsui building largest cheese plantCoBank stockholders elect directorsUW-Madison honors Truman TorgersonSouthern States discontinues member magazineCo-ops form Soybean Research CompanyMissouri dedicates power plantGEN-SYS, Engage sign agreement

Welch’s sales soar; Pokeman coming! . . . . . . . . . . . . . . . . . . . . March/April 27Merger creates Evergreen Co-opAg Council salutes Steve EasterRural Utilities sells debt securitiesNRTC praises House Ag Committee for moving to close

‘digital divide’Minnesota power alliance establishedSD co-op plans egg production plantSmall poultry processor co-op plannedNCBA to help ‘false’ co-ops become realTomato co-op files canner complaintTri Valley Growers sues OracleCo-ops buying into ‘green’ powerGlickman sets 2000 goalsImperial Sugar offers plants to co-opAmerican Crystal considers forfeiture of sugarGrowmark adds facilitiesNew Nebraska pork co-op plannedNew Pork co-op could hike profits

Sunkist cheers opening of China . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 23USDA, NFU spur Michigan co-opsIowa egg co-op, Nuzum awardedSpring Wheat Bakers loads first train

5 in Co-op Hall of FameDakota ranchers opening feedlotsIowa pork producers endorse co-opCorn co-op rebounds, but no dividendsPrairie Farms sales top $1 billionTVG gaining profitabilityAssociated gins one-millionth baleCarry new Amalgamated CEOCRF opens new hog research facilityFarmland sells hog plant, introduces branded breadCanadian, U.S. potato farmers work togetherUSDA co-op resources on the WebJudge says permit properly granted to Golden OvalCo-op communicator Reuwee diesDelta-Montrose installs first propane fuel cell

Blue Diamond buys MacFarms . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 28Cenex Harvest States names new CEOMcLean new USDA/RUS leaderInternet-based meat exchange formsFarmington co-op buys new technologyCitrus World to buy plantApple cooperative to closeKentucky grain farmers eye ethanol plantN.J. to sell new blueberry productsHonse to take over Farmland reinsUpstate Farms expands milk facilityStates launch inquiry into big dairyLOL sells fluid plants, continues cheese plant study

Florida’s Natural breaks sales record — again! . . . . . . September/October 25Neb. court backs co-ops on hedge-to-arrive contractsCo-ops blend feed linesUSDA fruit buys help TVGGlickman named ‘Honored Cooperator’Southern States expand aquaculture business with

NMFS fisheries loanN.Y. grape co-op enters marketing pactSelect Sire Power formedLamb co-op conducts equity driveNorthStar expands servicesFrozen dough co-op boosts productionPasta plant lender namedCaspers named interim leader at Minn-DakDiamond buys Berner nutKelley succeeds Webb as Growmark presidentRiceland completes trade with IraqLOL, DFA join Dairy.ComBlue Anchor closing operationsCalif. co-op/community parley slatedDFA returns $20 million in equityOcean Spray gets boost from USDASunkist sells Argentine lemonsAllied Seed buys AgribiotechPotato growers OK dividendCatfish processors mergeConsolidated Beef forming

Nation’s largest local co-op to reorganize . . . . . . . . . . November/December 27Gold Kist offers skillet mealsSugarbeet co-op eyes purchase of Western SugarFremont Co-op joins AMPIYoungdahl new CEO at Blue DiamondMichigan blueberry co-op launches venture with ChileAgri-Mark opens whey plantMinn canola co-op looks to Mexican marketRecord revenue for Southern StatesWashington growers lose credit co-opFaulty co-op ventures worth ‘post mortem’Wisconsin co-ops sponsor joint seminar for young producersElectric co-ops to study clean-burning coalLupinacci resigns from Sunkist “.coop” new internte domain

Pages From the PastForemost Farms traces its name to J.C. Penney . . . . . . . . . . . . . . May/June 29


SUBJECTS:AquacultureNew Directions:

Co-ops help tobacco farmers transition . . . . . . . . . September/October 20

BargainingCherrCo helps bring market stability to tart cherry

industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 4Co-ops in the 21st century

Cooperative marketeting in the new millennium . . . . . . January/February 7

Communication/EducationA Creed for Cooperative Members . . . . . . . . . . . . . . . . September/October 30Are you a good leader?


Boosting the 3 BsEngland’s Plunkett Foundation promotes “the furtherance of rural cooperation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 4

Co-op communicators honored . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 13History of NFO charts farm protest movement . . . . . . . . . . . . . . July/August 5John Malcheski, Wisconsin’s roving co-op ambassador, spreads

cooperative skills and knowledge worldwide . . . . . September/October 12

Co-op DevelopmentBoosting the 3 Bs

England’s Plunkett Foundation promotes “the furtherance of rural cooperation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 4

Cooperative Agro Pastorale SegbeyaAfrican swine raising cooperative struggles to survive and prosper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 24

Fingers and needlesAlaskan co-op turns cashmere-soft musk ox wool into hard cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 7

Generating rural progressStudy finds that new-generation and traditional co-ops havemajor beneficial impacts on rural communities. . . . . . . . . . . . July/August 16

History of NFO charts farm protest movement . . . . . . . . . . . . . . July/August 5John Malcheski, Wisconsin’s roving co-op ambassador, spreads

cooperative skills and knowledge worldwide . . . . . September/October 12Last Train leaving?

Some say Pork America represents best, and possibly last,chance for hog farmers to gain significant market access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 6

The Musk Ox Farm continues Teal’s work . . . . . . . . . . . . . . . . . March/April 10New Directions:

Co-ops help tobacco farmers transition to new crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 20

Small co-ops and marketing groups formed in wake of hog crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 8

South African village banks receive World Bank funding . . . . . March/April 11Strength through unity

Bulgarian honey producers sweeeten their future through cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 12

Why U.S. agriculture should support foreign aid . . . . . . . . . . . . . March/April 23

CottonTrading Up

Plains Cotton Co-op uses computer technology to pursue business-to-business strategy . . . . . . . . . . . . . . . . November/December 8

Craft Co-opsFingers and needles

Alaskan co-op turns cashmere-soft musk ox wool into hard cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 7

The Musk Ox Farm continues Teal’s work . . . . . . . . . . . . . . . . . March/April 10

DairyButter settlement: A glimpse into the future of antitrust

enforcement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 7Foremost Farms traces its name to J.C. Penney . . . . . . . . . . . . . . May/June 29How well are dairy cooperatives performing? . . . . . . . . . . . . . . July/August 25Land O’Lakes buys butter business . . . . . . . . . . . . . . . . . . . . . . . March/April 26Making its mark



Organic: a philosophy & production system . . . . . . . . . . . . January/February 26Organic Valley Firsts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 25

EnvironmentSeeing the forest for its trees

Cooperatives promote sustainable forestry and tap green trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 17

“Start with the rising sun”Sustainable forest a tradition for Menominee Indian tribe . . . . . . . . . . . . . . . . . . . . . . . . January/February 19

Farm Supply & Agronomy ServicesAsset growth for largest co-ops shows resilience to

declining revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 28Cal/West Seeds

Woodland, California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 15Consolidation in the heartland

A closer look at grain co-op mergers and acquisitions, 1993-97 . . . . . . . . . . . . . . . . . . . . . . . . November/December 14

Co-ops in the 21st centuryFarm supply cooperatives: a look on and over the horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 9

Co-ops’ share of farm marketings up slightly in ‘98 . . . . . . . January/February 4Depressed ag sector puts squeeze on

largest co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 32Generating rural progress

Study finds that new-generation and traditional co-ops have major beneficial impacts on rural communities. . . . . . . . . . . . July/August 16

Lower commodity prices cause drop in co-op sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 4

FinanceAsset growth for largest co-ops shows resilience to

declining revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 28Co-ops in the 21st century

Consolidations, technology, politics to impact co-op financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 14

Depressed ag sector puts squeeze on largest co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 32

How Does Your Local Farm Supply Cooperative Rate? . . . . . . . . March/April 25Iowa RECs reach 15-year milestone for rural development . . . . . . July/August 8Maine co-op building support for economic development . . . . . July/August 11Mohave Electric Co-op’s quick response attracts major source

of jobs to service area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 12Net savings dipped in 1999 for most corn-soybean and

wheat-barley co-ops . . . . . . . . . . . . . . . . . . . . . . . . . September/October 16Pennsylvania co-ops take development underground . . . . . . . July/August 10Saving an industry


South African village banks receive World Bank funding . . . . . March/April 11

ForestryJoyce Kilmer Memorial Forest . . . . . . . . . . . . . . . . . . . . . . January/February 21Seeing the forest for its tree

Cooperatives promote sustainable forsestry and tap green trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 17

“Start with the rising sun”Sustainable forest a tradition for Menominee Indian tribe . . . . . . . . . . . . . . . . . . . . . . . . January/February 19

Fruits, NutsCherrCo helps bring market stability to tart cherry

industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 4Hazelnut Growers of Oregon Cornelius, Oregon . . . . . . . January/February 16Tri Valley Growers files Chapter 11 bankruptcy . . . . . . . . . . . . . . July/August 4

FuelsFill ‘er up!

Pipeline flowing with new generation ethanol co-ops . . . . . . May/June 8Generating rural progress

Study finds that new-generation and traditional co-ops havemajor beneficial impacts on rural communities. . . . . . . . . . . . July/August 16


Missouri’s first ethanol plants will have major impact on region’s rural economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 12

Power formulaHigher gas prices fuel drive for ethanol production; farmers look to co-ops to gain market share . . . . . . . . . . . . . . May/June 7

Grains & Oil SeedConsolidation in the heartland


Downward spiral for commodity prices continues; bottom line mixed for Plains co-ops . . . . . . . . . . . . . . . . . . . . . November/December 11

Generating rural progressStudy finds that new-generation and traditional co-ops have major beneficial impacts on rural communities. . . . . . . . . . . . July/August 16

Grower co-ops to coordinate marketing. . . . . . . . . . . . . . September/October 22How Does Your Local Farm Supply Cooperative Rate? . . . . . . . March/April 25Net savings dipped in 1999 for most corn-soybean and

wheat-barley co-ops . . . . . . . . . . . . . . . . . . . . . . . . . September/October 16Power formula

Higher gas prices fuel drive for ethanol production; farmers look to co-ops to gain market share . . . . . . . . . . . . . . May/June 7

Legislative and LegalButter settlement: A glimpse into the future of antitrust

enforcement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 7Co-ops in the 21st century

Consolidations, technology, politics to impact co-op financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 14

Co-ops in the 21st centuryProviding power beyond 2000 . . . . . . . . . . . . . . . . . . . January/February 12

Foreign affairsUSDA Foreign Agricultural Service promotes U.S. agriculture abroad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 15


Walley Beyer, Retired AdministratorUSDA Rural Development, Rural Utilities Service. . . . . . . . . . . . May/June 20

When the lights came onUSDA program brought electricity and a better way of life to rural America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Auguest 6

Why U.S. agriculture should support foreign aid . . . . . . . . . . . . . March/April 23

Livestock (Pork)Building a cooperative on the fast track . . . . . . . . . . . . . . . . . . . . . . May/June 6Finding new ways to market ‘this little piggy’ . . . . . . . September/October 11Generating rural progress


Kentucky hog co-op to explore value-added alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 10

Last train leaving?Some say Pork America represents best, and possibly last, chance for hog farmers to gain significant market access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 6

Mt. Pride Cooperative Inc.Mt. Lake Park, MD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 22

Saving an industryPlant closure leads Michigan growers to form new turkey cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 4

Small co-ops and marketing groups formed in wake of hog crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 8

ManagementAre you a good leader?


Consultant’s feasibility study can predict success of ‘next great idea’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 22

Co-ops in the 21st centuryCooperative marketeting in the new millennium . . . . . . January/February 7

CROPP’s guiding principles . . . . . . . . . . . . . . . . . . . . . . . . . January/February 27Net savings dipped in 1999 for most corn-soybean and

wheat-barley co-ops . . . . . . . . . . . . . . . . . . . . . . . . . September/October 16Organic: a philosophy & production system . . . . . . . . . . . . January/February 26

MarketingAsset growth for largest co-ops shows resilience to

declining revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 28CherrCo helps bring market stability to tart cherry

industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 4Co-ops in the 21st century

Cooperative marketeting in the new millennium . . . . . . January/February 7Co-ops’ share of farm marketings up slightly in ‘98 . . . . . . . January/February 4Depressed ag sector puts squeeze on

largest co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 32Finding new ways to market ‘this little piggy’ . . . . . . . September/October 11Generating rural progress


Hazelnut Growers of Oregon Cornelius, Oregon . . . . . . . January/February 16How well are dairy cooperatives performing? . . . . . . . . . . . . . . July/August 25Kentucky hog co-op to explore value-added

alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 10Last Train leaving?

Some say Pork America represents best, and possibly last, chance forhog farmers to gain significant market

access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 6Lower commodity prices cause drop in co-op

sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 4Making its mark




MergersConsolidation in the heartland


Making its markAgri-Mark, New England’s largest dairy co-op, is building markets for producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 16

OrganicCROPP’s guiding principles . . . . . . . . . . . . . . . . . . . . . . . . . January/February 27New model, old ways

Wisconsin farmers find new life serving burgeoning organic markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 23

Organic: a philosophy & production system . . . . . . . . . . January/February 26Organic Valley Firsts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 25

Rural DevelopmentBoosting the 3 Bs


Co-ops in the 21st centuryCooperatives build community values. . . . . . . . . . . . . January/February 15

Co-ops in the 21st centuryProviding power beyond 2000 . . . . . . . . . . . . . . . . . . . January/February 12


Generating rural progressStudy finds that new-generation and traditional co-ops have major beneficial impacts on rural communities. . . . . . . . . . . . July/August 16

Iowa RECs reach 15-year milestone for rural development . . . . . . July/August 8Maine co-op building support for economic development . . . . . July/August 11Missouri’s first ethanol plants will have major impact on region’s

rural economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 12Mohave Electric Co-op’s quick response attracts major source

of jobs to service area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 12Pennsylvania co-ops take development underground . . . . . . . July/August 10USDA, Commerce join forces to boost early

warning system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 14Walley Beyer, Retired Administrator

USDA Rural Development, Rural Utilities Service. . . . . . . . . . . . May/June 20When the lights came on



StatisticsAsset growth for largest co-ops shows resilience to

declining revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 28Consolidation in the heartland


Co-ops’ share of farm marketings up slightly in ‘98 . . . . . . . January/February 4Depressed ag sector puts squeeze on largest

co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 32Downward spiral for commodity prices continues; bottom line mixed for

Plains co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 11How well are dairy cooperatives performing? . . . . . . . . . . . . . . July/August 25Lower commodity prices cause drop in co-op sales. . . September/October 4Net savings dipped in 1999 for most corn-soybean and

wheat-barley co-ops . . . . . . . . . . . . . . . . . . . . . . . . . September/October 16Trade takes a tumble

Cooperatives trade plunges 41 percent as Asian markets cool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 18

TechnologyCo-ops in the 21st century

Consolidations, technology, politics to impact co-op financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 14

Co-ops in the 21st centuryFarm supply co-ops: a look over the horizon . . . . . . . . January/February 9


TobaccoEnd nears for tobacco warehouse co-ops . . . . . . . . . . September/October 23Grower co-ops to coordinate marketing . . . . . . . . . . . . September/October 22New Directions:


Pursuing other uses for tobacco . . . . . . . . . . . . . . . . . . September/October 24

TradeCo-ops in the 21st century

Farm supply cooperatives: a look on and over the horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 9

Foreign affairsUSDA Foreign Agricultural Service promotes U.S. agriculture abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 15


Trade takes a tumbleCooperatives trade plunges 41 percent as Asian markets cool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 18

Why U.S. agriculture should support foreign aid . . . . . . . . . . . March/April 23

Utility Co-opsCo-ops in the 21st century

Providing power beyond 2000 . . . . . . . . . . . . . . . . . . . January/February 12Iowa RECs reach 15-year milestone for rural development . . . . . July/August 8Maine co-op building support for economic development. . . . . . July/August 11Mohave Electric Co-op’s quick response attracts major source

of jobs to service area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 12Pennsylvania co-ops take development underground . . . . . . . July/August 10Streamlined USDA utilities program draws plaudits . . . . . . . . . . May/June 21USDA, Commerce join forces to boost early warning system . . July/August 14Walley Beyer, Retired Administrator

USDA Rural Development, Rural Utilities Service . . . . . . . . . May/June 20When the lights came on


Value AddedCo-ops in the 21st century

Cooperative marketeting in the new millennium . . . . January/February 7Dennis M. Mullen: President & CEO

Agrilink Foods, Inc., Rochester, NY . . . . . . . . . . . . . . . . . . . . July/August 15

Fill ‘er up!Pipeline flowing with new generation ethanol co-ops . . . . . . May/June 8


Generating rural progressStudy finds that new-generation and traditional co-ops have major beneficial impacts on rural communities . . . . . . . . . July/August 16

Hazelnut Growers of Oregon Cornelius, Oregon . . . . . . . January/February 16Land O’Lakes buys butter business . . . . . . . . . . . . . . . . . . . . . . . March/April 26Larry D. Steward: President and CEO

Minn-Dak Farmers Cooperative . . . . . . . . . . . . . . . . . . January/February 22Making its mark


Mt. Pride Cooperative Inc.Mt. Lake Park, MD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 22

New Directions:Co-ops help tobacco farmers transition . . . . . . . . . September/October 20


Power formulaHigher gas prices fuel drive for ethanol production; farmers look to co-ops to gain market share . . . . . . . . . . . . . . May/June 7

Saving an industryPlant closure leads Michigan growers to form new turkey cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 4

VegetablesGrower co-ops to coordinate marketing . . . . . . . . . . . . September/October 22New Directions:


AUTHORSBailey, Isaac J.End nears for tobacco warehouse co-ops . . . . . . . . . . September/October 23Banks, ElizaBoosting the 3 Bs


Borst, AlanGoing global

Export certificates a valuable tool helping co-ops tap overseas markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 18

Brockhouse, BillKentucky hog co-op to explore value-added

alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 10Campell, DanTri Valley Growers files Chapter 11 bankruptcy . . . . . . . . . . . . . . July/August 4When the lights came on

USDA program brought electricity and a better way of life to rural America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 6

Chesnick, David S.Asset growth for largest co-ops shows resilience to

declining revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 28Depressed ag sector puts squeeze on largest co-ops . January/February 32Crooks, AnthonyConsolidation in the heartland


Cummins, DavidDownward spiral for commodity prices continues; bottom line mixed for

Plains co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 11Net savings dipped in 1999 for most corn-soybean and

wheat-barley co-ops . . . . . . . . . . . . . . . . . . . . . . . . . September/October 16Duffey, PatrickGenerating rural progress

Study finds that new-generation and traditional co-ops have major beneficial impacts on rural communities . . . . . . . . . July/August 16

John Malcheski, Wisconsin’s roving co-op ambassador, spreads cooperative skills and knowledge worldwide. . . . . . September/October 12

Making its markAgri-Mark, New England’s largest dairy co-op, is building markets for producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 16

United StatesDepartment of AgricultureWashington, DC 20250

OFFICIAL BUSINESS

Penalty for private use, $300

NOTICE:❏ Check here to stop receiving this publication,

and mail this sheet to the address below.❏ NEW ADDRESS. Send mailing label

on this page and changes to:

USDA/Rural Business–Cooperative ServiceStop 3255Washington, D. C. 20250-3255

Periodicals Postage PaidU.S. Department of Agriculture

English, GlennCo-ops in the 21st century

Providing power beyond 2000 . . . . . . . . . . . . . . . . . . . January/February 12Eversull, EldonCo-ops in the 21st century

Farm supply cooperatives: a look on and over the horizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 9

Folsom, JoeFinding new ways to market ‘this little piggy’ . . . . . . . September/October 11Frederick, Donald A.Butter settlement: A glimpse into the future of antitrust

enforcement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 7Gehrke, BradLast Train leaving?


Graham, StevenCooperative Agro Pastorale Segbeya


Hampton, KarlForeign affairs

USDA Foreign Agricultural Service promotes U.S. agriculture abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 15

Hazen, PaulCo-ops in the 21st century

Cooperatives build community values . . . . . . . . . . . . January/February 15Jobe, JeffSmall co-ops and marketing groups formed in wake of

hog crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 8Joseph, AzanmassoCooperative Agro Pastorale Segbeya


Karg, Pamela J.CherrCo helps bring market stability to tart cherry

industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 4Fingers and needles

Alaskan co-op turns cashmere-soft musk ox wool into hard cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 7

Foremost Farms traces its name to J.C. Penney . . . . . . . . . . . . . . May/June 29Iowa RECs reach 15-year milestone for rural development . . . . . July/August 8New Directions:



Seeing the forest for its treesCooperatives promote sustainable forestry and tap green trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January/February 17

Trading UpPlains Cotton Co-op uses computer technology to pursue

business-to-business strategy . . . . . . . . . . . . . . . . November/December 8When the lights came on


Kennedy, Tracey L.Trade takes a tumble

Cooperatives trade plunges 41 percent as Asian markets cool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September/October 18

Kraenzle, CharlesCo-ops’s share of farm marketings up slightly in ‘98 . . . . . January/February 4Letson, PerryWhy U.S. agriculture should support foreign aid . . . . . . . . . . . March/April 23Liebrand, CarolynHow well are dairy cooperatives performing? . . . . . . . . . . . . . . July/August 25Matson, JamesConsultant’s feasibility study can predict success of ‘next

great idea’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/August 22Last Train leaving?


Strength through unityBulgarian honey producers sweeeten their future through cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 12

Moser, LauraSaving an industry


Rotan, Beverly L.How Does Your Local Farm Supply Cooperative Rate? . . . . . . March/April 25Snyder, Charles E.Co-ops in the 21st century

Consolidations, technology, politics to impact co-op financial institutions . . . . . . . . . . . . . January/February 14

Stieve, Mary FarrellPower formula

Higher gas prices fuel drive for ethanol production, farmers look to co-ops to gain market share . . . . . . . . . . . . . . May/June 7

Thompson, Jill LongBargaining co-ops help level field, stabilize

markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November/December 2Borders are no longer barriers for co-ops . . . . . . . . . . . . . . . . . . March/April 2Cooperatives: getting the job done . . . . . . . . . . . . . . . . . September/October 2Co-ops keep farm-generated capital at home . . . . . . . . . . January/February 2Putting our eggs in more than one basket . . . . . . . . . . . . . . . . . . July/August 2USDA Rural Development programs help fuel

co-op movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 2Torgerson, RandallCo-ops in the 21st century

Cooperative marketing in the new millennium . . . . . . January/February 7Wadsworth, James J.Are you a good leader?
