usda / rural development march / april 2012 · 2019. 11. 20. · features rural cooperatives /...

USDA / Rural Development March / April 2012

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lCOOPERATIVESCOOPERATIVES

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More women attainco-op leadership roles

By Kathleen Merrigan, Deputy SecretaryU.S. Department of Agriculture

Since our first days at USDA, Secretary TomVilsack and I have been crisscrossing thecountry talking to farmers and ranchers, foodretailers and wholesalers, and many thousandsof others whose livelihoods depend on

agriculture. Here’s one thing we’ve heard loud and clear:Americans are interested in buying more food from localproducers and knowing that their food dollar supports thelocal economy.

The numbers bear out the local trend: In 2011, more than85 percent of customers polled by the National GrocersAssociation said that they chose a grocery store based in parton whether it stocked food from producers in their region.Today, we have more than 2,000 farm-to-school initiativesnationwide, up from only 400 in 2004.

The groundswell of interest in local foods in turn createsopportunities for new jobs, revenue and economicdevelopment. America’s rural cooperatives have a key role toplay in developing strong local and regional food systems.

Cooperatives owned by producers from a specific regioncan aggregate, store and market members’ products to avariety of local buyers. They are well-positioned to shareinformation about their producer-members and helpconsumers learn more about who produces their food. Retailcooperatives, which are owned by consumer members, are amodel that has been used to develop “food hubs” thataggregate local farmers’ products and sell them to membersand others.

USDA is working on myriad fronts to help cooperativestake greater advantage of these new market opportunities.Just a few examples: • Rural Cooperative Development Grants from USDA Rural

Development have helped the Rocky Mountain FarmersUnion in Colorado to assist the High Plains FoodCooperative in launching an online farmers’ market, whereconsumers can order products for delivery from co-opmember-producers.

• Producer-members of the Shepherd’s Grain farmingcooperative in Washington and Oregon grow much of theirwheat for export. But between 15 and 30 percent of theircrop is high-quality hard red spring wheat that is processed

and sold regionally, offering the farmers a better returnwhile local bakeries use it to produce popular products.With support from USDA’s Sustainable AgricultureResearch and Education program, the cooperative was ableto train its producers in the use of no-till farming topreserve the soil and reduce fuel use — and then conveythat information to its customers.USDA is eager to help cutting-edge businesses like this

grow, develop and succeed — and we have a lot to offer.Until recently, however, it has been daunting for producersand others in the agricultural community to navigate USDAresources.

That’s why USDA launched the Know Your Farmer,Know Your Food Initiative in 2009. It’s a tool to coordinatethe department’s work on local and regional food systems andleverage existing resources to strengthen them. The initiativedeveloped a website that serves as a “one-stop shop” for localfood tools and resources from USDA: www.usda.gov/knowyourfarmer. Most recently we launched the Know YourFarmer, Know Your Food Compass, an online map andcompendium of stories, photos, videos and resources availablefrom USDA: www.usda.gov/kyfcompass.

Stay tuned to the next issue of this magazine for morearticles and resources — and let us know how yourcooperative is strengthening local food systems bycommenting on the USDA blog, by sending us a tweet at#KYF2, or by e-mailing us at: [email protected]. n

U.S. Agriculture Deputy Secretary Kathleen Merrigan discussesthe Know Your Farmer, Know Your Food initiative with Alex Gyori,general manager of Brattleboro Food Co-op in Vermont. USDAphoto

2 March/April 2012 / Rural Cooperatives

Commentary Local food is a cooperative venture

Features

Rural Cooperatives / March/April 2012 3

Volume 79, Number 2March/April 2012

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

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

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

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

The U.S. Department of Agriculture(USDA) prohibits discrimination in all itsprograms and activities on the basis ofrace, color, national origin, age, disabili-ty, and where applicable, sex, maritalstatus, familial status, parental status,religion, sexual orientation, geneticinformation, political beliefs, reprisal, orbecause all or part of an individual’sincome is derived from any publicassistance program. (Not all prohibitedbases apply to all programs.) Personswith disabilities who require alternativemeans for communication of programinformation (Braille, large print, audiotape,etc.) should contact USDA’s TARGETCenter at (202) 720-2600 (voice and TDD).To file a complaint of discrimination, writeto USDA, Director, Office of Civil Rights,1400 Independence Avenue, S.W.,Washington, D.C. 20250-9410, or call (800)795-3272 (voice), or (202) 720-6382 (TDD).USDA is an equal opportunity providerand employer.

Tom Vilsack, Secretary of Agriculture

Dallas Tonsager, Under Secretary,USDA Rural Development

Dan Campbell, Editor

Stephen Hall / KOTA, Design

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

p.7

04 She’s taking care of businessMontana producer Mary Fritz paves a trail for women leaders in Farm Credit SystemBy Dan Campbell

07 Some like it hotMary Alice Garay continues family tradition of growing and processing chile peppers By Dan Campbell

10 From workers to owners LEDC helps Latino immigrants launch wide variety of businesses in Minnesota By Anne Todd

16 Largest 100 ag co-ops post near-record sales, margins By Sarah Ali and David Chesnick

26 Co-ops of all types benefit from USDA’s value-added grantsBy Stephen Thompson

32 Dairy co-ops in the 21st century: the first decadeBy Carolyn B. Liebrand

36 Co-ops respond to consolidation, global volatilityBy Lynn Pitman

Departments02 COMMENTARY

15 UTILITY CONNECTION

30 CO-OPS & COMMUNITY

38 NEWSLINE

p. 32p. 10

ON THE COVER: Posters of “Rosie the Riveter,” as she came to beknown, were used during World War II to encourage women to performjobs in heavy industry that had traditionally been done by men. AssistantEditor Stephen Thompson tweaked the art just a little — adding “Co-op”to her head scarf and changing the button on her collar to a Farm Creditlogo — to kick off a pair of features about women who have attainedleadership positions in the Farm Credit System. They share their storiesin the hope of encouraging more women to run for co-op boards. Seepage 4.

p. 26

By Dan Campbell, [email protected]

oes it ever feel like the bar sometimes gets seta few notches higher for a woman looking tofill an agricultural leadership positiontraditionally held by a man? Mary Fritz, aMontana grain and cattle producer, needs

only about one second to ponder this question beforeanswering: “Oh yeah!”

In 18 years of serving in leadership positions in the FarmCredit System, Fritz has had to contend with some whothought a woman wasn’t capable of the job. But it hasn’tstopped her from attaining leadership positions in the FarmCredit System that no woman had held before her, and inwhich she has proven to be more than capable of taking careof business. Any vestiges of sexism encountered along theway have been viewed as obstacles to be dealt with andovercome, never as a stopping point.

“Mary has definitely been a great leader for women in theFarm Credit System (FCS),” says Everett Dobrinski,chairman of the CoBank board. In 1994, Fritz became thefirst woman ever elected to her local Farm Credit advisoryboard in Montana. While she found that some of the boardmembers readily accepted her presence, others “were fromthe old school. I had to prove myself over and over.” Herbusiness skills and knowledge gradually won them over, and

she was elected board vice-chair in 2000 and board chair in2002.

Fritz went on to become the first woman elected to theboard of Northwest Farm Credit Services, which overseesFCS operations in five states. She then became the firstelected woman board member at CoBank and the firstwoman on the Farm Credit Council (FCC) board, FarmCredit’s policy organization. She was elected vice-chair of theFCC board in 2011.

“If my husband had been in my position, and walked intosome of those board rooms, no one would have questionedhis ability the way some did with me,” Fritz recalls.

“For example, in the old days, candidates for theNorthwest Farm Credit board would go from state to state,and each candidate would make a presentation before theballots were mailed out. In Oregon, a nice elderly man whoreminded me of my grandpa, sat me down, patted my handand told me: ‘Honey, you did a really nice job, but this is aman’s world.’ It was like spitting in your eye!” she recalls,although able to laugh at it now.

“With some guys on the board, it took a year or two forthem to come around, but they usually did.”

Stepping up Fritz’s role at Farm Credit is part of a larger trend with an

increasing number of women taking on leadership roles inagriculture. According to the most recent farm census,


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She’s taking care of business

Montana producer Mary Fritz paves a trailfor women leaders in Farm Credit System

women are the principal operators of more than 14 percentof the nation’s farms, a 22 percent increase since 1997.

But those numbers don’t reflect the fact that a typical U.S.family farm is run as a partnership by a farm couple, Fritzsays. On her Quarter Circle JF Ranch, near Chester, Mont.,Fritz is basically the business office manager for theoperation. She shares marketing work with her husband andhandles virtually all of the bookkeeping. She is also morethan capable of hopping on a combine or tractor when thefarming workload requires.

When a farm couple such as the Fritzes walks into a FarmCredit office to renew a loan, it is often the wife — in herrole as bookkeeper — who provides most of the financialdata, she notes. Serving on a Farm Credit board thus seemedto be a natural fit, once it was suggested to her.

“My husband, John, and I have always been partners, so Isaw no reason not to give it a shot when it was suggested Irun for the advisory board, although I never expected to winthat first race,” Fritz recalls. But she did, proving that, foreveryone who thought a woman wasn’t suited for the job,there were plenty of others who didn’t see it as a problem.

It didn’t hurt that the Fritzes are well regarded in theirarea for running an efficient farming and ranching operationand are strong supporters of their Farm Credit cooperative.The Fritz’s main crops are hard red winter and spring wheat,malt barley, forage peas (mixed with barley, for use on theirown farm) and dry peas that are processed in the area andexported, usually to India or Pakistan. They own an irrigatedhay farm (currently being leased out) 150 miles away fromthe home farm and also raise all-natural Black Angus beefcattle.

“To get the all-natural label, we can’t use any growthhormones or antibiotics,” Fritz explains. “That’s easy for us,because we get our growth through genetics. We have lots ofspace for calving, so we rarely get sick calves. If we do, and itneeds treatment, we keep meticulous records and that animalwill not be sold as all-natural.”

The farm is in an area called the Golden Triangle ofMontana that is well suited for growing high-protein redwheat without much need for inputs. “We do need somefertilizer and nitrogen, but because of the good soilconditions, you don’t have to break the bank putting nitrogenon it.”

The area is also well known for its malt barley production.“There are several companies in the area that buy it, so thecompetition is great,” Fritz says.

Transportation costs and related issues are always a bigeconomic factor for producers, but the Fritz farm isbenefitting from two new 110-car shuttle loaders in the area.

Adding new perspectiveAfter so many years serving on boards and running the

farm with her husband, Fritz has concluded that there aresubtle differences in the ways men and women typically goabout decision-making and addressing a problem. That’s a

good thing, she believes.“I see many things differently than my husband does, and

differently than do many of the guys on the board. When youhave a combination of men and women on a board, I thinkyou get a broader view — a 360-degree view of things.” Forexample, she thinks women have a tendency to be more adeptat reaching consensus and tend to be more careful listeners.

What personal traits have served her best as a co-opdirector? “We do a peer evaluation every year, and I am oftendescribed as a willing listener who strives to see all aspects ofa situation — and as a person who looks for opportunities tofind compromise. I’ve also been told I have goodcommunications skills.”

John Fritz isn’t shy about doing his own, less scientificanalysis of his wife. “He says I am way too analytical and alittle on the conservative side — which I don’t agree with, ofcourse,” she says with a laugh.

Fritz recently attended a Northwest Farm Credit meeting

and was pleased to see that there were more women on localadvisory boards than she had seen previously. “The numbersof women serving on co-op and association boards across thecountry seems to be increasing. At national meetings, Idefinitely see more lady members.”

Co-ops — with their history of democratic governanceand their role of “equalizer” in the marketplace — should beespecially cognizant of the need to get more women active inleadership positions, Fritz feels. “Co-ops need to realize thatwomen have a lot to offer. Many of them know theirbusinesses inside and out, and they have just as much to offeron the board as their husbands do. We just have to break outof this traditional mindset that agriculture is a man’s world.”

Technology helpful for women farmersKeeping abreast of all the evolving technology used on

farm machinery can be a challenge, Fritz says. “Luckily, myhusband is a tech nut.” She “fought tooth and nail” with himwhen he wanted to get auto-steer on their new combine. “Iwas used to our old machine and being able to hear everylittle nuance of it.” But when the new combine arrived withauto-steer, he said “‘Come on and try it, you will like it.’ Anddarned if I don’t.”

She enjoys driving combines and feels that a lot of the newtechnology makes it easier for women to do more hands-onfarming. “For example, it used to be hard for me to unloadgrain because you had to manually haul a big auger intoposition; it was especially hard under hopper-bottom trailers.Now, everything is hydraulic; it moves itself.


“Serving on these boards has beensuch an enriching and educational processfor me. I can’t even put a value on it.”

“We have GPS guidance systems on the combines andtractors now for spraying and seeding. It is amazing, buteverything has gotten bigger and more expensive. Up wherewe are [near the Canadian border with Montana], labor isdifficult to come by. We do have hired help, but have tocompensate with machinery.”

Merger puts demands on directors The time commitment for serving on a co-op board is

usually greater than anticipated, especially in the early years,Frtiz says. “There is an education process you go through.You may have great business sense for your own operation,but when you get on a board like Northwest Farm Credit orCoBank, many businesses that you are dealing with are verydifferent from your own.”

The last couple of years serving on the CoBank board has

involved an “exceptionally heavy workload” because of therecently completed merger with U.S. AgBank, she says.“That required a lot of director involvement, due to thestockholder issues and the need to monitor all the financials.”

Moving from the Northwest Farm Credit to the CoBankboard was a big switch, she found. “There are similaritieswhen moving from an association to a bank board, but alsodifferences.” At both Northwest and CoBank, a director’smost important job, she says, is to hire skilled managementand set policy for the CEO to carry out. “From a properdistance, you watch to see that policy is being carried out; butyou don’t get your nose or fingers into running the business.”

The scope and scale of the two operations, however, isquite different. “Northwest is a regional association with afive-state footprint that delivers credit services to members.CoBank is its wholesale parent and also has a retail arm; ithas a national footprint and even does some internationalbusiness.”

One of the driving forces behind the merger with U.S.AgBank (also a producer-owned co-op), Fritz says, was adesire to spread the risk that comes from having aconcentrated loan portfolio. With this merger, the bank has amore balanced portfolio consisting of roughly 50 percentwholesale business and 50 percent retail business, she notes.Adding California to CoBank’s trade area via the mergershould be especially helpful in spreading risk bothgeographically and over a larger mix of commodities.

“I have no doubt that this will make for a stronger, moreresilient bank,” she says.

Her CoBank term expires in 2015, and at this point, Fritzsays she is leaning toward retiring from the board after that.“I wanted to see this merger through, which I’ve done; now Iam leaning toward allowing someone with younger, fresherideas to come on when my term expires.”

She hopes that more women will continue to pursueleadership roles in Farm Credit and the larger co-op world.Step forward, she urges women producers, if you think youhave something to bring to the board room that can helpyour co-op.

Fear of failure probably prevents many good people, menand women, from running for co-op boards, she says.“They don’t want take a risk of failure. But the rewards faroutweigh the risk of failure. Serving on these boards has beensuch an enriching and educational process for me. I can’teven put a value on it.

“I have learned so many things that increased my businessskills — we’ve changed some of our business and farmingpractices as result of what I have learned doing this. I wouldstrongly encourage any woman who thinks she can do the jobto try it.” n


Rose Holste has run a row crop and hay operation inIowa with her husband since 1968. Even with decades ofexperience, she still wanted to learn more about the

business side of farming. Severalyears ago, she found out aboutAnnie’s Project, a nationalprogram designed to helpwomen in agriculture.“It was so worth the time,”

Holste says. “The sessions wereall well planned and presentedand gave me a new perspective.We’ve definitely applied the

information to our lives and our operation.” Annie’s Project (short for “Annie’s National Network

Initiative for Educational Success”) is a six-week coursethat teaches risk-management, problem-solving,recordkeeping and decision-making skills. Classes aredesigned around specific regional needs and helpparticipants develop local support networks. Since its inception in 2009, Annie’s Project has served

more than 6,500 women in 25 states. Farm Credit’snational sponsorship is helping to support Annie’sProject.This program has something for every age group and

every situation,” Holste says. “The group that attendedwith me was diversified, which made the discussionsinteresting. I felt that everyone who attended walkedaway with new knowledge.”For more information, visit: www.extension.iastate.

edu/annie/index.html. n— Courtesy Farm Credit System

Annie’s Project helps women farmers


By Dan Campbell, Editor

he chile pepper is not just a top crop in theHatch Valley of southwest New Mexico, it isa key part of the regional culture. All things“chile” are even celebrated each autumn witha festival that attracts 30,000 people and

media that has included the Food Network and the BritishBroadcasting Corporation.

While the region has ideal soil and climate conditions forgrowing top-quality chile peppers, acreage devoted to thecrop has been declining in recent years, due in large part tosoaring prices for cotton and alfalfa, resulting in an acreageshift away from peppers.

That’s meant even stronger demand, however, for the chileproducts processed by M.A. & Sons of Arrey, N.M., wherenot only are the food products spicy, but the business is alsohot.

“We have well-established markets, and they are buyingeverything we can produce,” says Mary Alice Garay, the headof the family business and the “M.A.” of the company name.

The Garay family grows about 15 percent of the chilepeppers it processes, contracting with about 14 other farmersfor the rest of their crop needs.

“We have growers who we have worked with for manyyears, and we are loyal to each other. So we have notexperienced a drop in our supply,” she says.

The “Sons” part of the company name refers to Frank,Randy and Patrick Garay, Mary Alice’s three sons, all whomare active in the business. “My dad had a small processingplant, and I was always involved in it,” Garay says. “When heretired, I took it over and my sons came into the business.”

Each family member has an area of specialty. Mary Alicedoes the bookwork and handles most financial aspects ofrunning the family business. Patrick takes care of all theplant-related billing and helps in plant operations. Frank runsthe field and farming operations. All of them also have theirown farms.

Garay says it does seems as if more women are assumingleadership positions on farms and related businesses in NewMexico, which she thinks will continue to grow as morewomen become heads of farming households. She does not

Some like it hot

Mary Alice Garay continues family traditionof growing and processing chile peppers

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Mary Alice Garay and her three sons all play an active role in the family chile pepper processingand farming operation. Photo courtesy Garay family


feel she hasencountered anyresentment aboutbeing a woman on theboard – which hasperhaps been helped,in part, by the fact thatat least one womanserved on the boardbefore her.

With her agri-business background,Garay didn’t feel therewas any reason shecouldn’t do the job ofco-op director just aswell as a man could.The gender of adirector shouldn’t be afactor, it should just beabout whether theyhave the skills andcommitment to theassociation, she feels.

A chile puree forpurists

The Garay’s flagshipproduct is their NewMexico Homestyle RedChile Puree. “We goan extra step beyondwhat most others do, taking outall the stems, skins and seeds. Thisavoids the bitter taste you can getwith some chile purees. That isour edge,” Garay explains.

M.A.& Sons market the pureein 14- and 56-ounce containers, aswell as in three-gallon buckets.“There is a lot of potential forgrowing the size of our pureebusiness,” she says.

Whole chile pods are sold towholesalers who re-pack andmarket them to the retail trade,where consumers buy them fortheir own sauces.

“The bulk of what we sell goesto big spice companies,” Garay

says. These companiesfurther process thecrushed chile they buyfrom M.A. & Sons.“We also producepaprikas that are usedfor food coloring andas a mild spice that ispopular when sprinkledon deviled eggs andother dishes.”

Some products aresold direct to thepublic at the plant.The company’s annualsales average in the $3million to $3.5 millionrange.

“In the past five orsix years, we have alsobranched out intofrozen enchilada sauce.Schools are our biggestcustomer there, but wealso sell to majorgrocery chains.”

Elected to FarmCredit board

Even with the longfamily tradition in thebusiness, securing

loans from commercial banks forfarming and agriculturaloperations isn’t always easy, Garaysays. So she is thankful for thepresence of Ag New Mexico, aFarm Credit System associationco-op whose sole mission is toserve the credit needs of producer-members like her. “Dealing withFarm Credit has certainly mademy life a lot easier,” she says.

When her loan officerasked Garay to consider runningfor the Ag New Mexico boardabout three years ago, she agreedto toss her hat in the ring. Garay’sextensive knowledge of vegetablefarming, processing and marketing

A field of ripe chile peppers just prior to harvest and incrates at the M.A. & Sons processing facility. Facing page:Hatch, N.M., is known as the Chile Capital of the World and

holds an annual festival to celebrate its favorite spicyvegetable. Racks of chile peppers being dehydrated. Photos

courtesy Tom McConnell and Garay family

made her well qualified, accordingto Warren Russell, her Ag NewMexico lender.

Russell says the family’s productsare worth standing behind. As aconsumer, he says he knows theirproducts are unrivaled. “As theirloan officer, I know that for thesereasons their growth potential ishuge.”

Any possible feelings that awoman might not be up for thejob of co-op director were morethan offset by the respect she hasearned among other producers,who elected Garay to the board in2009.

Part of her motivation inrunning was to give back to afinancial cooperative that hasmeant so much to her operation,Garay says. “I want to helppreserve financial co-ops like FarmCredit so that they will be there tocontinue to make loans toproducers — not only of mygeneration, but my sons’generation, and to their children.”

The association’s board isstrong because the directors eachhave their own unique skill set.“We all have differentbackgrounds and areas ofexpertise. I am a vegetable farmer;others are ranchers or graingrowers and so forth. The moreperspectives you get on a board,the better.”

It does take dedication to serveon a co-op board when your ownbusiness is so demanding, she continues. “I am six hours awayfrom Clovis, where our board meetings are held. Luckily it isa very peaceful drive — there is not a lot of traffic.”

Now in the third year of her term, Garay says she hasenjoyed the experience enough to run again at the end of thisyear. “I have learned a lot, and we’ve been able to get theorganization back on a solid footing after going through arough time.”

The downturn in the dairy industry a few years agoresulted in some challenging loans for the association and

caused much concern for its future.With a lot of hard work and dedica-tion, the staff and board turned thesituation around, and the associationis now strong.

Automating withhigh-tech sorter

The chile processing plant is aseasonal operation, usuallyrunning four to five months eachyear. The peak seasonal workforceis about 80 to 90, with about 14year-round workers.

But labor needs should soon beabout cut in half, thanks to therecent purchase of a mechanicalsorter, which the family hopes tohave installed this spring. Thismachine uses electric-eyetechnology to do much of thelaborious sorting work currentlydone by hand.

“We are very hopeful we willincrease production with less laborwhile getting better quality,”Garay says. “The machine won’tget tired in the afternoon like thehand sorters do.”

But the machine is not cheap,costing in the $350,000 range.Farm Credit is supplying thefinancing.

Once sorted, chile peppers haveto be dried. This is done byloading the peppers onto flat rackswhich are, in turn, loaded ontorolling carts placed inside windtunnels. Natural gas heats the air,which blowers circulate all around

the racks of peppers. In a continuous cycle, racks ofdehydrated chile peppers are rolled out and replaced withracks of fresh peppers.

Even though Garay has greatly expanded the dehydratingcapacity of the plant in the years she has been at the helm —expanding from 3 to 16 wind tunnels — demand is such that“we are at our capacity for dehydrating now.”

For future expansion, Garay says she won’t have to lookfar to find a lender who understands the needs of farmers. It’sher own co-op. n


“I want to help preservefinancial co-ops like Farm Credit

so that they will be there to continueto make loans to producers —not only of my generation,but my sons’ generation,and to their children.”


From workers to ownersLEDC helps Latino immigrants launchwide variety of businesses in Minnesota

Cooperative Mercado Central is a thriving Latin Americanmarketplace of some 45 businesses in Minneapolis. It includesrestaurants, apparel shops and personal services, among others.Pictured here are: Dona Enriqueta Cruz (second photo from top)in the La Reina de los Jugos (Queen of Juices) snack shop andAlfonso Zendejas in the Deportes Azteca sports apparel shop.Marisela Onofre shoulders a load of breads and pastries on abusy day at Panaderia El Mexicano. Photos courtesy MercadoCentral

By Anne Todd, Contributing Editore-mail: [email protected]

he Latino Economic Development Center(LEDC) is a cooperative of Hispanicimmigrant business owners that has createdan authentic Latin American marketplace inMinneapolis, Minn. The co-op emerged

from a small immigrant Latino church congregation in 1994in south Minneapolis. That congregation, Sagrado Corazónde Jesus (Sacred Heart of Jesus), took on a social actiondimension in addition to its spiritual one. These recentMexican immigrants worked in teams on educational, legaland economic issues, overcoming many barriers to reachtheir goals.

Over time, the group realized that economic progress wasessential to strengthen their community. LEDC wasincorporated in 2003, with assistance from several localbusiness development organizations. It then began workingto improve technical and leadership skills, which in turn ledto projects that are now known as the Cooperative MercadoCentral, Plaza Latina and Global Market.

Mercado Central is a marketplace of 45 businesses at thecorner of Lake Street and Bloomington Ave. in Minneapolis.The owners of this group of businesses are the ones whoexpanded their horizons through creation of LEDC.

The Global Market is housed in the former Searsbuilding, a key property on East Lake Street. An $18 millionproject, Global Market opened in 2006. It was spearheadedby LEDC, along with the help of other local and communitydevelopment centers. About one-third of the Global Market’stenants are startups, coming from graduates of trainingclasses offered by LEDC and other neighborhood partners.About half the vendors are “second level” entrepreneurs, whohave three to five years of experience in business.

Plaza Latina opened in 2001, before LEDC wasincorporated. Plaza Latina was establishedon Payne Avenue by members of theMercado Central development team,collaborating with the East SideNeighborhood Development Center.It is a smaller version of theMercado Central, with 10 tenants.These businesses, along withseveral others that openedbetween 2000 and 2002, werethe initial Latino businesses toopen on the east side of St.

Paul, Minn., leading to thedevelopment of about 50 new businesses in

the area.

LEDC’s goals are to establish, stabilize and expandbusinesses through orientations, classes, developmentconsulting, technical assistance and by providing access tocapital for new and existing entrepreneurs. It also strives torevitalize or develop community public markets andcommercial corridors in the Twin Cities and rural Minnesotathat allow for Latino businesses to fully participate in thebusiness community. It works to create a process andstructure through which the Latino business community mayaccess other institutions (such as banks, foundations andelected officials) and to create a membership base thatactively shapes the agenda of LEDC.

Rural Cooperatives interviewed Yolanda Cotterall, GreaterMinnesota rural program manager for the Latino EconomicDevelopment Center, to learn more about LEDC’s work.

Q: How important has the co-op business structure been tothe long-lasting success of businesses affiliated with LEDC?What do you consider to be the greatest strength andweakness of the co-op business model?

Yolanda Cotterall: LEDC has a long history of businessdevelopment in the Twin Cities as well as in rural regions ofMinnesota. Our first co-op development project, theMercado Central, was a success in many ways. The co-opmodel in this instance was critical to bringing a large groupof aspiring entrepreneurs together, making decisions,accessing funding and accomplishing a complex developmentproject with a variety of partner collaborators. I think thegreatest strength and weakness is the shared governance andcollaboration needed to pull off the birth of the co-op.

Q: Do you plan any major new projects or initiatives forLEDC in 2012?

Cotterall: We have a number of projects that we are involvedin and which will evolve within the next year:

• We are expanding pro-bono legal services to ruralcommunities;

• A staff member and an emerging “leader” client, whoresides in one of the rural regions where we believe aproducer co-op will begin, are attending training togetherthrough Land Stewardship’s “Beginner Farmer Training”program as a starting place for the co-op;

• We are collaborating with partners — a local agency andthe Association for Latinas in Action (ALA) — to expandopportunities in Willmar, Minn., where there is acommercial kitchen incubator program. We are helping to

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provide Spanish-language technicalassistance and trainingfor a food managerscertification class andfor food businessoperations,includingQuickBookstraining. Anotherproject in Willmar involves aclient who is seeking assistance to develop hisexisting property to accommodate a privately owned publicmarket;

• We are collaborating with the Minnesota Department ofAgriculture and other important stakeholders to coordinateexisting resources to respond to the needs of immigrantfarmers;

• We are in the exploration and organization phase of effortsto help birth our first worker-owned co-op. We’ve had aninitial exploratory meeting with a retiring wholesaler oflandscaping plant materials who employs about 28 folks.There is solid interest from the owner and the workers todevelop a plan and identify funding so that the employeescan buy and operate the business when the owner retires;

• In collaboration with Centro Campesino in Austin, Minn.,we are working to establish a public market that will createopportunities for approximately 25 Latino-ownedbusinesses. Centro owns the building but has littleexperience with economic development or cooperativeprojects. We will provide technical assistance in fundraisingfor the project as well as guidance to aspiring entrepreneurswho wish to participate in a cooperative public marketproject, such as we did with the Mercado Central project inMinneapolis.

Q: How many member businesses does LEDC have? How doyou handle communications with members?

Cotterall: LEDC has approximately 350 member businesseswith about 225 at what we would consider active at somelevel. Of these, about 20 percent are actively in the process ofstart-up or involved with expansion activities which requiretechnical assistance or loans; the other 80 percent are availingthemselves of membership benefits, such as ongoing technicalassistance and guidance as they navigate learning to operateand manage their businesses.

Q: Is LEDC planning to help membersexpand into new markets in 2012?

Cotterall: LEDC’s rural team,through funding from USDA’s RuralCooperative Development Grant program, is working ondevelopment of agricultural opportunities. We understandthat producers involved in small production have a criticalneed for improved access to markets. Our work will seek toaccomplish this improved access via building cooperativeinstitutional and wholesale buyers groups and a cooperativeretail operation.

Q: Tell us about how LEDC is helping Latinos in Minnesotaaddress barriers, such as language, and to learn to use newtechnologies to improve their business prospects.

Cotterall: We have come to understand that simply speakingSpanish is not what has developed relationships with the folkswho seek us out for support and guidance as they developtheir business concept. Our work begins with establishingcommunication that is directed by our clients and willrespond to and take advantage of their strengths. As we beginthe journey with them, we help to identify the resources thatwill improve their chances of success. Advocacy, training foracquiring information and increasing their technology skillsare some of the opportunities we find important to them.

LEDC’s “Practical Guide to Business Start Up” is an

The Latino Economic Development Centerhas a solid track record of business de-velopment in the Twin Cities area (includingMercado Central, pictured here) and in ruralparts of the state. In the bottom photo (facingpage), Dorain Olade styles the hair of ClaudiaJimenez, owner of the Electra Beauty Salon.Photos courtesy Mercado Central


eight-week course to introduce development of clients’business plans, as well as development of their first financialprojections and financial goals. We also offer a class inbusiness recordkeeping that provides, in many cases, theirfirst introduction to the concept of keeping importantfinancial information…and information on filing taxes,understanding the health of their cash-flow situation, anddetermining if they are making money.

We offer QuickBooks training for those who are ready totake that step in their business. We are also offering trainingso immigrants can gain knowledge about co-ops — what theyare, how they are structured, what the benefits are and theinitial first steps in trying to organize a co-op.

Q: How has LEDC used funds it received from USDA RuralDevelopment?

Cotterall: Last year was the first year that LEDC was arecipient of USDA Rural

Cooperative Development Grant funding. Thisfunding was extremely essential as we sought to exploreopportunities for immigrant Latino and Hmong ruralagricultural entrepreneurs. The funding provided theresources to lay the groundwork and explore agriculturalopportunities for immigrants.

In 2007, LEDC assigned a full-time staff person to ourrural work and we carried the economic developmentstrategies we used in our successful Twin Cities developmentefforts to out-of-state development efforts. We gainedrecognition from immigrants who sought us out as virtuallythe only resource for economic development available to

them that understood their barriers, spoke their language andbrought solutions. In 2009, we began to understand thetremendous opportunities that also existed for Latinos whohad experience in agriculture.

Latinos in Minnesota have been an important labor forcein the industry. It was a natural conclusion that Latinoimmigrants could participate not just as workers, but also asgrower- and meat-producing entrepreneurs.

Today, we have identified over 40 immigrant (Latino andHmong) agricultural entrepreneurs in four geographicregions who want to participate in the program offerings wehave been able to envision and develop. These offerings arenot ours alone; we have sought information and trainingthrough other organizations, such as the Land StewardshipProject, CooperationWorks!, Centro Campesino, theWillmar Multicultural Business Center, MinnesotaDepartment of Agriculture and the University of Minnesota,to name a few.

However, we are leaders in the development of strategiesand programming that have opened doors for immigrants tobe able to become contributors to the economic engine ofour state. We are the glue that makes it possible for theresource they represent to be incorporated in positive andpotentially profitable endeavors. The mission of LEDC is“To transform our community by creating economicopportunity for Latinos.”

Q: How much overall impact do LEDC member businesseshave on the local economy?

Cotterall: Over the last 14 years, LEDC has been involvedin the development of economic opportunities for Latinoimmigrants. Our organization is actually only eight years old(we received our nonprofit designation in 2003). But ourvision and mission began before that, in 1996, when thedream of a few aspiring entrepreneurs led us to identify andbring the resources that would eventually open the MercadoCentral. There were many who understood the importanceof this dream and they brought support and resources so thatthe opening of the Mercado was achieved in 1999.

From that time to the present, there has been muchwritten about the success of the project and the positiveeconomic impact it has had on the Twin Cities community.We have seen revitalization of at least four commercialcorridors and the creation of economic prosperity for manyaspiring Latino entrepreneurs. Well over 1,000 jobs havebeen created. Not all of these jobs can be attributed toLEDC members, but LEDC members and the MercadoCentral project showed the way and provided hope thatLatino immigrants could open businesses in the UnitedStates.


As a result, Latino families have experienced economicempowerment, which in turn has created educationalopportunities for their children, made home ownershippossible and has spurred civic involvement. These are just

some of the very visible results that LEDC members havebeen able to effect in not just the Twin Cities, but also inrural Minnesota. n

Enrique Garcia, owner of La Loma Tamales at MercadoCentral in Minneapolis, is one of the Latino EconomicDevelopment Center’s (LEDC) members and serves on itsboard of directors.

Q: How far back with LEDC does your business go, and whatdo you like best about belonging to LEDC?

Enrique Garcia:My wife, Noelia, and I are the owners of LaLoma Tamales [a Mexican food restaurant, catering businessand wholesale foods business] in Minneapolis. Ourinvolvement with LEDC goes all the way back to thebeginning of our business in 1999. Actually, if it wasn’t forLEDC, we would not be in business. The process of start-upbegan for us in 1998. We got one of the last slots forparticipation in the development of the Mercado Centralproject. What was great about the opportunity was that the folks

involved in the project understood the various barriers wefaced in being able to start a business. We have hadtremendous success and today have gross sales of almost $3million annually and employ 35 full-time employees. Ourbusiness is an important part of the Latino community andthis makes us very proud.

Q: Has your business been impacted by the recession? If so,how has LEDC helped you in this down economy?

Garcia:We must give credit to LEDC’s efforts in teaching usto build a strong business. This support has been critical forus; and because of it, we had strategies in place to be able towithstand the difficult times that most others have beenexperiencing. LEDC’s advice enabled us to understand salesdata and maintain an eye on the factors impacting our abilityto make a profit. We have experienced an approximate 10-percent drop in sales, but we saw it coming and were readyto make the necessary adjustments. Fortunately, we did nothave to lay off any employees.

Q: How do you participate in LEDC activities? Do you sit onany committees, or go to meetings?

Garcia: As a board member, I am very involved with LEDCand it programs. I have learned a lot about the operation andimportance of nonprofit organizations. I am also very proud tosay that I am one of the founding members of the LatinoScholarship Fund that provides money for Latino youth whomight not be able to attend higher education if not for theopportunity to get a scholarship. I am active in my communityin many other ways because of what I have learned throughmy participation and connections via LEDC.

Q: Are you satisfied with the communications you get fromLEDC, and that your voice is heard on important issues?

Garcia: Yes, I feel that all of my opinions are heard and havegood communication with the organization and othermembers.

Q: What are your plans for the future of your business?

Garcia:We have been working with LEDC to open our fourthretail store. A very important next step for us is to get ourFDA [Food and Drug Administration] license so that we canenter markets nationally.

To learn more about the activities of the Latino EconomicDevelopment Center, visit www.ledc-mn.org, [email protected], or call (612) 724-5332. n

Business ownerbenefited from LEDC

Enrique and Noelia

Garcia

By Anne MayberryRural Utilities Program staffUSDA Rural Development e-mail: [email protected]

biomass generationproject currently underconstruction by theNorthern VirginiaElectric Cooperative

(NOVEC) in Halifax County will notonly increase the use of renewableenergy to provide electricity, but it isexpected to create several hundred jobsin a portion of the state grappling withhigh unemployment. NOVEC EnergyProduction, Halifax County Biomass isexpected to generate up to 6.5 percentof the cooperative’s electrical output by2014, enough to meet the needs ofabout 16,000 residential customers.

“Investment in infrastructure is aninvestment in American workers,” saysJonathan Adelstein, administrator of theRural Utilities Program of USDA RuralDevelopment, which helped finance theplant. “This project shows howfinancing utility projects pays off, bothnow and in the future.”

Plant to generate 50 megawattsThe NOVEC biomass project, on

the site of a former Georgia-Pacificmanufacturing facility, will burn wastewood to generate nearly 50 megawattsof electricity. The waste will come fromregional logging operations and theforest products industry near SouthBoston in Halifax County, alongVirginia’s North Carolina border.

Halifax County reached its peak

population of more than 41,000 in1950. Today’s population of just over36,000 is about the same as it was in1900.

Stan Feuerberg, NOVEC presidentand CEO, says the construction hasalready brought more than 100 jobs tothe economically hard-hit region. Heestimates that the project will bring250 construction jobs to the SouthsideVirginia area during a two-year period.Once the system becomes commerciallyoperable, the plant will require about 26permanent jobs and 40 indirect jobs inforestry, logging and transportation.

“We expect to see an increasingnumber of indirect jobs harvestingwaste wood,” Feuerberg said. “As muchas 30 percent of the tree is left after it isused for construction or furniture.Harvesting, chipping and truckingindustries will likely grow.”

The biomass plant will be cooledwith “grey” water from a nearbywastewater treatment facility to helpconserve the amount of potable waterneeded for plant operations. Biomass —

such as agriculture and forest residues,energy crops and algae — areconsidered renewable energy sources.

According to data from the U.S.Department of Energy’s EnergyInformation Administration, over one-half of renewable energy consumed inthe United States in 2007 wasgenerated by biomass. Many ruralelectric cooperative utilities use avariety of fuel sources to provideelectric power. This diversity helpsmaintain a reliable and affordableelectric supply by utilizing regionalresources.

“This project is a win-win for allparties,” says Feuerberg. “It will provideNOVEC with a renewable source ofelectricity and increase logging andtrucking jobs for residents.Furthermore, it will improve the taxbase for the community.”

Carbon-neutral plant There is an abundance of wood

waste within a 75-mile radius of the


Uti l i ty Co-op Connect ion Virginia co-op’s biomass project creatingjobs, along with renewable energy

A

continued on page 43

An artist’s depiction of a new biomass power facility being developed by the NorthernVirginia Electric Cooperative.

By Sarah Ali and David Chesnick

Editor’s note: The authors areagricultural economists with USDA RuralDevelopment, Cooperative Programs. Thismarks the first time that USDA hasincluded the actual list of the top 100 ag co-ops (table 1). Eight co-ops requested thatthey not be included on the list by name.These co-ops ranked 37, 38, 48, 70, 76,86, 92 and 100.

he nation’s 100 largestagriculture coopera-tives reported near-record revenue of $118billion in 2010, an

increase of 4 percent over 2009, whenrevenue totaled $114. Net income forthe 100 top co-ops also increased in2010, reaching $2.39 billion, up from$2.16 billion in 2009.

Leading the revenue increase weredairy cooperatives, which saw 2010revenue climb more than 14.5 percentfrom the previous year, to $29.45billion. Dairy cooperatives accountedfor more than half of the revenueincrease recorded by the top 100 ag co-ops in 2010. However, nearly half ofthe top 100 cooperatives (47 percent)had lower revenue in 2010 compared tothe prior year.

Gross margins, as a percent of totalsales, were up slightly, from 9 percentto 9.2 percent. The increase in grossmargins partially covered higherexpenses. Gross margins plus service

Largest100

ag co-ops postnear-record sales,

margins

A summary of the Top 100ag co-op sales for 2010 shows that:

n The No. 1 ranked co-op had sales of $25 billion.n The 100th ranked co-op had sales of $276 million.n Sales of more than $1 billion were reported by 23 co-ops.n Sales of $506 million to $1 billion were reported by 47 co-ops.n Sales of $276 million to $500 million were reported by 30 co-ops.


T

Photo courtesy CHS Inc.


revenue climbed to $684 million. Total expenses for the top 100 ag co-

ops were up $575 million in 2010. Thelargest cost increase was for labor,where expenses climbed by 7 percent,to $4.6 billion. On the other hand,lower interest rates and less debt causedinterest expense to drop 11 percent.

Net margin, as a percent of totalsales, was up slightly, from 2 percent in2009 to 2.1 percent in 2010. Netmargins for the largest 100 agcooperatives were $2.3 billion. Thelargest increase in net margins occurredamong mixed cooperatives. As a group,these co-ops saw net margins increase$223 million. Dairy and farm supplycooperatives had lower net margins in2010, with a combined decrease of $102million.

The asset base for the top 100 grewby $2.3 billion between 2009 and 2010.Current assets accounted for nearlytwo-thirds of that increase. Fixed assetsalso showed an increase of $600 million. Current liabilities increased by morethan $1 billion for the largest 100 agco-ops. However, they used less long-term debt, which declined by $143million. Total liabilities thus increasedby $871 million.

Equity allocated to members jumped10 percent in 2010, to nearly $11billion. Retained earnings also showed asubstantial increase of 12 percent,ending the year at $386 million.Throughout the recession, cooperativeshave relied more heavily on member

financing than borrowed funding.

About the tables and figures In table 1, the rank, name, revenue

and assets are given for the nation’slargest agricultural cooperatives.Comparing 2010 to 2009 shows that thefirst six cooperatives ranked in the sameorder both years. The rest of the listreflects many changes in rankingsbetween the two years.

Information for the largestcooperatives has been segmented intoseven functional areas as defined intable 2 (see page 23). The functionalareas (and the number of cooperativesin each segment) are: supply co-ops(13); mixed co-ops (24); grain co-ops(16); dairy co-ops (23); sugar co-ops (6);fruit and vegetable co-ops (10); and

other marketing co-ops (8).

Historical comparisonComparing total gross business

volume of the same 100 cooperativesfrom 2006 to 2010 shows that there wasa small increase from 2006 to 2007.The record year for business volumewas 2008, when higher energy costs andlarge increases in the price of grains andoilseeds boosted the total.

Total gross business volume felldramatically, by 15.02 percent, between2008 and 2009. Increases in grossbusiness volume of $100 million ormore from 2009 to 2010 were achievedby 17 cooperatives as illustrated inFigure 1.

Patronage income (income fromother cooperatives) decreased by $41

Figure 3—Revenue of Cooperatives by Function, 2010

Mixed39.7%

Supply14.9%

Other5.6%

Fruit & Vegetable5.1%

Sugar 4.1%

Dairy29.9%

Grain5.7%

($ billions)140

120

100

802006 2007 2008 2009 2010 2006 2007 2008 2009 2010

($ billions)2.5

2.3

2.1

1.9

1.7

1.5

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


million in 2010, or 26.3 percent. Net income (after taxes)grew almost 12 percent, or $249 million. Net income aftertaxes for these same 100 cooperatives grew from $1.95 billionin 2006 to $2.4 billion in 2010, trailing only the 2008 recordof $2.42 billion (figure 2).

Figure 3 shows that mixed cooperatives account for 40percent of the revenue of the top 100 while comprising only24 percent of the number of cooperatives on the list (thelargest group). The mixed-marketing group also accountedfor 40 percent of the revenue and 43 percent of the assets ofthe top 100 ag co-ops.

Dairy (23 cooperatives) accounted for 25 percent of therevenue and 17 percent of the assets (figure 4).

The two charts in figure 5, show changes in the size of thefunctional groups between 2001 and 2010. Mixed

cooperatives were also the most numerous (26 percent) in2001. The number of co-ops in each functional group showsonly small fluctuations during the 10-year period, theexception being for fruit and vegetable cooperatives, whichdeclined from 15 co-ops in 2001 to 100 co-ops in 2010.

Thirty cooperatives that were in the top 100 in 2001 felloff the 2010 list, for various reasons (figure 6). The biggestreason is that 19 co-ops simply didn’t have the revenueneeded to make the list in 2010. Of those 19 co-ops, 11 stillranked fairly high, from 101 to 130, in 2010. Three of the 19went out of business in the interim; each had been highlyranked in 2001 (1, 12, and 13). Another five of these 19 co-ops were purchased by, or converted to, an investor-orientedfirm. The remaining three cooperatives were purchased by ormerged with another cooperative. n

Figure 4—Assets of Cooperatives by Function, 2010

Mixed43.4%

Supply15.6% Other

3.9%

Fruit & Vegetable8.5%

Sugar5.7%

Dairy16.9%

Grain6.0%

Figure 5—Distribution of Cooperative by Function for Top 100, 2001 and 2010

Mixed24%

Supply13%

Other8%

Fruit & Vegetable10%

Sugar6%

Dairy23%

Grain16%

2001

Mixed26%

Supply14%

Other9%

Fruit & Vegetable15%

Sugar4%

Dairy22%

Grain16%

2010

Figure 6—Reason No Longer In Top 100, 2001 vs. 2010 Rankings

Purchased by anothercooperative: 2

Merged with anothercooperative: 1

Purchased by an IOF*: 1

Converted to an IOF: 4

Out of business: 3

Out of top 100: 19

*IOF = Investor owned firm.


2010RANK

2009RANK

Table 1—100 Largest Agriculture Cooperatives, 2010Note: Co-op names and data withheld, by request, for co-ops ranking: 37, 38, 48, 70, 76, 86, 92 and 100.

NAME

CHS Inc.,Saint Paul, Minn.

Land O’Lakes Inc.,Saint Paul, Minn.

Dairy Farmers of America,Kansas City, Mo.

GROWMARK Inc.,Bloomington, Ill.

Ag Processing Inc.,Omaha, Neb.

California Dairies Inc.,Artesia, Calif.

Associated Milk Producers Inc.,New Ulm, Minn.

United Sugars Corporation,Bloomington, Minn.

Southern States Cooperative Inc., Richmond, Va.

Northwest Dairy Association, Seattle, Wash.

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

Prairie Farms Dairy Inc.,Carlinville, Ill.

United Suppliers Inc.,Eldora, Iowa

Foremost Farms USA, Cooperative, Baraboo, Wis.

Maryland & Virginia Milk Producers Co-op Association,Reston, Va.

United Producers Inc.,Columbus, Ohio

American Crystal Sugar Company,Moorhead, Minn.

Riceland Foods Inc.,Stuttgart, Ark.

Countrymark Cooperative Inc.,Indianapolis, Ind.

Dairylea Cooperative Inc.,Syracuse, N.Y.

Mixed (Energy,Supply, Food, Grain)

Mixed (Supply,Dairy, Food)

Dairy

Supply

Supply

Dairy

Dairy

Sugar

Supply

Dairy

Fruit & Vegetable

Dairy

Supply

Dairy

Dairy

Other (Livestock)

Sugar

Other (Rice)

Supply

Dairy

2009ASSETS

2010ASSETS

2009REVENUE

2010REVENUE

TYPE

$ millions

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

1

2

3

4

5

6

11

7

9

8

10

12

13

18

25

20

17

14

24

16

25,315

11,146

9,872

6,132

3,302

2,987

1,709

1,700

1,695

1,650

1,582

1,518

1,387

1,374

1,221

1,204

1,197

1,132

1,130

1,068

25,749

10,409

8,149

6,092

3,402

2,405

1,383

2,200

1,890

1,998

1,538

1,371

1,352

1,146

867

1,001

1,196

1,270

870

1,203

8,666

4,885

2,165

1,876

1,187

678

288

131

500

496

1,201

684

662

398

158

38

788

480

417

156

7,870

4,924

2,198

1,837

1,084

676

300

144

477

489

1,168

670

526

305

157

33

761

560

399

139


2010RANK

2009RANK


NAME

MFA Incorporated,Columbia, Mo.

MFA Oil Company,Columbia, Mo.

South Dakota Wheat Growers Assoc.,Aberdeen, S.D.

Sunkist Growers Inc.,Sherman Oaks, Calif.

Plains Cotton CooperativeAssociation,Lubbock, Texas

Producers Livestock MarketingAssociation,Omaha, Neb.

Farmers Cooperative Company, Ames, Iowa

Snake River Sugar Company,Boise, Idaho

Southeast Milk Inc.,Belleview, Fla.

Agri-Mark Inc.,Methuen, Mass.

Blue Diamond Growers,Sacramento, Calif.

Co-Alliance, LLP,Avon, Ind.

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

Heartland Co-op,West Des Moines, Iowa

Michigan Milk ProducersAssociation,Novi, Mch.

Lone Star Milk Producers,Windthorst, Texas

Cooperative Producers, Inc,Hastings, Neb.

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

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

Mixed (Supply,Grain)

Supply

Mixed (Grain,Supply)

Fruit & Vegetable

Other (Cotton)

Other (Livestock)


Sugar

Dairy

Dairy

Other (Nut)

Supply

Dairy

Grain

Dairy

Dairy

Grain

Dairy

Dairy

2009ASSETS

2010ASSETS

2009REVENUE

2010REVENUE

TYPE

$ millions

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

39

40

41

19

23

15

27

30

31

22

38

28

39

33

26

34

21

45

50

59

48

51

1,051

1,047

1,047

1,013

1,008

908

842

827

794

782

775

767

727

710

699

688

643

620

619

1,050

937

1,210

860

765

724

963

661

809

657

709

862

704

987

557

520

448

523

519

358

338

473

190

187

122

330

673

105

268

276

255

91

199

161

64

241

160

203

381

296

440

215

188

73

299

640

107

245

258

236

82

235

96

62

252

121

191


2010RANK

2009RANK


NAME

United Dairymen of Arizona,Tempe, Az.

Aurora Cooperative ElevatorCompany,Aurora, Neb.

Innovative Ag Services Co.,Monticello, Iowa

Farmers Cooperative,Dorchester, Neb.

Tennessee Farmers Cooperative, La Vergne, Tenn.

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

West Central Cooperative,Ralston, Iowa

Pacific Coast Producers,Lodi, Calif.

Trupointe Cooperative,Piqua, Ohio

Equity Cooperative Livestock SalesAssociation, Baraboo, Wis.

Central Valley Ag Cooperative, O’Neill, Neb.

NEW Cooperative Inc.,Fort Dodge, Iowa

NFO Inc.,Ames, Iowa

Producers Rice Mill Inc.,Stuttgart, Ark.

United Farmers Cooperative,York, Neb.

Michigan Sugar Company,Bay City, Mich.

Heritage Cooperative Inc., W. Mansfield, Ohio

North Central Farmers Elevator,Ipswich, S.D.

Southern Minnesota Beet SugarCooperative,Renville, Minn.

Dairy


Grain


Supply

Fruit & Vegetable


Fruit & Vegetable


Other (Livestock)


Grain

Dairy

Other (Rice)

Grain

Sugar

Grain


Sugar

2009ASSETS

2010ASSETS

2009REVENUE

2010REVENUE

TYPE

$ millions

42

43

44

45

46

47

49

50

51

52

53

54

55

56

57

58

59

60

61

47

35

40

32

43

42

37

57

86

64

49

41

56

52

54

61

92

97

68

615

614

610

602

581

577

520

516

512

510

506

498

492

479

450

448

443

442

440

537

686

623

719

569

572

663

471

295

412

520

615

474

511

506

438

251

228

374

110

325

117

192

211

296

250

301

168

29

167

173

32

172

156

255

114

137

319

90

251

82

150

183

284

211

258

82

23

150

169

29

176

157

266

131

139

276


2010RANK

2009RANK


NAME

Sunrise Cooperative Inc.,Fremont, Ohio

Tillamook County Creamery Assoc.,Tillamook, Ore.

Frenchman Valley FarmersCooperative Inc.,Imperial, Neb.

Alabama Farmers Cooperative Inc.,Decatur, Ala.

Farmway Co-op Inc.,Beloit, Kan.

First District Association,Litchfield, Minn.

Watonwan Farm Service Company,Truman, Minn.

Tree Top Inc.,Selah, Wash.

Meadowland Farmers Cooperative, Lamberton, Minn.

Mid-Kansas Cooperative Assoc.Moundridge, Kan.

Key Cooperative,Roland, Iowa

Swiss Valley Farms Cooperative,Davenport, Iowa

River Valley Cooperative,Eldridge, Iowa

Western Consolidated Cooperatives,Holloway, Minn.

Harvest Land Co-op,Richmond, Ind.

Ray-Carroll County Grain Growers Inc.,Richmond, Mo.

Sun-Maid Growers of California,Kingsburg, Calif.

Sunsweet Growers Inc.,Yuba City, Calif.

Westland Co-op Inc.,Crawfordsville, Ind.

Premier Cooperative Inc.,Champaign, Ill.


Dairy


Grain

Supply

Dairy


Fruit & Vegetable


Grain


Dairy




Grain

Fruit & Vegetable

Fruit & Vegetable

Supply

Grain

2009REVENUE

2010ASSETS

2009REVENUE

2010REVENUE

TYPE

$ millions

62

63

64

65

66

67

68

69

71

72

73

74

75

77

78

79

80

81

82

83

72

66

46

65

100

73

53

69

55

58

96

60

67

71

75

94

78

89

70

99

432

426

419

415

412

391

388

365

357

356

350

347

346

343

342

332

323

315

314

308

341

386

545

401

125

327

506

359

504

469

231

441

384

344

322

243

310

293

353

137

151

264

153

198

134

87

92

277

129

154

110

115

84

201

134

90

168

195

121

99

103

242

161

200

69

71

109

292

121

125

57

106

103

175

146

67

175

174

130

31


2010RANK

2009RANK


NAME

Frontier Ag, Inc.,Oakley, Kan.

Landmark Services Cooperative,Cottage Grove, Wis.

Universal Cooperatives Inc.,Eagan, Minn.

Saint Albans Cooperative Creamery Inc., Saint Albans, Vt.

Pro Cooperative,Pocahontas, Iowa

Ag Valley Cooperative Non-Stock, Edison, Neb.

Prairie Land Cooperative,Hubbard, Iowa

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

Security Milk Producers Association, Chino, Calif.

Knouse Foods Cooperative Inc.,Peach Glen, Pa.

Gold-Eagle Cooperative,Goldfield, Iowa

Effingham Equity,Effingham, Ill.

Hopkinsville Elevator Company Inc., Hopkinsville, Ky.

First Cooperative Association,Cherokee, Iowa

Grain


Supply

Dairy


Grain

Grain


Dairy

Fruit & Vegetable


Supply Grain


2009ASSETS

2010ASSETS

2009REVENUE

2010REVENUE

TYPE

$ millions

84

85

87

88

89

90

91

93

94

95

96

97

98

99

79

85

80

98

81

63

77

83

93

84

76

95

88

74

300

295

293

293

289

289

289

285

283

281

281

278

277

276

309

295

308

215

303

416

315

302

244

298

322

243

293

324

123

155

129

31

91

126

134

103

27

176

92

150

110

96

106

113

134

24

91

115

94

76

23

173

65

134

100

81

Table 2 — Criteria used for sorting co-ops by segmentType of cooperative

Supply Mixed

Grain Dairy

Sugar Fruit and Vegetable

Other

Cooperative definedDerive at least 75 percent of their total revenues from farm supply sales .Derive between 25 percent the 75 percent of total revenues from farm supply sales and the remainder from marketing.

Derive at least 75 percent of their total revenues from grain marketing.Market their members’ raw milk, while some also manufacture products, such as cheese and ice cream.Refine sugar beets and cane into sugar and market sugar and related byproducts.Generally further process fruits or vegetables and market those products, rather than market raw products.This segment includes cooperatives that market livestock, rice, cotton and nuts.


Co-ops of all types benefitfrom USDA’s value-added grants

By Stephen Thompson,Assistant Editor

n today’scompetitiveagriculturalmarkets,adding value

to agricultural productsbefore selling them offersproducers a way off of the“commodity-price treadmill.”The problem, more oftenthan not, is obtaining thecapital needed to furtherprocess and differentiate afarm product.

USDA Rural Developmentoffers rural businesses,including cooperatives, helpin moving beyond commodityproduction through its Value-Added Producers Grant(VAPG) program. VAPG is amatching grant program(recipients must put up anamount of money equal to theamount of the VAPG) thatcan provide a substantialboost to co-ops and otherrural businesses, regardless ofsize. Qualifying entities canobtain up to $300,000 toincrease the consumer value

of their agriculturalcommodities in theproduction or processingstages (they cannot be used toraise crops or livestock). Theprogram not only helps co-ops that are new to the value-added sphere, it also helpswell-established value-addedco-ops develop new productsor open new markets.

“These projects willprovide financial returns andhelp create jobs foragricultural producers,businesses and families acrossthe country,” DeputyAgriculture SecretaryKathleen Merrigan said whenannouncing the 2012 VAPGrecipients Feb. 3 at theLocal/Regional Food SystemConference in Chicago.

Out of 298 totalVAPG recipients, 26 werecooperatives. They rangedfrom large grower co-ops thatmarket internationally, such asBlue Diamond Growers(almonds) and SunsweetGrowers (dried fruits, plumsand juices), to small co-opsserving local food markets.The awards to co-ops ranged

I

Sunsweet is using its VAPG funds to increasesales of diced dried plums (seen here in a

retail container) to the industrial foods market.“Without USDA’s support, this project would

have been difficult to fund,” says JeffMcLemore, the co-op’s marketing director.


from a low of $17,865 for theWisconsin Sheep DairyCooperative to study thefeasibility of renovating theco-op’s creamery, to themaximum $300,000 forPacific Coast Producers.

“Curd Capital” co-op wins VAPG

Ellsworth CooperativeCreamery, in Ellsworth, Wis.— the “Cheese Curd Capitalof Wisconsin” — is one ofthe recent VAPG recipients.With 495 producer-membersin Wisconsin and Minnesota,the creamery processes about1.7 million pounds of milkdaily. Founded in 1908, theco-op has carved out a placefor itself on regionalsupermarket shelves with itsleading consumer product:top-quality white cheddarcheese curds, a regionaldelicacy in the UpperMidwest and Canada.

While the co-op does produce someprivate-label goods, the majority of itsproducts are sold under its ownEllsworth brand.

Ellsworth cheese curds are offered infive flavors, including: Original, Garlicand Cajun. Careful processing results ina product that has a “cleaner taste,”according to Paul Bauer, the co-op’sCEO. The curds don’t clump togetherin the bag, giving them a kind of“popcorn” appearance that appeals tocustomers.

The major marketing challengefacing the co-op is that cheese curdsjust aren’t very popular outsideWisconsin, Minnesota and parts ofCanada. Looking to expand its market,the cooperative saw an opportunity inthe smaller Blaser Creamery, about 60miles to the north of Ellsworth, whichbegan life as the Comstock Cooperativein 1901. It went “private” about 75years ago.

Blaser developed a line of high-quality cheeses and cheese spreads,including specialty cheeses, such asasiago and flavored Muenster, Colby,Cheddar and Jack cheeses. Ellsworthwas already supplying milk to thesmaller firm and, like Ellsworth, BlaserCreamery had established a goodmarket for its products in nearbycommunities, especially in theMinneapolis-St. Paul metropolitan area.

Together the two product linesoffered a broader selection of high-quality products that was less limitedgeographically in appeal.

“It’s a good fit,” Bauer says. “Theymake some beautiful artisan cheeses,and they had good sales. But they werea small operation and needed somemore financial ‘oomph’ to get bettermarket exposure.”

Ellsworth bought Blaser in June2011, and officially renamed itComstock Creamery, while keeping thewell-regarded Blaser Premium Cheesesbrand. Bauer says the proximity of some

of Ellsworth’s members toBlaser means that some of itscollection trucks can maketheir first daily deliveriesdirectly to the smallerfacility.

“Now we need to get ourproducts known to thebuyers,” he says. That meanssales trips and demonstra-tions to potential wholesalebuyers, such as supermarketchains, and marketingcampaigns to establish theco-op’s brands with thepublic. That’s where the$300,000 Value-AddedProducers Grant fromUSDA Rural Developmentcomes in. The cooperativewill use the funds to expandits market penetration.

“We want to use the salesforces of both firms,” saysBauer, who sees good salespossibilities on the EastCoast. “We’ve even sent

samples to China,” he says.

Dakota Pride looks to expand Asian market

A few hundred miles to the west,another cooperative is using VAPGfunds to expand into foreign markets.Like Ellsworth, Dakota Pride, inJamestown, N.D., is a 200-membermarketing co-op that seeks to add valueto its growers’ crops by achieving ahigh-quality, differentiated product.

The cooperative sells identity-preserved commodities: grain andoilseeds that meet stringentspecifications tailored to the needs ofeach buyer. Participating growers usehigh-quality seed supplied by thecooperative, planted and raisedaccording to strict requirementsdesigned to eliminate cross-contamination and assure a high-quality, identity-preserved product.

The processing, packaging andshipping are handled by the cooperative

Ellsworth Creamery cheese curds and fruit make for a tasty, healthfullunch, as these co-op producer-members can attest.


to ensure that quality remains “up tospec.” The result is a top-qualityproduct that offers better value to thecustomer and a premium price to thegrower.

There are inviting markets for suchproducts in Asia. South Koreanconsumers in particular use largequantities of high-quality soybeans, butthey demand that the soybeans beguaranteed to be non-genetically-modified. Dakota Pride already sellssoybeans in Asia, but wants to breakinto the highly lucrative South Koreanmarket. A $49,000 VAPG, plus thematching funds supplied by the

cooperative, will be used to carry outmarketing studies and campaigns toestablish trading links in that country.

Grant helping aquaculture co-op

A much smaller cooperative inVirginia faces a different problem: moredemand than it can meet. VirginiaAqua-Farmers Network LLC, ofFarmville, is part of the growing localfoods movement. It has 19 members insoutheastern Virginia raising rainbowtrout, striped bass hybrids, catfish, andfreshwater prawns.

The cooperative was started as theresult of a working group formed in2006 by the Virginia AquacultureAssociation and Virginia State

University in Ettrick, Va. With the helpof a VAPG, the working group carriedout a feasibility study and set up themeeting at which the cooperative wasformed in May 2007.

The co-op sells its products througha wholly-owned subsidiary, the VirginiaNatural Fish Co. It receives technicalsupport from Virginia State University(VSU) and the Virginia Tech Coopera-tive Extension service. It also serves as apurchasing co-op for fingerlings andother supplies. Co-op members helpeach other with large jobs such asstocking, harvesting, transport, etc.

The fish and prawns are harvested,

cleaned and frozen, then soldthroughout the year at farmers marketsand through subscription services. Theco-op now sells at markets inWilliamsburg, Lynchburg, Appomattoxand Charlottesville, home of theUniversity of Virginia, where studentshave set up a Community SupportedFishery to bring aquaculture producersand customers together.

Restaurants are another market thecooperative began supplying recentlyon a small scale. One of the co-op’sselling points is that its producers arecommitted to sustainable productionand don’t use pesticides or herbicidesaround the ponds and don’t use growthhormones or antibiotics.

“We’ve got a good, healthy product,”

says Cathy Belcher, the co-op’smarketing manager. “But we’restretched pretty thin.”

Part of the problem is the lack ofcentralized processing and storagefacilities. Trout are processed at VSU, a90-minute drive away, while other fishare handled at the Prince EdwardCounty Cannery, a small public facilityin Farmville. The prawns are cleanedand frozen at a seafood processor inHampton, Va., 145 miles away.

The VAPG of $300,000 andmatching funds will be used to supporta production manager’s position, buildthe brand and expand production andmarkets — hopefully building thecapital for a centralized processing andstorage facility.

Wide variety of uses allowedThe purpose of the Value-Added

Producer Grant program is to helpagricultural producers improve thevalue of their products throughprocessing and/or marketing. Grantscan be used for feasibility studies,developing business plans, workingcapital and for farm-based renewableenergy products.

Planning grants are available for upto $100,000; working capital grants forup to $300,000. The grants are limitedto 50 percent of project costs. The restof the funds must be matched by therecipient or other donors.

Eligible applicants includeindependent producers, agriculturalcooperatives, producer groups andmajority-controlled producer-basedbusiness ventures. However,cooperatives are given preference inscoring the applications. Moreinformation is available from USDARural Development State Offices,which can be found at the followingWeb address: http://www.rurdev.usda.gov/StateOfficeAddresses.html.

A list of all the co-ops that receivedVAPG funding in February is on page29. To see the complete list ofrecipients, visit the Newsroom (Feb. 3press release) at: www.rurdev.usda.gov.n

Leland “Judge” Barth (far right), executive director of the Dakota Pride Cooperative, leads a tourof co-op facilities for some visitors. The co-op is using its grant to expand marketing efforts for itsidentity-preserved grains and oilseeds. Facing page: the fish ponds of a member of the VirginiaAqua-Farmers Network.


1 Pacific Coast Producers Lodi, Calif.; $300,000; Formarketing effort aimed at attracting younger demographicto canned fruit and tomato paste products.

2. Blue Diamond Growers Sacramento, Calif.; $300,000; Forintroducing a line of flavored snack almonds specificallyformulated for French consumers.

3. Sunsweet Growers Yuba City, Calif.; $300,000; Formarketing diced, dried plums in industrial and food servicechannels.

4. Sweetgrass Cooperative Hillside, Colo.; $226,000; Todevelop web-based marketing for co-op’s grass-fed beefproducts.

5. Flint River Farmers Cooperative Newton, Ga.; $300,000; Forvegetable processing facility.

6. Hawaii Cattle Producers Cooperative Assoc. Kamuela,Hawaii; $58,180; To expand marketing by hiring marketingstaff and creating retail point-of-sale materials to increasedemand for locally raised cattle products.

7. Idaho’s Bounty Ketchum, Idaho; $58,160; For marketingefforts for wide variety of locally produced foods.

8. Michigan Sugar Company Bay City, Mich.; $300,000; Foreffort to expand markets for co-op’s powdered and brownsugar in consumer-direct polybag packages.

9. Clearbrook Elevator Assoc. Clearbrook, Minn.; $300,000;For a soybean extruder that adds value to co-op’s organicsoybeans.

10. Soy Inc. Jefferson City, Mo.; $100,000; For economicplanning for export of soy protein to Thailand.

11. Show Me Energy Cooperative, LLC Centerview, Mo.;$100,000; For feasibility study for construction of abiomass powerplant that will turn native grasses intoelectrical power.

12. Indian Springs Farmers Assoc., AAL Petal, Miss.; $24,999;For developing watermelon juice products.

13. Dakota Pride Cooperative Jamestown, N.D.; $49,000; Forexpanding market reach for identity-preserved, non-GMOsoybeans in South Korea.

14. Bowdon Meat Processing Bowdon, N.D.; $49,500; Foroperating a meat processing plant and marketing value-added product.

15. Landisville Produce Cooperative Assoc. Landisville, N.J.;$49,975; For starting small-lot delivery service forpackaged/branded fruits and vegetables; acquisition ofcredit card readers; and for local product promotion andfood safety training for members.

16. New York Beef Farmer’s Cooperative Canostata, N.Y.;$36,500; For a marketing plan for the co-op’s proposedvalue-added beef and pork products, to be sold locallyunder the Side Hill Products brand.

17. Growers Cooperative Grape Juice Co. Inc.Westfield,N.Y.; $45,000; For collaborating with the newly openedGrape Discovery Center to increase sales of co-op’s newlocal retail product lines.

18. Mercer Landmark-Louis McIntire Celina, Ohio; $39,800;For feasibility study of three new soybean product lines.

19. Endless Mountains Farm Fresh Cooperative Hop Bottom,Pa.; $37,450; For feasibility study for expanding the co-op’s market for local farm products into two nearby cities.

20. Virginia Wineries Association Cooperative Richmond,Va.; $100,000; For expanding the customer base forVirginia wines.

21. Virginia Aqua-Farmers Network LLC Farmville, Va.;$300,000; For product expansion into an emerging marketin Virginia for local fish and prawn.

22. Wisconsin Sheep Dairy Cooperative Strum, Wis.; $17,865;For economic planning to determine the technical andeconomic feasibility of the co-op’s creamery renovationproject.

23. Wisconsin Cranberry CooperativeWisconisn Rapids,Wis.; $300,000; For value-added pocessing and marketingof cranberry products in East Europe and China.

24. Community Farmers’ Co-Op (AKA CFC) Osceola, Wis.;$200,000; For value-added processing to package and jarco-op’s tomatoes, cabbage, cucumbers and beans.

25. Ellsworth Cooperative Creamery Ellsworth, Wis.;$300,000; For marketing campaign and to purchaseinventory for cheese products.

26. Westby CooperativeWestby, Wis.; $300,000; For value-added processing and marketing of cheeses. n

USDA Value-Added Producer Grants Awarded to Farmer Cooperatives

Editor’s note: This article is providedcourtesy West Central Cooperative, Ralston,Iowa. The “Co-ops & Community” pagespotlights the efforts of co-op members andemployees who fulfill the co-op mission of“commitment to community.” Regardless ofwhether these efforts make a co-op’s home-town a better place to live, or — as in thiscase — help to feed people on the other sideof the world, co-op people are reaching outto make a difference. If you know of a co-opmember or employee whose efforts deserve tobe recognized on this page, please contact:[email protected]. Reprintarticles from co-op publications are welcome.

armers in the WestAfrican nation ofSenegal face severedisadvantages,including an arid

climate that is not ideal for most crops,lack of transportation infrastructure toreach markets and a lack of access toinvestment capital. Undaunted, they aredetermined to succeed despite these andother formidable obstacles.

Sarah Dorman, communicationsmanager for West Central Cooperative— an Iowa grain marketing, soybeanprocessing and farm supply co-op —recently completed an assignment as aFarmer-to-Farmer program volunteerin Senegal, where she helped farmersdevelop new marketing skills. Shereturned home impressed by the spiritand resourcefulness of the subsistence-level farmers she worked with, whomanage to do so much with so little.

Nation struggles to end hungerSenegal is located on the western tip

of Africa and is currently classified as“serious” on the Global Hunger Indexof the International Food Policy

Research Institute. Plagued by chronicfood insecurity, Senegal imports 70percent of its food. Current foodproduction cannot keep pace withdemand from a growing population,and rising food prices limit the abilityfor the Senegalese people to havediverse and healthy diets.

It took four days for Dorman totravel from her home in Carroll, Iowa,to Bakel, Senegal. There, sheimmediately went to work on a

marketing assignment with the BakelHorticulture Producers Union(BAKHPU).

“BAKHPU is essentially acooperative, with about 315 producefarmers in the Bakel region of Sengal,near the border of Mauritania andMali,” explains Dorman. She wasinitially told that the farmers in the areagrew onions and hot peppers. But afterarriving in Senegal, Dorman found thatwhile most farmers did grow these two

Co-ops & Community


Iowan shares skills with African farmers

F

“These farmers are feeding their families and trying to make a living on what they can grow on afarm that’s about half the size of a football field,” says Sarah Dorman, explaining the challenge ofhelping farmers in Senegal improve their marketing efforts. Facing page, a farmer slices eggplant(no longer good for human consumption), which will be packaged in baggies and sold as goatfood. Photos courtesy Sarah Dorman.

crops, there were also a wide variety ofother fruits and vegetables beingproduced.

“The important thing to keep inmind, though, is that this isn’t Iowaagriculture, or even U.S. agriculture forthat matter,” Dorman says. “Thesefarmers are feeding their families andtrying to make a living on what theycan grow on a farm that’s about the sizeof half of a football field, and in an areathat had only two days of rain last year.”

NCBA oversees program The Farmer-to-Farmer (FTF)

program is operated by the NationalCooperative Business Association’s(NCBA) CLUSA InternationalProgram. FTF provides short-termvolunteers who provide technicalassistance to farmers, farm groups andagribusinesses. Through this USAID-funded program, volunteers provideassistance and training in processing,production and marketing to targetedpopulations.

FTF’s goal is to improve the valuechains that impact food security,increase household revenue and providefarmers with cash to purchase food.NCBA’s CLUSA International Programcurrently has project offices in 10countries on three continents.

“Originally, I was asked by FTFin the spring of 2011 to work withfarmers in Niger, but that trip waslater cancelled. When I got thesecond call to work in Senegalwith produce farmers, I wasexcited about the opportunity toparticipate in this program,”recalls Dorman.

Although asked to volunteer,Dorman still had to apply to theprogram and be accepted by bothNCBA organizers in Washington,D.C., as well as by USAIDemployees in Senegal. Once herapplication was approved, Dorman wasassigned to work as a marketingvolunteer, based on her education andprofessional experience.

In a marketing assignment,volunteers work directly withorganizations and farmers to develop

improved marketing techniques fortheir crops. Other FTF volunteers workin the areas of production, processingand cooperative development.

Covering large territoryDorman spent 11 days in the area

meeting with farmers each day.Traveling with an interpreter/projectcoordinator and a driver, the trio wouldtravel up to 40 miles daily in anydirection from Bakel to meet withfarmers and offer marketing training.

“The response from the farmers wasgreat,” Dorman says. “Taking the timeto travel and meet with me was a lot toask of these farmers when it’s all theycan do to keep their farms going. Wehad in-depth conversations during thetraining sessions.” The farmers askedmany pointed questions that showedtheir grasp of the marketing challengesthey face.

“I enjoyed working with them andwill be excited to see the results they’reable to achieve as an outcome of ourwork there,” says Dorman.

“Translating from English to Frenchand then into tribal languages was a bitdaunting, and for a minute you’dwonder if what you were saying wasreally going to be understood,” she says.

“But then the farmers would fire backexacting questions regarding the topic,and you knew the language barrier hadbeen broken.”

During the training sessions shefocused on five key areas:• Understanding supply and demand;

• Storage and processing techniques;• The need for diversification of

products;• Budgeting and cost control

fundamentals, and• Wholesale contracting.

Follow-up plan compiledBefore leaving Senegal, Dorman met

with in-country USAID officials todiscuss her assignment, hoped-foroutcomes and to put together a follow-up plan for local administrators tocontinue the work she’d started. Afterreturning to the United States, Dormanwrote an action report detailing howU.S. officials can do follow-up workwith BAKHPU. The report wassubmitted to the NCBA/CLUSA officein Washington, D.C.

“Knowing that the work you’redoing will be implemented and thatfollow-up will be done after you’ve leftthe country to ensure success makesyou feel confident that your time andeffort was well spent,” notes Dorman.She was one of three FTF volunteers towork with the BAKHPU organization.The first volunteer arrived inSeptember 2011 to work with the groupon pest management and production. Asecond volunteer was with the group in

October and focused onorganizational and cooperativedevelopment, and Dorman arrivedin November.

As a volunteer, her tripexpenses were covered by USAIDwhile West Central Cooperativeprovided Dorman with the timeaway from her position toparticipate in the program.

“What’s great about the FTFprogram is that you know USAIDwill follow through. You know thework you’re doing will haveconsequence. Just a week or soago, I received a progress report

from Abibou, the in-country contact,and Eric Wallace with NCBA in D.C.There’s still a connection there.”

For more information about theFarmer-to-Farmer program, visit:www.usaid.gov/index.html. n



Carolyn B. Liebrand, Ag EconomistCooperative ProgramsUSDA Rural Developmente-mail: [email protected]

s the 21st century began, cooperativescontinued to be the marketing organizationsof choice for most dairy farmers. Helping tosustain this standing, dairy farmers madeadjustments in their marketing organizations

through new formations, mergers and even dissolutions overthe past decade. These actions positioned dairy farmers withorganizations better able to serve their marketing needs.

Between 2000 and 2010, 23 new dairy cooperatives were

formed. Conversely, 30 dairy cooperatives merged withanother dairy co-op, while 49 dissolved. Another fourcooperatives stopped handling producer milk (table 1). As aresult, the number of U.S. dairy cooperatives shrank by 60cooperatives from 2000-2010.

The South Atlantic region of the United States was theonly region where there was a net increase in the number ofdairy cooperatives. The North Atlantic had the largest netdecline in dairy co-ops. However, the North Atlantic had thelargest number of cooperatives in both 2000 and 2010.

Despite the decline in co-op numbers, dairy cooperativeproducer-members continue to market a large majority of thenation’s milk supply — about 82 percent of total production(as measured in 2002 and 2007). The cooperative model

A

Dairy co-opsin the 21st century:the first decade


employed by U.S. milk producers is not uniform; rather,cooperatives range in size (as measured by the amount ofmilk the cooperatives handle) and have varied operations (theactivities they undertake to market member milk).

New co-ops formedDuring the past decade, every region of the nation (except

the South Central region) saw one or more new dairycooperatives form to operate at the first-handler level,seeking to secure the most profitable outlets for theirmembers’ milk and provide producers a say in the market.These 17 new cooperatives may negotiate prices and terms oftrade, as well as secure a buyer(s) for members’ milk. Butthese co-ops usually didn’t own plants.

Dairy cooperatives that operate in this manner arereferred to as “bargaining-only” cooperatives because theygenerally do minimal, or no, further processing of themembers’ bulk, raw milk. The new bargaining-onlycooperatives were medium-sized (10 cooperatives handledbetween 1 billion and 50 billion pounds of milk annually) orsmall (seven of these new co-ops handled less than 50 millionpounds of milk annually).

In addition to the 17 new bargaining-only cooperatives,five new dairy cooperatives began operations during the pastdecade to make and/or market specialty or niche dairyproducts. These new “niche marketing” cooperatives were all

small. Three of the five new niche marketing cooperativeswere headquartered in Wisconsin. Several were formed byAmish dairy farmers. They emphasize the unique milkproduction characteristics of their members, such as grass-fed, organic and/or local, to market the milk and milkproducts.

Finally, there was one new large (handling more than 1billion pounds of milk annually) “diversified” cooperative inthe North Atlantic region. It was created through the mergerof several dairy cooperatives.

Cooperatives that make a variety of dairy products in anumber of plants, in addition to selling bulk/raw milk toother dairy firms, are referred to as diversified cooperatives.

Cooperatives mergedTo address changes in their marketing environments, 30

dairy cooperatives merged into other cooperatives during the2000-10 period. Co-ops that merged were headquartered inevery region except the South Atlantic. Further, bothbargaining-only and cooperatives with manufacturing and/orprocessing operations merged with other cooperatives.However, no niche marketing co-ops merged with anotherco-op during this decade.

One-half of the cooperatives that merged were smallbargaining-only co-ops in the North Atlantic region (15cooperatives). Seven of the other nine bargaining-only co-ops

Diversified 14 3 1 0 4 1 5 1 12 13 22 8

Fluid processing 4 1 2 0 3 0 3 0 2 2 3 -1

Niche marketing 23 0 8 0 8 5 13 5 4 9 19 -4

Hard-product manufacturing

and Bargaining-balancing 14 2 2 0 4 10 14 0 0 0 0 -14

Manufacturing/ processing, total 55 6 13 0 19 n/a n/a 6 n/a n/a 44 -11

Bargaining only 156 24 36 4 64 7 71 17 5 22 107 -49

Total 211 30 49 4 83 23 n/a 23 23 n/a 151 -60

Note:Mode of operation was determined from the marketing operations survey data of 1997, 2002 and/or 2007.1 Cooperatives that merged with another cooperative and were not the surviving entity.2 Cooperatives that were sold, dissolved, etc.3 Cooperatives no longer handling member milk4 Includes cooperatives formed by merger of existing cooperatives when the new entity operated under a new name.

2000CO-OPSOperating Mode MERGED1

Table 1—Dairy cooperative changes, 2000-10

DIS-

SOLVED2

NOLONGER

DAIRY3TOTALEXITS

MODECHANGESFROM

EXITS PLUSMODE

CHANGES ENTRIES4

MODECHANGES

TOTOTAL

ADDITIONS2010CO-OPS

NETCHANGE2000-10

Number of dairy cooperatives


that merged were medium-sized and headquartered in four ofthe six U.S. geographic regions (North Atlantic, West NorthCentral, South Central and Western regions).

Six manufacturing/processing cooperatives merged withother larger manufacturing/processing cooperatives during2000-10. All but one were all medium-sized prior to theirmergers and headquartered in the North Atlantic, WestNorth Central and Western regions.

Changed operationsWhile cooperatives must continually modernize and make

adjustments in their operations to meet changes in themarket environment, 23 significantly changed the nature oftheir operations between 2000 and 2010. Certain modes ofoperation that were successful in previous decades gave wayto alternative operating types.

For example, the cost of inefficient plant utilization led“bargaining-balancing” cooperatives to merge with other co-ops, alter their operations or dissolve. Bargaining-balancingcooperatives are dairy cooperatives that operate at the firsthandler level and bargain for their producer-members; theyalso have plants that manufacture commodity dairy products(butter, powder or cheese) for “last-resort” balancing ofsurplus milk volume.

Five of the former bargaining-balancing cooperatives

broadened their product lines to operate as diversified dairycooperatives. Conversely, three of the bargaining-balancingcooperatives closed their under-utilized plants and continuedas bargaining-only cooperatives.

(Regardless of the disappearance of bargaining-balancingcooperatives, dairy cooperatives continue to provide abalancing function in milk markets. The balancing functionnow is mostly provided by the diversified cooperatives thatdirect varying volumes of milk through their plants toaccommodate the ebb and flow of milk production anddemand.)

Two dairy cooperatives adapted to a changed marketplaceby shifting away from the manufacture of a narrow line ofhard products (butter, powder or cheese). Previously, thesecooperatives used most of their members’ milk in their ownmanufacturing plants to make undifferentiated, commoditydairy products. These cooperatives found it moreadvantageous to diversify their product lines to includeproducts formulated to unique customer specifications.

Further, seven bargaining-only cooperatives addedmanufacturing/processing operations during 2000-10 tobecome diversified, fluid processing or niche marketing

cooperatives. Conversely, two niche marketing co-ops ceasedplant operations and continued on with bargaining-onlyoperations during the decade.

Three other niche marketing cooperatives broadened theiroperations, becoming diversified cooperatives. Finally, onediversified cooperative became more focused on fluidprocessing operations.

Cooperative dissolutionsThe 2000-10 decade saw 49 dairy cooperatives dissolve.

Nearly three out of four were bargaining-only cooperatives. Most of the manufacturing/processing cooperatives that

dissolved were niche marketing cooperatives (eight co-ops).In many cases, the members of the dissolved cooperativeswere able to join other dairy cooperatives.

Dairy cooperatives in 2010At the same time that some dairy cooperatives have

changed to adapt to evolving market conditions, others havecontinued operating within a particular marketing mode.This is not to imply that these cooperatives have not madeadjustments to address changes in the marketplace. These co-ops have modernized their plants and equipment, acquiredplants, built new plants, expanded product lines, entered jointventures and/or broadened member services. But these moveshave been made as they continued in the same general modeof operation.

Of the 151 dairy cooperatives operating in 2010, almostthree of every four had been in continuous operation sinceprior to 1992 (table 2). Further, most of these cooperativeshad been operating since well before the 1990s, and at least adozen had been operating for more than 75 years.

Nineteen of the 110 cooperatives that had been operatingsince prior to 1992 changed their operations during 2000-10enough that they were identified as operating under adifferent operational mode than previously. Still, a majorityof the nation’s dairy cooperatives in 2010 had been inoperation since prior to 1992 and had been using the samemode of operation since at least 2000. These 91 cooperativeslikely expanded, altered and adapted their operations over theyears, but they remained identified with the same mode ofoperation.

Further, a majority of each of the operating types had beenin operation since prior to 1992. However, bargaining-onlycooperatives were the only type of dairy cooperative where amajority had focused solely on bargaining functions sinceprior to 1992, not changing to this mode during this pastdecade.

In contrast, only a minority of the manufacturing/processing cooperatives had been operating within the samemode of operation since prior to 1992. Among themanufacturing/processing cooperatives, niche marketingcooperatives were remarkable because they had the lowestproportion of cooperatives that had been in operation sinceat least 1992 but had the largest proportion that had been

Dairy co-op producer-members continueto market a large majority of the nation’s

milk supply — about 82 percentof total production.


niche marketers since at least 1992 (three cooperatives hadniche operations for 100 years or more).

Finally, a majority of dairy cooperatives in every regionexcept the Western region had been in operation since priorto 1992. The West North Central and North Atlantic regionshad the largest proportion of cooperatives that had been inoperation since prior to 1992. In contrast, around one-fourthof the dairy cooperatives in the Western, East North Centraland South Atlantic regions had entered during 2000-10.

Conclusion: dairy cooperatives can be flexible, responsive

Like their dairy-farmer owners, dairy cooperativesdeclined in number even as the amount of milk theymarketed continued to grow. Some co-ops continued tooperate as they had for decades, while others halted theirmanufacturing-processing operations. Other co-ops addedplant operations , and a number of new dairy cooperativesformed in this first decade of the 21st century.

Small cooperatives declined to less than one-half of thenation’s dairy cooperatives, even as a majority of the NorthAtlantic cooperatives continue to be small. Much of the

adjustment in dairy cooperative numbers was in the smallcategory, where a majority went out of business bydissolution.

Bargaining-only cooperatives were perhaps the mostflexible operating type, as evidenced by the numerous co-opentries and exits in this industry sector. This could be due inpart to their having few fixed assets. On the other hand, overone-half of the niche marketing cooperatives in operation in2000 went out of business, or ceased niche marketingoperations, by 2010.

Meanwhile, more than one-fourth of the niche marketingcooperatives operating in 2010 had begun operations duringthe decade.

All this attests to the viability of the cooperative model indairy marketing while at the same time highlighting thatthere is no one ideal mode of dairy cooperative operation.The fact that dairy cooperatives have been able to thriveusing a variety of operating modes and under a broad rangeof economic conditions indicates that dairy cooperatives arelikely to continue as the marketing organizations of choicefor many dairy farmers in the years to come. n

Continuous operation1 110 16 3 12 79

Same mode2 91 6 1 8 76

Percent of 2010 cooperatives

Continuous operation1 73% 73% 100% 63% 74%

Same mode2 60% 27% 33% 42% 71%

Region

Number of cooperatives

Continuous operation1 43 2 24 32 2 7

Percent of 2010 cooperatives

Continuous operation1 78% 50% 69% 84% 67% 44%

1 Cooperatives operating prior to 1992 and in continuous operation through 20102 Cooperatives operating prior to 1992 and in continuous operation through 2010 with operations categorized as the same mode of operation during 2000-10

ALL DIVERSIFIED

Table 2—Dairy cooperatives in 2010 that had been in operation since 1992, by mode of operation, region

FLUIDPROCESSING

NICHEMARKETING

BARGAININGONLY

Number of cooperatives

Mode of operation

NORTHATLANTIC

SOUTHATLANTIC

EAST NORTHCENTRAL

WEST NORTHCENTRAL SOUTH CENTRAL WESTERN

By Lynn Pitman,University of Wisconsin Center forCooperativese-mail: [email protected]

olatility in the globaleconomy and rapidconsolidation in theagribusiness marketsare placing

unprecedented demands on farmercooperatives. How can cooperativesinnovate and grow?

The 14th Annual FarmerCooperatives Conference, held inMinneapolis in November, provided aforum for cooperative leaders to assess

their business environment and discussnew strategies to meet the needs oftheir members.

Terry Barr, senior director ofindustry research for CoBank, kickedoff the conference with a review oftrends in the global marketplace. Thebalance between emerging andadvanced economies will continue tochange as the emerging economiesdrive the demand and economic growthof the future, he said.

This trend is benefiting theagribusiness sector, which isincreasingly becoming more export-dependent. Significantly lower levels ofliquidity in the global credit markets,

along with continued volatility andgeopolitical and economic uncertainty,is expected. Agriculture continues itsstrong performance, Barr said, but willneed to explore new marketingarrangements to manage the risk that isbeing passed up and down the supplychain.

As populations increase, foodsovereignty concerns are driving foreigneconomies to seek more control overtheir food supplies. Many countries arenow active international agriculturalinvestors, purchasing land and makinginvestments across the globe.

Private equity funds have alsoentered the market. Mark Palmquist,


V

Speakers, including Bob Fifield of Cooperative Producers Inc.,reviewed marketplace trends that are impacting co-ops

during the 14th annual Farmer Cooperative Conference in Minneapolis.

Co-ops respond to consolidation, global volatility


CHS executive vice president and chiefoperating office for Ag Business,described how the cooperative isresponding to this focus on assetacquisition that is driving pricesskyward. The CHS system strategy, heexplained, builds on a strongcooperative system domestically and isgrowing its global origination footprint.

Palmquist noted that the cooperativefarmer ownership structure providesCHS a competitive advantage, and helooked forward to continued growthopportunities.

Consolidation has local and regional impact

As agribusiness operationsconsolidate to maintain competitiveadvantage, there are impacts forcooperatives at the local and regionallevel. The general managers of threelocal and regional cooperativesdescribed how their cooperatives haveadjusted to meet the changingmarketplace.

Jeff Nielsen of United FarmersCooperative (UFC) in Minnesotaemphasized that strong earnings arenecessary to invest in the infrastructureneeded to compete globally and toallow the co-op to maintain andimprove its member equity revolvementprogram. Partnerships have allowedUFC to be part of the globalmarketplace but keep production andcapital local.

Frontier FS Cooperative inWisconsin merged into Growmark in2010. Sam Skemp described some ofthe advantages and challenges posed bythis significant structural change.

He noted the need to attract andretain high-caliber employees who arenecessary to provide the service qualityits customers expect. To help meetsome of these challenges, Frontier hasinstituted better employee benefits anda new equity payout system with ahigher cash/stock ratio.

Sunrise Ag in Illinois is a diversifiedco-op with agronomy, grain, trans-portation, energy and retail divisions. Ithas also pursued joint ventures and isparticipating in an LLC to strengthen

its competitive position vs. largeragribusinesses. Rich Vanderpooldescribed how this diversification hasbeen complemented by a successfulproducer-finance program, which helpsdifferentiate Sunrise Ag from othercompetitors.

Flexible financial structuresConference speakers also addressed

topics related to the flexible financialstrategies that are necessary forcooperatives to pursue competitivelydriven structural options. MikeHechtner, CoBank Central Regionpresident/Rural Agribusiness Group,provided an overview of the currentbanking environment. CoBank has beenable to respond to commodity volatilityby tailoring its loan programs to thecapitalization and profitability levelswithin each company.

Co-ops will need to keep their focuson working capital levels to meet bankrequirements, but also should considerfinancing strategies that take advantageof historic low interest rates, Hechtnersaid. Counterparty risk continues to bean issue for lenders. He called for co-ops to “make some (and) save some”during these strong economic times inagriculture.

David Barton, professor emeritus,Kansas State University, drilled downinto the topic of income distributionand equity management strategies,drawing on co-op and business financetheory and practices. He describedinnovative practices that impactprofitability, income distribution, assetand balance sheet management, andpatron equity investment.

In acknowledging the trade-offs thatinevitably must be made, Bartonreminded co-ops that while they shouldnot let “perfect” be the enemy of“good,” neither should “good enough”interfere with “continuousimprovement.”

Tax, equity issues The impact of tax and accounting

issues on financial strategies wasexamined by Teree Castanias, CPA. Sheprovided a recap of Section 199 of the

IRS Tax Code, which relates tomanufacturing activity for productsmade in the United States, and thechoices about patronage dividendmanagement that cooperatives shouldconsider when using this deduction.

Both Barton and Castanias workedwith Bob Fifield, CEO of CooperativeProducers Inc., to develop a new equityrevolvement plan after the 2007 mergerbetween Heartland and Midland. Fifielddescribed how balance sheet manage-ment and use of capital drove patronageequity rules. Section 199 considerationsalso affected patron allocationstrategies.

Another view of equity managementwas provided by Tom Houser ofCoBank, who described howcooperative equity in the bank wasdependent on how much the co-opborrowed. CoBank has used non-qualified allocations to its members,with no intent to retire it, as a result ofregulatory considerations. Especially inthe Midwest, there has been an increasein the use of non-qualified allocationsby cooperatives, but with an intent torevolve it.

Cooperatives also need tocontinually adapt their riskmanagement strategies to respond to avolatile global marketplace that isdriving risk down the supply chain.Tom Neher, vice president forAgriBusiness at AgStar FinancialServices in Minnesota, described theshift from trading based on marketpredictions to a margin managementapproach based on cost of productionand financial goals.

Steve Watrin of Land O’Lakesdiscussed hedging practices within alarger risk management strategy forproducers and the information,communication and tracking systemsthat are needed to make them aneffective tool.

The 15th Annual FarmerCooperatives Conference will return toMinneapolis on November 8-9, 2012.Visit www.uwcc.wisc.edu for conferenceupdates as they occur. n


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

Co-op developments, coast to coast

Land O’ Lakes sets sales record Land O’Lakes achieved record net

sales and had its second-highest netearnings in 2011, co-op leaders told1,000 delegates and visitors at the dairyfoods and farm supply co-op’s 91stannual meeting, held in Minneapolis inFebruary.

President and CEO Chris Policinskisaid 2011 financial highlights included: • Net sales of $12.8 billion, up from

$11.1 billion in 2010, with record-high sales in the Dairy Foods, Feedand Crop Inputs divisions;

• Net earnings of $182 million, up from$178 million in 2010;

• $108 million in cash was returned tomembers, the third consecutive yearin which cash returned exceeded $100million. “Our 2011 results represent positive

performance and ongoing businessgrowth in what continues to be anuncertain economy and volatilemarketplace,” Policinski said. “Despitethese challenges, over the past threeyears, Land O’Lakes has achieved ourtop three years, in terms of net earningsand cash returned to members, and twoof our top three years for net salestotals.”

Land O’Lakes is positioned tocapitalize on the opportunity created bya growing global population, projectedto expand from about 7 billion peopletoday to more than 9 billion by 2050.“Opportunity attracts competition, andwe expect competition — bothdomestic and global — to beaggressive,” he said. “However, weremain focused on delivering a level ofperformance and strategic growth thatenables us to compete and win,generating enhanced value for members

and customers.” Policinski added that Land O’Lakes’

growth initiatives will focus on branded,value-added market segments; high-potential multi-national customers;emerging global markets; andinnovation and insights that helpproducer-members and member-cooperatives grow their businesses.

Federated Co-op tops Canadian co-op list

Canada’s Rural and CooperativeSecretariat has reported that thenation’s top 50 non-financial co-opsgrew in members, revenue and assets in2010. Federated Co-operatives Ltd.(FCL) was the top Canadian non-financial cooperative (based on revenue)for the tenth consecutive year. The co-op does central wholesaling andmanufacturing and provides admin-istrative services for about 1.5 million

member-owners of about 250 retailcooperatives across western Canada.

FCL’s members include co-op foodstores, pharmacies, clothing stores,general merchandisers, buildingmaterial enterprises, crop and feedsuppliers, gas stations, conveniencestores and travel services. FCL providesaccess to petroleum products via itsrefinery, Consumers’ Co-operativeRefineries Limited (CCRL), andgroceries through a subsidiary, TheGrocery People.

La Coop fédérée ranked second onthe Canadian top 50 co-op list. It isowned by more than 90,000 membersof 103 cooperatives in several Canadianprovinces. La Coop fédérée is involved in animal and cropproduction and grain marketing,hardware and farm machinery, energyand meat processing.

For the first time, a telecommun-ications co-operative — Saskatchewan'sAccess Communications — made theTop 50 list.

The 2010 Annual Survey ofCanadian Cooperatives also shows that:• Top 50 co-op revenue grew 3.4 per-

cent from 2009, to $24.8 billion in2010.

• Top 50 co-op assets grew 6.6 percent,to $11 billion in 2010.

• Top 50 co-ops were owned by 4.9million members in 2010, up 6.7 per-cent from 2009.

• Top 50 co-ops employ 38,700 people,81 percent of whom are full-time.

• Top 50 co-ops returned $640 millionto their members in patronagerefunds in 2010.More information on the top 50

non-financial cooperatives is available athttp://s.coop/7xbe.

Share your co-op news

To have your co-ops newsappear in Newsline, make sureyou are sending press releasesand announcements to:[email protected] of interest include newproducts and services, businessventures, honors, annualfinancial performance, mergers,new board chairs and managers/CEOs, and community serviceefforts, among many othertopics. Photos are also welcome,but should be of print quality(about 300 dots per inch at fourinches wide).


The next generation of co-op leaders is taking time tolearn not only the history of cooperatives, but also whatreally makes them work in today’s economic and socialenvironments.Nearly 100 students from nine states came together

recently in Minneapolis, Minn., to learn aboutcooperatives from co-op experts, employees andmembers of all ages. The students were participants inthe College Conference on Cooperatives, sponsored bythe CHS Foundation and hosted by the National FarmersUnion (NFU) Foundation.

“The conference provided me the opportunity to gaina very broad perspective of youth involvement in the U.S.cooperative moment,” says conference attendee andspeaker Mingwei Huang of Illinois. “I come from astudent housing co-op background – a very small niche ofthe co-op movement. I learned a lot about agriculture,retail, food, rural electric co-ops, credit unions and ruralcommunity economic development.” She agreed with others that to foster a vibrant

generation of co-op leaders, it’s necessary for youth tounderstand all kinds of co-ops, and to learn from leadersin the various cooperative businesses.The three-day event in February included participants

from Minnesota, Wisconsin, South Dakota, Nebraska,North Dakota, Kansas, Iowa, Illinois and Colorado. Manyof the participants are attending a community college,working on a bachelor’s degree or pursing a master’sdegree, for which an understanding of the cooperativebusiness structure is important.

“Don’t limit your learning to your current education,”William Nelson, president of the CHS Foundation, told thestudents on a tour of CHS Inc. headquarters. He

challenged them to “get involved in things that youcannot complete in your own lifetime” as a way to makea difference.The students also visited REI, a sports equipment

consumer cooperative, Mississippi Market Natural FoodsCo-op and 7500 York Cooperative. The latter is aretirement housing cooperative whose residents voicedappreciation for having an active role in their livingenvironment.Presenters included members, directors, employees

and managers from traditional and value-addedagricultural cooperatives, as well as perspectives fromelectric, housing, worker-owned co-ops and consumercooperatives, such as credit unions. Representativesfrom USDA Rural Development and the Peace Corpsprovided perspectives on cooperative development hereand abroad.“Cooperatives are corporations where people work

together to solve common problems, seize excitingbusiness opportunities and provide themselves withgoods and services,” said Greg McKee, assistantprofessor and director of the Quentin Burdick Center forCooperatives on the North Dakota State Universitycampus. “Co-ops are here to stay.”Conference coordinator Cathy Statz, education

director for Wisconsin Farmers Union, says FarmersUnion’s activities involve cooperation, education, andcivic activism. “Our own history is closely tied with thecooperative movement,” says Statz. “Cooperatives weremade possible by legislative activity and brought to life incommunities both rural and urban. Events like thesebring these topics together.” n

Students explore world of co-ops

CoBank earnings rise15 percent; patronagetops $340 million

CoBank’s 2011 earnings and netinterest income reached record highs,and loan quality improved throughoutthe year, the co-op lender reports. Netearnings increased 15 percent, to$706.6 million, and patronage of $340.7million will be paid to members. Netinterest income rose 13 percent, to $1.1billion, up from $950.8 million in 2010.

Average loan volume during 2011was $50.2 billion, up 10 percent from

the prior year. Most of the increaseoccurred in the bank’s Agribusinessoperating segment, where higher pricesfor corn, soybeans and wheat droveincreased seasonal borrowing by manycooperatives and other agriculturalbusinesses. The bank also experiencedhigher average loan volume in its RuralInfrastructure operating segment,largely due to growth in lending torural electric distribution cooperativesthroughout the country.

“Throughout the year, we were ableto effectively meet the borrowing needs

of customers and build the financialstrength of the bank, despite difficultconditions in the financial markets andthe broader U.S. economy,” saysRobert B. Engel, president and chiefexecutive officer.

“In addition, we successfullyexecuted our merger with U.S. AgBank,which expanded our customer base,enhanced the diversification of our loanportfolio and increased our capitalposition.”

Average loan volume increased about1 percent in CoBank’s Strategic


Relationships operating segment, whichincludes the bank’s wholesale loans toaffiliated Farm Credit associations andother Farm Credit System organiza-tions that are primarily focused onproduction agriculture.

“Ironically, the same highercommodity prices that increasedborrowing by cooperatives last yearhelped suppress loan demand fromassociation customers,” Engel says.“Many farmers around the countryexperienced strong profits in 2011 andopted to finance their operations withcash, reducing their need for loans fromassociations. While association lendinggrew only moderately last year, we’repleased that the overall health of theU.S. farm economy remains so strong.”

Total loan volume for the bank atDec. 31, 2011, was $46.3 billion,compared with $50 billion at the end of2010. CoBank will pay $340.7 millionin patronage, including $230.7 millionin cash and $110 million in commonstock, in March. At year-end, 1.25percent of the bank’s loans wereclassified as adverse assets, compared to1.71 percent on Dec. 31, 2010.

In other CoBank news, it iscontributing $2.5 million to support anew center for commodities research atthe University of Colorado (CU). Thenew center will open in 2012 at the CUDenver Business School. The gift overthree years is intended to help establishCU as a global leader in research,education and training in commodities,including agricultural and energycommodities that play an increasinglyvital role in the world economy.

Ocean Spray and PepsiCopursue Latin America markets

Ocean Spray Cranberries Inc. andPepsiCo in January jointly announcedthat they have formed a strategicalliance for Latin America. As part ofthe alliance, PepsiCo will have exclusiverights to manufacture and distribute aportfolio of cranberry- and blueberry-based beverages through its LatinAmerica Beverages division. Thecompanies will share marketingresponsibilities for the products and

collaborate on product innovation.PepsiCo and Ocean Spray began a

business relationship in 2006, whenOcean Spray’s single-serve juices andjuice drinks entered the PepsiCobottling system. As a result of thisrelationship, which uses PepsiCo’smarket leadership and expertise in theconvenience and gas (C&G) channel,

Ocean Spray says it has earned a 5percent share of the C&G single-servejuice market, with volume growing by20 percent in 2011.

“We are eager to continue buildingon our successful partnership withPepsiCo, as it will help us expandconsumer access to Ocean Sprayproducts in important internationalmarkets like Latin America,” StewartGallagher, Ocean Spray’s chiefoperating officer for Global PartnerOperations, says. “We believe this is agreat opportunity to further promoteand deliver the health and nutritionbenefits of the cranberry to consumersin Latin America.”

Frank Bragg to lead FRC Farmers Rice Cooperative (FRC),

Sacramento, Calif., has named Frank G.Bragg III as its new president andCEO. Bragg, who started the new jobJan. 1, succeeds Mike Sandrock, whoretired Dec. 31 after 28 years of servicewith the cooperative.

“We believe we have found anoutstanding individual to lead thiscompany into the future,” says FRCChairman Herb Holzapfel. “Frankbrings a wealth of experience inmanagement with both private andcooperative businesses.”

Bragg previously served as presidentand CEO for MBG Marketing, a NorthAmerican blueberry marketingcooperative of 365 members. Prior tothat, he was vice president of the CitrusJuice and Oils business for SunkistGrowers. He also served as presidentand COO for Mauna Loa MacadamiaNut Holdings of Irvine, Calif., andspent 12 years with Blue DiamondGrowers in Sacramento, where he heldexecutive positions in operations andbusiness development.

Bragg completed graduate programsat both the University of Missouri andStanford University.

NCBA videos explore thriving food co-ops

The National Cooperative BusinessAssociation (NCBA) is inviting thepublic to join a cross-country tour ofthe nation’s most vibrant food co-ops,from California to Vermont, via a newvideo series that “highlights the people,personalities and passion fueling today’sfood co-op renaissance.”

The program, “Lights, Cameras, Co-ops,” is hosted by Top Chef finalistKevin Gillespie. The video series hasbeen designed to be fun and fast pacedto get people “fired up about food,community and the passion we sharefor our favorite co-ops,” NCBA says.Gillespie is an advocate for using locallysourced, organically grown ingredientsfound at neighborhood food co-opsacross the nation. To view the program,visit: http://strongertogether.coop/premiere/index.html.


Co-ops and trade focus of WIITCooperatives and their role in

agriculture trade were in the spotlightat a recent meeting of the Association

of Women in International Trade(WIIT) in Washington, D.C. Providingthe organization’s AgricultureCommittee with a “co-op-eye view” of

current trade issues were Julian Heron,general counsel for Blue DiamondGrowers; Alex Serrano, director ofbusiness development at the NationalCooperative BusinessAssociation/CLUSA InternationalProgram; and Lisa Knight, presidentand general counsel for CooperativesBusiness International.

The speakers discussed successes andchallenges facing co-ops whenexporting their products. Herondescribed Blue Diamond’s role inhelping to make almonds one of thenation’s leading farm exports andaddressed the challenges of dealing witha large number of trade agreementswhen exporting almonds to dozens offoreign markets. Serrano discussed hisorganization’s role in creatingpartnerships between small- andmedium-sized U.S. cooperatives andco-ops in developing nations. The linksbeing forged are promoting a greatertwo-way flow of agricultural products.

The Association of Women inInternational Trade is a professionalassociation of members who share aninterest and expertise in internationaltrade. Members are engaged in a varietyof international trade careers, includingbusiness, U.S. and foreign governmentsand nonprofit organizations.

OCDC names Hazen executive director

The U.S. Overseas CooperativeDevelopment Council board has namedPaul Hazen as its executive director.Hazen, who started the job Feb. 1,brings more than 30 years experience ininternational and domestic cooperativedevelopment to the organization.

“Paul brings to the organization awealth of cooperative experience and anin-depth knowledge of cooperativeinternational development. This yearwill be particularly exciting for OCDC,its members and Paul as we launch theInternational Year of Cooperatives,”says OCDC Board Chair TomVerdoorn of Land O’Lakes Inc.

Hazen recently stepped down aspresident and CEO of the Washington,D.C.-based National Cooperative

Cherry Central Cooperative Inc., in Traverse City, Mich., has added a newcooperative member – Norfolk Cherry Co. Ltd, of Simcoe, Ontario – effectiveMay 1. “The addition of Norfolk Cherry Company Ltd. to the membership willbroaden the cooperative’ geographic representation of tart [sour] cherryproduction, thus offering more flexibility in satisfying our customers’ needs,”says Cherry Central President Richard Bogard.Ryan Schuyler, spokesperson for Norfolk Cherry, says joining Cherry

Central will enable it to provide better service to its customers. Formed in1974, Norfolk Cherry is the largest sour cherry processor in Canada.“We are always looking for the right fit for Cherry Central Cooperative,”

Bogard says. “It is not about growth necessarily, but more about whether itmakes sense to our current producers and customers. If we can clearly seethe value and we see the opportunity for success for both companies, then it

is a natural fit, as is the addition of Norfolk Cherry to the cooperative.”Cherry Central Cooperative, formed in 1973, is a federated marketing

cooperative representing grower-owned processing plants across NorthAmerica. It is a global marketer of frozen, canned, bottled and dried products.The cooperative was recognized by the Michigan Department of Agricultureas its 2005 and 2010 Michigan Agriculture Exporter of the Year. n

Cherry Central adds Canadian member

Processing tart cherries at a plant of Cherry Central Cooperative, which hasjust expanded by adding a Canadian co-op to its membership.


Business Association (NCBA), thenation’s oldest national cooperativeorganization. Under Hazen’s leadership,NCBA’s international cooperativedevelopment portfolio grew from $8million annually to more than $30million. In 2001, he was named CEOCommunicator of the Year by theCooperative CommunicatorsAssociation.

OCDC brings togetherorganizations committed to building amore prosperous world throughcooperatives. Its mission is tochampion, advocate and promoteeffective international cooperativedevelopment. OCDC members areglobal leaders in cooperative develop-ment in Africa, Latin America and Asia.With projects in more than 70 counties,OCDC members implement the largestportfolio of cooperative developmentprograms in the world.

NMPF supports USDA school meal standards

The National Milk ProducersFederation (NMPF) has issued astatement in support of USDA’supdated school meal standards thatcontinue to stress the nutritionalbenefits of low-fat and fat-free milk anddairy products. A final version of thosestandards was released by USDAfollowing more than a year of publiccomment and review.

NMPF submitted comments toUSDA last April focusing on thenutrient package of milk and dairyfoods, which will continue to be a corecomponent of school meals, with fluidmilk being offered at all meals. “Theupdated nutrition standards require thatlow-fat or fat-free milk remain a part ofevery school meal,” NMPF Presidentand CEO Jerry Kozak said. “That’sessential, given that milk is the singlelargest contributor of nutrients in kids’diets. A single glass of milk delivers avery affordable package of nine essentialnutrients important to good health,including calcium, potassium,phosphorus, protein and vitamins A, Dand B12.”

Wisconsin co-ops announce merger plan

United Cooperative, Beaver Dam,Wis., has signed a letter of intent toallow a subsidiary to pursue a mergerwith Cooperative Services, Denmark,Wis. Ballots were mailed toCooperative Services’ members inFebruary. If approved, the merger willtake effect April 1.

Cooperative Services projects itsrevenue for fiscal 2012 will be in excessof $29 million. The co-op has feed,grain and agronomy divisions, as well asa Cenex convenience store and anautomotive shop, all in Denmark.

United Cooperative, with facilitiesthroughout Wisconsin, had $525million in sales in 2011, up $200million from 2010 due to stronginternal growth. As of Feb. 1, UnitedCooperative also merged with Shawano,Wis.-based Mid-County Cooperativeand Pulaski Chase Cooperative, inPulaski, Wis.

IDEA to help African dairy co-ops

Land O’Lakes InternationalDevelopment has launched theInternational Dairy Enterprise Alliance(IDEA), a learning network designed toprovide dairy cooperatives indeveloping countries with theinformation, resources and technologythey need to thrive and be competitivein national and regional markets.Created as a core component of LandO’Lakes Cooperative DevelopmentProgram (CDP), which is being fundedby the American people through theU.S. Agency for InternationalDevelopment (USAID), the IDEAnetwork is comprised of cooperatives,development and research organiza-tions, input suppliers, governments andnongovernmental organizations andother private sector partners.

“Our goal with IDEA is to provide amechanism for cooperative managersand leaders to network with dairystakeholders around the globe. A keyfeature of the cooperative model islearning and sharing,” explains RebeccaSavoie, Land O’Lakes International

Development’s practice manager forEnterprise, Cooperative and AssociationDevelopment. “Instead of competition,we want to create an environment ofcollaboration where members can shareunique best practices, technology andinnovative solutions to shared dairyindustry and cooperative issues.”

Learning and networking are centralto IDEA, so Land O’Lakes has planneda Cooperative-to-Cooperative LearningSeries, which will bring togetherindustry thought leaders, cooperativemanagers and board members to sharetheir experiences and knowledge. Theinaugural Cooperative-to-CooperativeLearning Series took place Feb. 28-March 1 in Nairobi, Kenya. It was co-sponsored by Cooperative ResourcesInternational (CRI), a cooperativefocused on animal breeding that alsoreceives CDP funding through USAID.The event included more than 40participants representing 25cooperatives from nine countries.

In addition to the Cooperative-to-Cooperative Learning Series, which willalso host an event in India in 2013,IDEA will develop a “knowledge-management portal.” The portal willprovide a forum for IDEA members tocollaborate and share strategies andtools.

Mark Ventry to lead Ontario Co-op Assoc.

Mark Ventry has been selected asexecutive director of the Ontario Co-operative (On Co-op) Association.Ventry, who assumed his new dutiesMarch 2, had been acting executivedirector.

“The hiring committee was im-pressed with Mark’s strong cooperativeand credit union background and hiscommitment to continuing On Co-op’sleadership role in the Ontario co-operative sector,” On Co-op BoardChair Barry Hannah says. “Coop-eratives are riding the wave of theUnited Nations International Year ofCooperatives, and we have ensured thatOn Co-op has a strong team in place tocontinue that momentum well into thefuture.” n

facility. Feuerberg says that as wooddecomposes, one of the byproducts ismethane, which is “24 to 25 timesworse for the environment than carbondioxide. One of the major attributes ofthis facility is that it will be carbonneutral — it will not add more carbondioxide to the environment than what isreleased naturally.”

Ash, another byproduct of the plant,can be returned to the forests asfertilizer, he said.

Construction of the plant, which isexpected to cost $178 million, is onschedule. Funding includes a $90million loan from USDA’s RuralUtilities Program, equity funds andstate and federal grants. NOVEC willbegin testing the plant in 2013, and by

September the plant is expected tobegin commercial operation.

“The sun doesn’t always shine andthe wind doesn’t always blow,” notesFeuerberg. “The relative economies ofwood biomass are less expensive thansolar and wind energy.”

Feuerberg says that reliability was akey factor in selecting biomass as arenewable fuel source. “If you’reoperating near peak capacity on a hot,humid summer afternoon, you cannotbe certain of meeting system demandwith wind or solar as the source.Virginia does not yet have renewable-energy mandates, but we’re anticipatinga federal renewable standard. Our goalis to be ahead of the curve. Trying tocatch up to a standard can be costly.This is another way to diversify ourresource mix.”

Response by NOVEC members,many of whom have encouraged greateruse of renewable energy, has beenpositive.

Did being a cooperative facilitateapproval of the project? “Our boardmembers recognized this was an easydecision to make after hearing from ourmembers through our survey process,”Feuerberg says. “The feedbackindicated that many members linkenvironmental stewardship with goodcorporate citizenship.”

Feuerberg contends that furtherevidence of the project’s popularity waswhen they held regulatory hearings, noopponents testified.

“There are so many favorableattributes associated with this projectthat it was a simple decision,”Feuerberg explains. “We have satisfiedour customers’ expectations, addedrenewables to our portfolio anddiversified our resource mix in theprocess. We’ve become morecompetitive, provided jobs and helpedimprove the local economy.” n


Utility Co-op Connectioncontinued from page 15

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