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CCUSDA /OORural DeOOvelopmePPnt EE RRAATTNoIIvemVVber / DeEEcembeSS r 2011

Page 10 Commentary

Co-ops: A vital source of rural jobs

By Dallas Tonsager, Under Secretary sound huge, remember that in rural areas especially, every job USDA Rural Development can be a crucially needed job. A grain and farm supply co-op, for example, with 30 or 40 employees will often be the t’s hard to live in rural America without being leading employer in a rural community. I touched almost daily in some way by When one such co-op adds just three new jobs, it can be big news cooperatives. Farmers and ranchers across in a town of 800 or 900 people. It may translate into three more the nation use co-ops to process and market houses having “sold’ placards placed on the real estate sign in the their crops and livestock and to provide them front yard and commission checks for a real estate agent to deposit with essential production supplies and services. Electric and in the local bank. It could mean eight or nine new students in a telecommunications cooperatives supply rural America with a rural school — maybe enough to justify hiring a new teacher, reliable, affordable source of energy and communications resulting in another house sold. It can mean a dozen or more new technology, including phone and Internet services. consumers to help support a rural grocery store and a surge in new While these are the two cooperative sectors we work with business for the local barber or hair stylist, and so on. most often at USDA Rural Development, there are many Rural utility co-ops are also major employers in many other types of producer-, user- and worker-owned co-ops rural communities. This co-op sector provides an additional across the nation that are helping to meet the myriad needs 162,000 fulltime jobs nationally, according to a 2009 survey of rural and urban people and businesses. These range from conducted by the University of Wisconsin Center for co-op food stores and daycare centers to credit unions, Cooperatives, with support from USDA. This survey looked insurance companies and hardware and building supply co- at 17 co-op subsectors of the economy, finding that the co-op ops, among many others. economy as a whole accounts for 853,000 jobs and $500 Having just concluded observing Cooperative Month in billion in annual revenue. October, it is fitting that we focus special attention on Focusing again on the agricultural sector, the job growth cooperatives as a key source of jobs. Co-ops are playing a role among co-ops is due in no small part to the continued strong as our nation strives to reduce high levels of unemployment prices for a number of key commodities, most notably in the by providing good jobs for tens of thousands of people in the dairy and livestock sectors. Indeed, 2010 marked the fourth farm sector alone. consecutive year of strong sales performance by farmer co- According to USDA’s recently released economic survey of ops, which is helping to fuel the upward employment trend. farmer cooperatives for 2010, U.S. agricultural and fishery The bottom line here is no great mystery: when American cooperatives created 7,000 new jobs in 2010, boosting the agriculture, utilities and industry are strong and thriving, it number of jobs to 184,000 at the nearly 2,400 agricultural co- translates into more jobs and more economic vitality for the ops surveyed. This survey also shows that ag co-ops had their nation. Cooperatives — as a business model that puts the second best year on record for sales at $170 billion. Pre-tax needs of member-owners and community first, and which net income of $4.3 billion was also the second best year ever help to keep more sales dollars and profits working close to for agricultural and fishery co-ops. home — are a key cog in the nation’s economic recovery Because co-ops are locally or regionally owned by their efforts. members, a larger percent of these dollars “stay local,” I believe that the potential of cooperative businesses to circulating in the rural counties and towns where their help more Americans improve the quality of their lives is members live and work. These dollars also support other almost unlimited. We at USDA will continue to foster co-op local businesses and generate tax revenues that in turn development and will strive to help improve co-op operations support schools, police and fire services and other local because — as was the theme of this year’s Co-op Month government services. celebration — Cooperative Enterprises Build a Better World. While 7,000 new jobs, or even 184,000 total jobs, may not I

2 November/December 2011 / Rural Cooperatives Features

Volume 78, Number 6 November/December 2011

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

The Secretary of Agriculture has determined that publication of this p.8 p. 16 p. 24 periodical is necessary in the transaction of public business required by law of the Department. Periodicals postage paid at Washington, DC. and additional mailing offices. Copies may be obtained from the Superintendent of Documents, 04 Why do members participate in ag co-ops? Government Printing Office, Washington, DC, 20402, at $23 per year. Postmaster: send address change to: Rural 08 Upward spiral Cooperatives, USDA/RBS, Stop 3255, Once on the ropes, Minnesota food co-op bounces back Wash., DC 20250-3255. By Kevin Edberg Mention in Rural Cooperatives of company and brand names does not signify endorsement over other 10 Shine a light companies’ products and services. International Year of Co-ops is unique chance to put co-ops in spotlight Unless otherwise stated, articles in this By Dan Campbell publication are not copyrighted and may be reprinted freely. Any opinions express- ed are those of the writers, and do not 13 Crash course in cooperation necessarily reflect those of USDA or its Rural auto body shops form co-op for group purchasing, information sharing employees. By Stephen Thompson The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of 16 How co-ops do it race, color, national origin, age, disabili- Dairy co-ops are a prime example of the economics of co-op marketing ty, and where applicable, sex, marital status, familial status, parental status, By K. Charles Ling religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual’s 20 Co-ops saluted as ‘vital economic force’ at USDA event income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons 24 Mission-driven marketing with disabilities who require alternative means for communication of program Rocky Mountain co-ops expand opportunities for sustainable food production information (Braille, large print, audiotape, By Jennifer Keeling Bond, Kellie Enns and Bill Brockhouse etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write 29 Is ‘local’ enough? to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Keeping customers happy in farmer co-op stores Washington, D.C. 20250-9410, or call (800) By Norbert Wilson, Thomas Hall, Deacue Fields 795-3272 (voice), or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer. 32 Making the connection The co-op brand can help strengthen links with members and consumers By Bruce J. Reynolds Departments

Tom Vilsack, Secretary of Agriculture 02 COMMENTARY Dallas Tonsager, Under Secretary, 34 NEWSLINE USDA Rural Development 41 2011 ARTICLE INDEX Dan Campbell, Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question? ON THE COVER: The declaration of “2012 International Year of Call (202) 720-6483, or email: Cooperatives” by the United Nations is being looked upon as a golden [email protected] opportunity to help call more attention to the cooperative system of This publication was printed with vegetable oil-based ink. business. See page 10. USDA graphic by Stephen Thompson

Rural Cooperatives / November/December 2011 3 Why do members participate in ag co-ops?

Co-op members place orders at a Texas farm supply co-op. Farmers may feel positive about the principles of cooperative organization, without necessarily believing collective action is the best strategy for all farmers. USDA photos by Dan Campbell

By Thomas W. Gray, Ph.D. meetings, serving on committees, serving in elected offices, Rural Sociologist, Agricultural Economist voting and recruiting other members, among other activities. USDA Cooperative Programs In 1970, in a North Central Research Publication, Farmers’ Organizations and Movements , these questions were Editor’s note: The author welcomes feedback from readers on asked: farmers’ cooperatives, member involvement, and participation. • What motivates farmers to join and participate in Comments can be sent to: [email protected]. cooperatives? • What causes low attendance at meetings? he Council on Food, Agriculture and • What explains differences in degree of membership T Resource Economics (C-FARE) held a participation, and why do some farmers never join any conference in Washington, D.C., on Aug. 4 group? titled: “Agricultural Cooperatives: Dynamic factors such as globalization, privatization, Economics, Opportunities and Structure in a consolidation among cooperatives and farms, and rural New Era of Food, Fiber and Fuel.” Five areas were specified outmigration have shifted the character for much of U.S. for discussion: finance, strategy, governance, communicating agriculture during the past several decades. But questions the value package and new cooperative development. about participation continue to persist. The recent C-FARE One area of discussion was member participation in co- conference demonstrated the continuing relevance of these ops. Member participation involves a series of activities that issues. include patronage, membership in cooperatives, attending This article lists determining factors that were previously

4 November/December 2011 / Rural Cooperatives found to be important in influencing participation in co-ops. promote co-op education for members; (4-b) Agricultural They include: (1) cooperative principles; (2) positions on cooperatives should support co-op education efforts directed collective action; (3) identification with the cooperative; (4) at the public; (5) Agricultural cooperatives should work with satisfaction with farming and farm life; (5) member influence; other agricultural cooperatives. (6) understandings of equity and impartiality; (7) member Earlier work by this author found that co-op members demographics and farm characteristics. were generally supportive of all of these principles, though These measures are presented here, in a survey format, as less enthusiastic about the open membership (“accept any if members were being asked whether they agree, disagree or farmer”) principle. Given the cyclical difficulties of excess

“Once members become involved within an organization — through holding office, serving on committees or voting — they begin to identify and attach to the organization beyond a simple patronage attachment.”

are indifferent to each statement or position. This permits production and low prices in agriculture, it is not surprising educators and others to “pull” items out of the article directly that members would feel less positive about open- for use in their own member relations workshops or surveys. membership. Ultimately, the goal of this article is to suggest some “levers” that might be used to encourage members and Collective action potential members to participate in a cooperative. Farmers may feel positive about the principles of cooperative organization, without necessarily believing Cooperative principles collective action is the best strategy for all farmers. Examples Member beliefs in cooperative principles can influence of attitudes that would test a farmer’s predisposition to how readily a member or a potential member might join or collective action include such statements as: (1) “Farmers participate in a cooperative. Some sources list as few as three must stick together in order to get things done, even if they principles, others seven or eight. Five will be listed here, and have to give up some of their individual freedoms;” (2) “A (as stated above) are presented in the manner of a survey basic cause of agricultural problems today is that too many question asking for agreement or disagreement: (1) farmers want to go their separate and individual ways without Agricultural cooperatives should accept any farmer who regard for other farmers;” (3) “An individual farmer can wants to join; (2) Agricultural cooperatives should practice usually make better marketing decisions than a group of one-person, one-vote democracy; (3) Members should receive farmers can;” (4) “Members receive benefits from doing patronage dividends in proportion to the business they do business the cooperative way;” (5) “It is only through with the organization; (4-a) Agricultural cooperatives should agricultural cooperatives that farmers can assume an

Rural Cooperatives / November/December 2011 5 appropriate role in the marketplace;” (6) “Members of earned elsewhere. These questions might be honed more agricultural cooperatives have a competitive advantage in the sharply if designed for office holders and managers. Key market place.” perceptions of the co-op can be gauged by asking: “How Measures of such sentiments can help determine if farmers satisfied are you with your elected officers?” “How satisfied place collective interest higher than individualistic are you with your cooperative management, and please orientations. Karen Hakelius, in her study of 1999, suggested specify which officers, which managers?” that with Western cultures becoming increasingly centered Assessments of this kind can help bring focus to particular on individualism, participation based on reasons of collective problems in participation and commitment to the action are becoming less evident. organization, particularly around dissatisfaction with officers.

Identification with the cooperative Member influence “Identification” refers to the degree of attachment a Cooperatives are organized around principles designed to member may feel toward an organization. Possible measures provide member influence and organizational control. of identification include such perceptions as: (1) “I feel I am Member impressions of their personal influence upon an part owner of the cooperative;” (2) “Belonging to the organization — and their views of members’ influence cooperative is an important part of my identity as a farmer;” generally — can be measured by whether they hold such (3) “The cooperative is my agent in the marketplace;” and (4) perceptions as: (1) “Cooperative members have a great “The cooperative is just another place to do business.” amount of influence on how the cooperative is run;” (2) These measures position members’ loyalty and “Cooperative members have too much say about how the commitment — based on their sense of ownership and cooperative is run;” and, a more personal measure, (3) “I am satisfied with the amount of influence I have on how the cooperative is run.” Assessments of member attitudes Earlier farmer participation studies identified member influence as having an active dimension, by asking: “How can help bring focus to particular much control do members perceive they actually have,” and, a more passive dimension: “How much control do they perceive they could have if they were to exercise it.” problems with participation and All of these measures can be important in the sense that the more members feel in control of their cooperative, or commitment to the organization. hold an opportunity to be in control, the greater the likelihood they will participate in the organization. connection to the cooperative — against a more passive, “It’s Equity/impartiality just another business” orientation. Farmers come together, or unify, in a cooperative Participation research suggests that prospective members organization to gain market power and/or gain a service may not have any particular identification with an (broadly defined) to enhance farm operations. In some sense, organization. “It’s just like any other business,” they may feel. farmers are equals struggling together in a market context In fact, members who only participate with economic that has not often favored them historically. patronage tend to often hold such a perception. Once in an organization however, difference among However, once members become involved within an farmers in terms of scale of their respective production units organization — through holding office, serving on and volume of business done with the cooperative can raise committees or voting — they begin to identify and attach to questions about equality and equity. Contention can play out the organization beyond a simple patronage attachment. around differences in voting rights (one-person, one-vote vs. Membership participation tends to engender more votes based on the business volume done with the participation. cooperative,) and patronage (better prices and discounts based on volume). Satisfaction levels Such differences can cause tensions among members along Co-op participation levels may correspond to measures of differences in size of farms and volumes produced. satisfaction, as indicated by such statements as: “I am satisfied Assessment of these issues and perceptions can be gauged by with: (a) “farming as a way of life;” (b) “farming as a way to asking members: (1) “Does the cooperative primarily benefit make a living;” and (c) “the income my family makes from large farms?” or the inverse (2) “Does the cooperative farming.” primarily benefit small farms?” Members could stay away from their cooperative because When there are different commodities produced by they are unsatisfied with the income gained from their different classes of members, it can cause splits in patronage, or they may join a co-op because of poor returns membership loyalties and commitments as well. For example,

6 November/December 2011 / Rural Cooperatives dairy cooperatives often have both Grade A and Grade B How these predispositions play out among farmers likely producers within their membership. Difficulties may be varies by type of commodity, geographically by region and revealed when members make, or agree with, statements such country, and by volume of production. This article suggests as: “The cooperative benefits Grade A producers more than some possible measures to gauge member attitudes, such as: Grade B producers.” What motivates farmers to join and participate in Once identified, the cooperative may be able to address cooperatives, the differences in degree of membership participation difficulties due to these differences. participation and why some farmers never join a cooperative. These suggestions are only a narrow band of possibilities that Member demographics and farm characteristics tend to focus on the social-psychological predispositions of There are a series of other considerations that can help participation. explain how farmers participate in a co-op. These measures Scholars from other disciplines — economics for example, include age of the primary owner(s), education levels, off- or geography — would likely come up with a different series farm employment, income levels, debt load, type of products of considerations to approach the complexity of membership. produced and gross farm sales, among others. This author Earlier research has shown the several items reviewed here found that when the spouse of a dairy cooperative member is are relevant to the seemingly enduring questions of how employed off the farm, participation in cooperative meetings members participate in a co-op, and for what reasons. was lower. There was simply no family member with enough Author’s note: For further reading on this topic, refer to free time to attend a co-op meeting. reviews of the literature in Sanjib Bhuyan’s 2007 article, “The Age of the primary operator might provide the cooperative People Factor in Cooperatives,” in the Canadian Journal of business some indication about future product flows and Agricultural Economics , and Peter Osterberg and Jerker member retirements. Any of these considerations, when Nilsson’s 2009 article on “Members’ Perception of their examined carefully, might reveal an influence, and an answer Participation in the Governance of Cooperatives,” in to the whys of member participation. Agribusiness . I

Rural Cooperatives / November/December 2011 7 Upward Spiral Once on the ropes, Minnesota food co-op bounces back

One of the co-op’s original founders in Hastings, Minn., Angela Olson still shops at Spiral Natural Foods Cooperative twice a week. Photos by Ginger Pinson

8 November/December 2011 / Rural Cooperatives By Kevin Edberg, Executive Director this store? Does the community share engage the membership and community Cooperative Development Services that vision? Could you increase to raise $14,000 to plan the relocation. [email protected] membership to 200?” Second was to raise additional member He connected co-op leaders with a loans to generate equity and secure t was late 2010, and the promising young business consultant, long-term bank loans. Third was to I remaining board which began an effort to better equip execute the plan and open the new store members of a small the board to reinvigorate the co-op. By that summer. food co-op knew they spring 2010, things were looking better. The planning for the new store took were coming to a The co-op had more than 100 shape. Cooperative Development crossroads. “If it means saving the co- members, a new marketing and Services (CDS) used USDA Rural op, are you willing to deal with your merchandising position had been Cooperative Development Grant management issues and relocate the created and some physical improve- (RCDG) funds to provide staff time to store?” their consultant asked. This is ments had been made to the store. develop the project strategy and attend the story of how they answered that However, the co-op was still renting member information meetings. As a question. month to month — and management 501(c)3 nonprofit, CDS could also let Spiral Natural Foods Cooperative issues still needed to be addressed. By co-op members make tax-deductible serves the community of Hastings, fall 2010, vendors were holding back contributions that paid for consulting Minn., an old “river town” of about orders; the situation was looking grim. needs for the relocation. 22,000 on the Mississippi, just southeast It was clear that either the store The Agricultural Utilization of Minneapolis-St. Paul. The co-op Research Institute also provided RCDG opened for business in 1979, originally funds on a matching basis to pay for capitalized with about $10,000 in sales financial projections, store design of member stock and substantial services and other technical assistance. donations of equipment, fixtures and The phase-one planning goals were renovation labor. soon met. Typical of the time, the store ran on The phase-two member loan a system of annual membership dues, campaign was launched in June. product discounts and all-volunteer Membership, which stood at 67 in labor. The co-op built a core trade from 2008, was up to 385 in July and topped the sale of supplements and bulk food, Jennifer Johnson drives 30 minutes from 400 in September. In just five weeks, Welch, Minn., to Hastings, where she loads up moving twice to larger spaces over the members pledged $200,000 in loans. her shopping cart with bulk staple items, next decade. In 1992, it rented a Several local food co-ops made member including flour and grains, at Spiral Natural storefront in the historic downtown on Foods. loans to support the project, and others a month-to-month basis. have helped secure a $160,000 loan for About that time, the co-op changed the project. from a dues-and-discounts system to an would close, or the board would need The new store opened Sept. 2 (the equity-based system in which to find new management. The new old store had closed in late August). In individuals paid $100 to become owner- general manager would need to raise two months of operations, the new members. But the transition did not go member loans quickly to infuse cash store is on track to achieve projected well: only 50 members made the equity into the business and to get the first year sales that are almost twice investment. landlord to sign a lease. those of 2010. Employment has also The board terminated the manager increased from three full-time and two Ups and downs and a new general manager was soon on part-time jobs in the old store, to five The co-op continued to plod along the job. But the property owner decided full-time and five part-time jobs in the for more than a decade, under- to put the building on the market, and new store. capitalized and with stagnant sales. by 2011 the building had been sold, What had seemed almost There were major concerns about both forcing the co-op to move by late unimaginable at Christmas 2010 was a its management and the co-op’s long- summer. reality by Labor Day 2011. All was term viability. made possible by a board and In 2008, with a membership of only Three-phase revival management team that could create a 67 and working on a shoestring budget, plan adopted compelling vision, that had timely the board engaged Bill Gessner of CDS Gessner helped the board develop a access to key advisors, some modest Consulting Cooperative to help them three-phase revival plan. The first step funding for technical assistance and a revitalize the store. He listened and was to develop a vision for a relocated community willing to invest in itself. I asked questions: “What’s your vision for store, do pro forma projections and

Rural Cooperatives / November/December 2011 9 Shine a light International Year of Co-ops is unique chance to put co-ops in spotlight

By Dan Campbell, editor grain, oilseeds, cotton, fruits, nuts, by the U.S. Senate) as an excellent [email protected] vegetables or livestock — it could wind opportunity for helping to shine the up being exported almost anywhere on international spotlight on the ooperatives are not only the planet. It might even be sold to cooperative way of doing business. C a major force that help consumers at a co-op food store or at a “IYC provides a once-in-a-lifetime fuel the U.S. economy, grocery store that is itself a member of opportunity to come together under but also a driver of a retail buying co-op. The seeds and one brand and one message to showcase economic development fertilizers for the crop may have come the cooperative difference,” says Paul around the globe. Still, the ultimate from a farm supply co-op. The crop Hazen, president and CEO of the potential of co-ops has barely been may have been planted, cultivated and National Cooperative Business tapped, many believe. It is therefore harvested by equipment purchased with Association, which represents the fitting that the United Nations General a loan from a co-op financial United States in international planning Assembly has declared 2012 as the institution. The processing and sale of for IYC. “This is a wonderful chance to International Year of Cooperatives the farm products may have been raise the profile of cooperative (IYC), highlighting the contribution of performed by a producer-owned enterprise, demonstrate the strength of cooperatives to socio-economic marketing co-op. Further, the electric the model and tell the world why development worldwide. power on the farm and at the co-op cooperatives are the best business With the theme of “Cooperative elevator, packing shed or processing model for economic and social Enterprises Build a Better World,” the plant may have come from a consumer- development.” IYC celebration seeks to encourage the owned utility co-op. Under Secretary Dallas Tonsager of growth and establishment of U.S. farmer co-ops and countless USDA Rural Development says he cooperatives. The event also encourages volunteers from among their members hopes all co-ops will consider getting individuals, communities and have been leading advocates for the involved in IYC. “We have an governments to recognize the role of development of cooperatives overseas to incredible story to tell about what has cooperatives in helping to achieve help lift people out of poverty and been achieved with co-ops, and how internationally agreed upon economic eliminate the scourge of hunger — just much more can be accomplished development goals. as farm, utility and credit co-ops have through this producer- and user-owned helped rural Americans drastically form of business. No one call tell that Global force for advancement improve their own standard of living. story better than the member-owners of Few know better than the U.S. But far too few people, here and our co-ops themselves.” farmer just how interconnected world abroad, understand just how much can Bill Cheney, president and CEO of economies have become and the role be achieved through the power of Credit Union National Association co-ops — domestic and foreign — play uniting in cooperatives to achieve a (CUNA), is also urging credit unions in the international marketplace. When common goal. Many co-op leaders thus around the nation to help promote a U.S. farmer harvests a crop — be it see IYC (which has also been endorsed IYC. “The International Year of

10 November/December 2011 / Rural Cooperatives “Cooperatives are a model of self- reliance and an example of people working together to improve their quality of life.”

The United Nations General Assembly Resolution (A/RES/64/136) “encourages all member states, the United Nations and all relevant stakeholders to take advantage of the IYC to promote cooperatives and raise awareness of their contribution to social and economic development and promote the formation and growth of cooperatives.” (Also see sidebar.) Many of the same types of events that co-ops use to observe Co-op Month — such as open houses, school visits, proclamations signed by state governors, press releases and op eds — Cooperatives gives us all a chance to International Programs, a partnership can be used to promote IYC while spotlight what we are, how we operate among America’s electric co-ops that, simultaneously providing an — and the difference credit unions since its creation in 1962, has assisted opportunity for a co-op to increase make for their members, cooperatively,” with electrification efforts that have public awareness of what it does. Cheney says. “So…throughout 2012, improved the quality of life for about NCBA is creating an online “toolkit” take time to celebrate cooperatives and 100 million people in more than 40 that will have numerous ideas for how your credit union’s place in the nations. co-ops can help promote IYC; it can be cooperative movement.” accessed at: www.ncba.coop. “Cooperatives are a model of self- Celebration launched in NYC NCBA says goals for IYC are to: reliance and an example of people The IYC celebration kicked off in
Increase public awareness and raise working together to improve their earnest Oct. 31 at the United Nations the profile of cooperatives so that quality of life,” says National Rural General Assembly Hall in New York Americans will seek out co-ops for Electric Cooperative Association City. A daylong series of events was products or services, for business (NRECA) CEO Glenn English. held, starting with a roundtable development and community solutions; NRECA represents more than 900 discussion addressing the theme:
Educate and engage all levels of consumer-owned electric cooperatives “Cooperative Enterprises Build a Better government to develop policies, that provide power to about 42 million World: Contributions to Sustainable programs and services that create a people in 47 states. The International Development.” In the afternoon, IYC “level playing field” for co-ops in the Year of Cooperatives coincides with the was officially launched during a General economy; 50th anniversary of NRECA Assembly plenary session.
Promote co-ops to the media,

Rural Cooperatives / September/October 2011 11 especially in international and business campaign. This effort encourages co-op waiver of liability (the form is posted on press; members to tell about their co-op and the website), which must be e-mailed
Support objective studies that why they belong to it. “Tell the world to: [email protected]. demonstrate the economic value of co- what cooperatives are, where they are
Submit IYC-related events for ops; and what makes them unique!” the inclusion on the U.N.’s official IYC
Improve access to co-op businesses in website says. The effort will use calendar of upcoming events. the United States by building the only YouTube, Facebook, Twitter and a U.N. Announcements about your event can comprehensive, online directory of blog, all of which will be featured and be posted at: www.social.un.org/coops more than 29,000 U.S. co-ops of all hyperlinked on the IYC website. Co- year/events. types. ops are being urged to post photos,
Co-op photos can also be posted on video clips (not to exceed five minutes), the U.N.’s Picassa Photo Gallery. U.N. website encourages informational blurbs (of 300 words or Photos should be e-mailed to: co-op participation less), data and news highlights (no more [email protected], with the subject line The United Nations — which is than 500 words). Materials submitted reading “IYC Photo Sharing.” particularly interested in promoting co- must be accom-panied by a
Co-op videos can be sent to: ops because of their impact on poverty signed, scanned [email protected]; the subject line reduction, job creation and social copy of a should read: “IYC Video Sharing.” integration — has established an
The U.N.’s Facebook page IYC website at: promoting IYC activities is at: http://social.un.org/ http://www.facebook.com/CoopsYear. coopsyear. The website
The U.N. Twitter page promoting includes a number of ideas IYC activities is at: http://twitter.com/ about how co-ops can help #!/CoopsYear. I to promote IYK, including:
Participate in the U.N. “What Cooperatives Are”

The International Year of Cooperatives resolution

The International Year of Cooperatives (IYC) resolution and access to financial services and markets; adopted by the U.N. General Assembly says, in part, that
Create a supportive environment for the development of the IYC is a time to: cooperatives by developing an effective partnership
Recognize that cooperatives, in their various forms, between governments and the cooperative movement promote the fullest possible participation in the economic through joint consultative councils and/or advisory bodies, and social development of all people — including women, and by promoting and implementing better legislation, youth, older persons, persons with disabilities and research, sharing of good practices, training, technical indigenous peoples — and that co-ops are becoming a assistance and capacity-building of cooperatives, major factor of economic and social development, and especially in the fields of management, auditing and contribute to the eradication of poverty; marketing skills;
Encourage governments to keep under review the legal
Raise public awareness of the contributions of and administrative provisions governing the activities of cooperatives to employment generation and to socio- cooperatives in order to enhance the growth and economic development, promoting comprehensive sustainability of cooperatives in a rapidly changing socio- research and statistical data-gathering on the activities, economic environment by…providing a level playing field employment and overall socio-economic impact of for cooperatives… including appropriate tax incentives cooperatives at the national and international levels.

12 November/December 2011 / Rural Cooperatives Crash course in cooperation

Rural auto body shops form co-op for group purchasing, information sharing

By Stephen Thompson, Assistant Editor proprietor of Ernie’s Auto Body in into account when they are applied. USDA Rural Development the village of Hayward, Wis. “You Not knowing the proper [email protected] don’t get much of a discount when procedure for using a component, or you’re buying less than $50,000 using the wrong one, can lead to the mall, rural auto body worth of paint a year,” he says. loss of valuable time correcting S shops in the Upper Moreover, deciding what items to problems and also wasting expensive Midwest have use in your shop, and how to use materials. In the worst case, a discovered that the them, can be a daunting task. technician might have to sand off the cooperative model There is a huge range of auto new finish and start over. can help them improve productivity refinishing products available. To make matters worse, individual and raise profits. The Key Choice Preparing a vehicle for painting and technicians may have developed their Collision Center network brings applying the finish is a lot more own ways of doing things which are together 18 non-competing collision complicated than simply sanding it not ideal for the materials being repair shops to share knowledge and down and spraying the paint. used. There is also the “we’ve always resources in promoting better Modern automotive finishes are done it this way,” syndrome, which business practices. made up of layers of fillers, primers, can hinder workers and managers Auto body shops, especially in sealers, color coats and finally clear alike from adopting new and better rural areas, are often archetypal small coats, all of which must be approaches to getting the job done. businesses: single-location compatible with one another. There “These and other factors can be proprietor-ships. Their small size can are literally millions of possible addressed by adopting “lean be a disadvantage when it comes to combinations, and various manufacturing” methods, which seek buying supplies and operating components have different to maximize efficiency, enabling a efficiently, says John Magowan, characteristics that must be taken business to operate at the lowest

Rural Cooperatives / November/December 2011 13 possible cost while offering a high- was the Key Choice Collision Center Cooperation leads quality service or product. But how Network, a purchasing and service LLC to higher efficiency does a small proprietorship gain access that operates as a co-op, now with 18 The key to better profits, says to the information it needs to adopt members in seven Midwest states. Magowan, is making your operation lean manufacturing successfully? “It was fairly easy to set up,” says more efficient; the cooperative has Magowan. “The core group had all proven to be a valuable tool to Twenty Group been friends for years. We went to a achieving that goal. The first step to evolves into co-op business attorney we’d used in the past rationalizing its operations was to adopt One method adopted in the auto for legal help.” a common paint system. body business is the so-called “Twenty The slow economy has resulted in “We contracted with one company, Group.” A concept borrowed from auto little growth in revenue in recent years Sherwin Williams, which came in and dealers, Twenty Groups are gatherings for most small auto body shops, so set up a product line for us,” says of non-competing small business better profits have to come from cutting Magowan. “We all use the exact same owners and managers to exchange costs. Key Choice uses its purchasing products. We don’t have anyone trying information and ideas and work out power to negotiate much better deals out the ‘flavor of the month.’ That rules solutions to common problems. Twenty with suppliers than individual shops out a lot of issues.” Groups usually meet several times a could manage. A percentage of The paint-system commonality year, typically with a guest speaker. the purchase amounts is tacked on to means that each shop’s paint technicians Discussions occur under protection of a cover administrative costs of the can be trained together in the same confidentiality agreement. cooperative. methods by representatives of the paint Magowan joined a Twenty Group in “The discounting is huge,” Magowan supplier. The close relationship with 1997 and found it a useful source of says. “But a shop that does a million the supplier also keeps the co-op up to information. But about five years later, dollars’ worth of business a year is date on cost-saving improvements and he and some other members decided to going to spend about $45,000 on paint. innovations. Painters with problems can take it a step further. “We wanted At the end of the day, it’s not going to discuss them with other painters from access to resources not available to a make a huge difference to your bottom their own or other member shops and small body shop,” he says. The result line.” get good advice based on common

A technician sprays a fender in the paint booth at Ernie’s Auto Body. Adopting a common line of finishing products makes possible better efficiency and lower costs for members of the Key Choice Collision Center Network.

14 November/December 2011 / Rural Cooperatives training and experience. Together, those the new method or process is put in use department,” says Magowan. Techs had factors help ensure consistent, satis- by all the members. Members also their own individual setup and would factory results. informally discuss individual issues get supplies from the inventory room as That consistency is also a marketing needed. “We put up a plus. “Having a network like this makes sign-up sheet at the it easier for us to deal with insurance door to the inventory companies,” says Magowan. “They room to find out how know what kind of results to expect, many trips to the because we have consistent products room were being and techniques.” Bus tour companies made.” also know that they can have damage The results were repaired at any of the 18 Key Choice surprising — a great locations and expect a high quality, deal of time was being cost-effective job. The Key Choice lost in trips to logo is displayed on exterior signs and replenish supplies. on business cards. Not only that, there Using the same paint was only the was a lot of first piece of the puzzle. Improving duplication in work flow and time management and among themselves, offering each other materials being held by the technicians, eliminating waste are just as important advice. meaning more money tied up in to a successful operation. Lean The result, says Magowan, has been inventory. manufacturing principles, derived from “tremendous net growth.” One example The answer was to bring the supplies Japanese production practices, seek to of this is an overhaul of the workflow in to the technicians with an inventory minimize waste in materials, manpower the shop. “A traditional shop has a body cart. Every morning, the cart is and other resources, while keeping department and a paint department,” he replenished with supplies. quality as high as possible. They says. “The techs work on commission. “Everything they need is right emphasize constant effort to find and Each is assigned jobs, and each job has there,” Magowan says. “They rarely eliminate waste and improve efficiency, a number of labor units assigned to it, need to make an extra trip.” The result adaptability, and always being ready to according to the amount of time is more efficient use of time, and, as a change any aspect of the operation that expected for it to take. Typically, a tech bonus, a reduction in inventory. “We can be improved. is paid according to the number of units don’t have so much cash tied up in our “‘Lean’ is a huge buzzword in the assigned, whether it actually takes two supply room,” he says. “That makes a auto body industry,” Magowan says. hours or ten.” difference when you consider that a box “But some people are successful at In the traditional setup, if a vehicle is of sandpaper can cost $75.” accomplishing a ‘lean’ operation, and still being prepared in the body “Small steps like that add up to huge some are not. I’d say about one in ten department and the paint tech has no improvements,” says Magowan. He actually makes it work. If someone tells other work, he or she may be idle until emphasizes that innovations are not me his operation is ‘150 percent lean,’ the job is ready. The cooperative rigidly applied. Each shop has its own I’m pretty skeptical.” worked out a system in which labor conditions and physical layout, and hours are pooled and divided between measures must be tailored to work well Collective problem solving everybody working in the shop. That in each situation. The key is flexibility, Magowan says he and other means that everyone has an incentive to he says. members study lean manufacturing get jobs done as quickly as possible. A “You need to be able to put things techniques and together work out ways technician who is not working on an together with what is already in place.” to apply them to their operations. The assigned job will thus help with other In fact, flexibility and being ready to cooperative takes a systematic approach parts of the repair. make changes are a vital part of the lean to this. When a problem or goal is “We’ve set up a standard operating manufacturing approach. identified, five members are delegated procedure that allows anyone to work The cooperative is already looking to address the issue. Research and where most useful at the time. As a ahead to new challenges, one of which discussion are documented, and the result, I’m doing the same amount of will be possible future government “group of five” develops a solution, business as I was three years ago — requirements to change from a solvent- which will be presented to the with four fewer people.” based to a water-borne paint system. membership. Another innovation cuts down on “We’re already studying that,” All co-op members vote on whether unnecessary foot traffic in the shop. Magowan says. “When the time comes, to adopt the measure. If it’s accepted, “We had three techs in the paint we’ll be ready.” I

Rural Cooperatives / November/December 2011 15 How co-ops do it Dairy co-ops are a prime example of the economics of co-op marketing

Photos courtesy Darigold

By K. Charles Ling, Ag Economist n our free-market cooperative’s administrative control, and USDA Co-op Program I economy, the the cooperative cannot dictate how cooperative is a unique members operate their dairy farms. Note: This article is a sequel to “What business model in that This operating mode entails its own Cooperatives Are (and Aren’t),” “What it is an aggregate of unique economics that comprises the Cooperatives Do,” and “Dairy Co-ops: individual economic units. In the following elements: What They Are and What They Do,” agricultural sector, a cooperative is an • When milk price goes up or down, Rural Cooperatives, Volume 76, Number 6, aggregate of member-farms. the milk volume a farm may produce November/December 2009; Volume 77, Using the dairy sector as an example depends on the financial objective of Number 2, March/April 2010; and for this article, the cooperative takes the farm: whether it wants to attain Volume 78, Number 2, March/April 2011, whatever milk volume is produced by maximum total profit (minimum loss respectively. Past issues are posted on the members and then acts as their in a loss situation), maximum total USDA Rural Development website: exclusive marketing agent. Members’ revenue (up to the break-even point), www.rurdev.usda.gov. farming operations are not under the or minimum average cost.

16 November/December 2011 / Rural Cooperatives • Production input cost changes do not produces. According to textbook for maximum total revenue and increase change a farm’s rated capacity, but optimization theory, the farm would its production up to the volume where instead shift the farm’s cost curves minimize its total losses by producing the farm will break even. Thus, when straight up or down. The milk volume milk at a volume where milk price milk price is higher than the minimum that the farm produces, again, (marginal revenue) equals marginal average cost, the amount of milk depends on the financial objective of cost. produced by the dairy farm may be the farm. (Cost curves refer to a However, although marginal cost is a somewhere in the range framed by the typical, simple diagram showing how useful concept, its “real-life calculation” three possible milk volumes just given. milk production costs vary in relation has many complications and, therefore, Replicating the model dairy farm to production volume. See figure 1.) it is not readily available for practical ten, a hundred or even a thousand • Depending on how farmers respond day-to-day operational decision- times, depending on the size of a to milk price and input cost changes, making. For such decisions, the time- cooperative, the aggregate milk volume the milk volume the cooperative has produced by its members is certain to to handle may continually fluctuate. Figure 1: Average cost (AC) and marginal cost fluctuate. The cooperative may know • Likewise, milk production is a (MC) vs. milk production volume with certainty the aggregate volume of biological process and is subject to $/cwt members’ rated capacity, which would daily and seasonal fluctuations. logically be the basis for planning its • The seasonality of milk production milk handling capacity. MC AC generally does not match the However, the uncertain volume of seasonality of fluid milk demand. This actual delivery means on some days the mismatch requires cooperatives that cooperative will have slack capacity, supply milk to the fluid market to P while on other days it may have to balance seasonal supply with seasonal scramble to make sure every drop of demand and handle the inevitable milk has a home. Also in response to seasonal surplus milk volume at a V Pounds/day the fluctuating volume, milk hauling substantial supply-balancing cost. may have to be rerouted for most A fuller explanation of the unique economical coordination. economics of dairy cooperative honored business practice is to use It should be noted that because a operation is facilitated by the focusing average cost in the profit-and-loss cooperative is formed to market on a model dairy farm. estimation. whatever the aggregate volume of milk In the present case, it is very likely produced by its members, it does not Model dairy farm that the dairy farm will still strive to have its own milk production functions, A farm is constructed with its attain the lowest average cost by milk production cost curves or milk dairying infrastructure to accommodate producing milk up to its rated capacity, supply curves. a dairy herd of a certain size. It has a even though doing so would incur a rated capacity of producing a certain higher loss. So, depending on which Milk production number of pounds of milk per day. cost concept a farmer uses, milk volume input cost variation When the farm produces milk at the produced by the dairy farm may be Suppose milk price remains the same capacity volume, the average cost of somewhere between the two amounts as the minimum average cost given at milk production per hundredweight just mentioned. the rated capacity volume, but the cost (cwt) should be at a minimum. If milk When milk price is higher than the of production input, such as feed or price for the month is the same as the minimum average cost, the farm will fuel, has increased. Because the minimum average cost, then the farm’s enjoy a profit. The farmer may decide infrastructure and the size of the dairy milk production for the month is at to attain the lowest average cost by herd do not change, the rated capacity capacity and the farm is said to be in producing at its rated capacity. Or, the of the farm will stay the same. “equilibrium.” farmer may want to achieve maximum However, the average cost curve and total profit by producing a milk volume its associated marginal cost curve will Milk price variation where milk price (marginal revenue) shift upward. The farm will suffer a If milk price is lower than the equals marginal cost, if the latter is loss, and it may want to minimize its minimum average cost, the farm will actually known. total losses by producing milk at a incur a loss for every cwt of milk it Alternatively, the farmer may strive volume where milk price (marginal

Rural Cooperatives / November/December 2011 17 revenue) equals marginal cost. Short of knowing the marginal cost, Table 1 ―Indices of seasonality of producer milk it is very likely that the dairy farm will deliveries and fluid demand work to attain the lowest average cost by still producing milk at its rated Producer milk Fluid capacity. When production input cost Month deliveries demand increases, milk volume produced by the ------Percent------dairy farm may be somewhere between January 100.1 101.9 the two milk volumes just referred to. February 101.8 100.6 On the other hand, if production March 103.7 100.9 input cost decreases, the average cost April 105.4 98.2 curve and the associated marginal cost May 106.0 98.1 curve will shift downward and the farm June 103.4 94.0 will reap a profit. The farm may still July 97.8 94.2 decide to produce milk at its rated August 97.0 98.1 capacity. Or it may increase its September 96.3 105.2 production up to the break-even point October 95.4 104.6 that will return the highest total November 95.0 102.8 December 98.1 101.4 revenue. Annual average 100.0 100.0 Alternatively, the farm may want to achieve maximum total profit by Source: Ling, K. Charles. Cost of Balancing Milk Supplies: producing at the milk volume where Northeast Regional Market , U.S. Department of Agriculture, milk price (marginal revenue) meets RBS Research Report No. 188, October 2001. marginal cost. When production input cost decreases, milk volume produced Note: Different regions of the country may experience different seasonality, and seasonality may change over time. by the dairy farm may be somewhere in the range framed by the three volumes just articulated. Again, the aggregate volume of member milk faced by the cooperative Seasonal production variation December and increase steadily through is rather uncertain, depending on how Milk production is affected by a winter and spring. The drop from May members make their day-to-day cow’s physiological condition, which is to November is 11 percentage points. production decisions in reaction to subject to seasonal changes. The Seasonality of milk production, in production input cost changes. seasonal nature of milk production is essence, shifts a farm’s cost curves The discussion thus far shows the best portrayed by the index of downward to the right during a challenges a dairy cooperative faces in seasonality, such as shown in table 1, seasonally high production month or handling fluctuating milk volume when which is based on milk deliveries to the upward to the left during a seasonally either milk price or production input Northeast regional market and low production month. During a cost changes. When both price and cost documented in an earlier USDA seasonally high production month changes are considered at the same research report. The table shows that (seasonality index is more than 100), time, the picture is even more the first six months of the year is a since the same infrastructure and the complicated. period of higher-than-average milk same herd size will produce more milk, Still, this is a highly simplified deliveries, with May being the peak. the farm’s capacity should be higher scenario. In real life, not every farm is The index of 106 indicates that May than originally rated. like the model dairy farm; in fact, no is 6 percent higher than annual average Also because the same fixed cost is two farms are alike. They are not likely daily deliveries. Milk deliveries decline spread over a higher milk volume, the to be of the same size and make the sharply from June to July and stay average cost of producing milk should same production decision. That means relatively low throughout summer and be lower. The combined effect would the volume variation may be even more fall. Deliveries are usually lowest in shift the cost curves rightward and uncertain than what has been described. November. downward. In addition, the seasonality of milk With an index of 95, November is 5 On the other hand, during a production further aggravates milk percent below annual average daily seasonally low production month volume uncertainties. deliveries. Deliveries recover in (seasonality index is less than 100), since

18 November/December 2011 / Rural Cooperatives Table 2 ―An example of a cooperative's milk in excess of demand by fluid milk and manufacturing processors 1

Member To fluid To Co-op milk in milk milk manufacturing excess of Month deliveries processors processors sales

------Million pounds/day------January 10.0 4.1 2.5 3.4 February 10.2 4.0 2.5 3.7 March 10.4 4.0 2.5 3.8 April 10.5 3.9 2.5 4.1 May 10.6 3.9 2.5 4.2 June 10.3 3.8 2.5 4.1 July 9.8 3.8 2.5 3.5 August 9.7 3.9 2.5 3.3 September 9.6 4.2 2.5 2.9 October 9.5 4.2 2.5 2.9 November 9.5 4.1 2.5 2.9 December 9.8 4.1 2.5 3.3 Annual average 10.0 4.0 2.5 3.5

1Items may not add to totals due to rounding.

the same infrastructure and herd size consumers’ demand of fluid products, usually runs counter to the seasonality will produce less milk, the farm’s which is highly seasonal. Manufacturing of milk production. Fluid demand tends capacity should be less than originally plants that make storable products such to be high during those months when rated. And because the same fixed cost as cheese are different. They tend to milk production is low, and tends to be is spread over a smaller milk volume, maintain a throughput volume at or low when milk production is high. The the average cost of producing milk near plant capacity in order to achieve mismatch of supply and demand is a should be higher. The combined effect least-cost operations. major challenge the cooperative has to would shift the cost curves leftward and The example in table 1 shows that handle, as shown in the following upward. fluid demand is highest in September example. The net effect of shifting seasonal and maintains a higher-than-average, Suppose that on an annual daily capacity and cost curves means that the though declining, level through fall and average basis, the cooperative’s members’ milk volume the cooperative winter until March; fluid demand is members deliver 10 million pounds of has to handle will fluctuate seasonally lower-than-average from April through milk a day, and the cooperative markets throughout the year. This further August. The peak in September 4 million pounds to fluid milk compounds the challenges of marketing (seasonality index = 105) is 5 percent processors and a constant 2.5 million members’ milk. above annual average daily pounds to dairy product manufacturing consumption. processors. Seasonal demand variation The lowest fluid consumption month Suppose further that milk production On the milk demand side, seasonal is June, with an index of 94, or 6 and fluid demand follow the seasonal variation is mainly caused by fluid percent below the annual daily average. patterns given in table 1. In May, the (beverage) uses. This is because the The June low is a drop of 11 percentage cooperative’s members will produce milk volume required by fluid points compared with the September 10.6 million pounds of milk a day, while processing plants is directly and peak. fluid plants will use 3.9 million pounds instantaneously derived from Thus, seasonality of fluid demand continued on page 40

Rural Cooperatives / November/December 2011 19 Co-ops saluted as ‘vital economic force’ at USDA event

cooperative of Hispanic immigrant business A owners that has created an authentic Latin American marketplace in Minneapolis and an online “virtual food hub” that helps local food co-ops expand their customer base in Virginia were among the co-ops saluted at USDA headquarters on Oct. 19 as part of its annual Co-op Month salute. The event was held to help increase awareness of the vital role co-ops play in the nation. In attendance were leaders and staff of many of the nation’s major co-op associations, as well as USDA employees, many of whose work includes serving and supporting co-ops. Cooperatives are producer- and user-owned businesses that give their members a stronger position in the marketplace by multiplying the power of one by the power of many,” Judith Canales, administrator for the Rural Clockwise from above: Judith Canales, administrator for the Business- Business-Cooperative Service of USDA Rural Development Cooperative Programs of USDA Rural Development, presents a said, reading from the Cooperative Month Proclamation certificate honoring Paul Hazen (center) for his support for USDA signed by Secretary of Agriculture Tom Vilsack. Further, co- Co-op Programs (he will be stepping down as president of the National ops “represent democracy and capitalism at their best” and Cooperative Business Association). At right is Chad Parker, the new “play a vital role in improving economic opportunity and the deputy administrator of USDA Cooperative Programs; Matthew Mullen provides information about USDA’s Rural Business-Cooperative Service quality of life in rural America,” she said. to Liz Bailey of the Cooperative Development Foundation; Jamie Villalaz USDA Deputy Under Secretary for Rural Development (left) and Enel Espinoza of the Latino Economic Development Center Doug O’Brien focused his remarks on co-ops as a source of discuss efforts to help Hispanic immigrants form new co-ops in jobs. “Co-ops are playing a role as our nation strives to Minnesota; Kathleen Heron and Kaitlin Campbell pass out samples of reduce high levels of unemployment by providing good jobs farm co-op products at the National Council of Farmer Cooperatives for tens of thousands of people in the farm sector alone,” he booth. USDA photos by Dan Campbell

20 November/December 2011 / Rural Cooperatives Mercado Central as a springboard to form LEDC, Villalaz said. Other LEDC efforts include helping to forge marketing links between an organic farm and a group of Mexican food restaurants looking for more local produce. LEDC also has an active outreach program that strives to make Hispanic people more aware of the co-op business model and how it can help them achieve their goals through group action. Molly Harris described how local food producers and co- ops in the Richmond, Va., area are able to post their product availability online and take orders from customers using the LuLu’s Local Foods website, which she created and runs. Member-producers also take an active role in education and community outreach. Farmers speak in classrooms and stage “meet and greet” sessions on their farms to explain production methods, food sustainability and nutrition issues. The growers also work with a number of churches that sponsor “Food and Faith” programs to help provide nutritious food to needy people. LuLu’s Local Food and LEDC have each been helped with financial and technical assistance programs of USDA Rural Development. said. U.S. agricultural and fishery cooperatives created 7,000 Jennifer Bond provided an overview of eXtension, a new jobs in 2010, boosting the number of jobs to 184,000 at Cooperative Extension effort that has created an online the nearly 2,400 agricultural co-ops surveyed. “cooperative community of practice,” which is developing O’Brien noted that through a number of USDA programs into a major “idea exchange” platform for academic — including Rural Cooperative Development Grants; Value- researchers, co-op and business development specialists, co- Added Producer Grants; support for Small, Socially op leaders, teachers and all others with an interest in Disadvantaged Farmers and Ranchers; and support for 1890s developing and improving cooperatives. universities — USDA Rural Development is continuing to USDA’s Co-op Month event was also used to pay tribute meet the needs of rural Americans, create the opportunity for to one of the co-op world’s best friends: Paul Hazen, who new jobs and support the cooperative business model. recently announced that he is stepping down as president of “During the new fiscal year, and in coming years, we will the National Cooperative Business Association. Canales and partner with other federal agencies — such as the Small Chad Parker, the deputy administrator for USDA’s Business Administration — to link cooperatives with Cooperative Programs office, presented Hazen with a special potential investors, secure access to capital to help fund certificate recognizing him for: “25 years of exemplary service growth and use opportunities created by the Rural Council to, and support of, USDA Rural Development Cooperative (headed by Secretary Vilsack) to network effectively and Programs in promoting the positive benefits of the promote opportunities for cooperatives to thrive,” he said. cooperative business model.” Jamie Villalaz and Enel Espinoza of the Latino Economic Hazen said he will be devoting much of his time during Development Center (LEDC) in Minneapolis discussed a his final months as NCBA leader to helping promote the number of efforts their organization is spearheading in worldwide observance of 2012 as the International Year of Minnesota to help immigrants develop and expand their own the Cooperative. businesses. Mercado Central Co-op, for example, is a thriving Worldwide, Hazen said there are more than 1 billion marketplace created by about 45 Hispanic business owners. members of cooperatives, including 29,000 co-ops in the The business owners eventually used their success with United States with 120 million members. I

Rural Cooperatives / November/December 2011 21

Mission-driven marketing

Rocky Mountain co-ops expand opportunities for sustainable food production

By Jennifer Keeling Bond, Kellie Enns In this article, we share the stories of distance between the growers and end- and Bill Brockhouse how these organizations came to be, consumers while potentially reducing what philosophies link the organizations profit margins. A solution was needed Editor’s note: Bond and Enns are assistant and how they created vibrant local that would allow growers to foster close professors in the Department of foods communities through relationships with customers while Agricultural and Resource Economics at cooperation. growing and marketing their products Colorado State University. Brockhouse in a sustainable manner. retired in July as a co-op development High Plains Food Cooperative: How to achieve these marketing specialist with USDA’s Cooperative Finding solid ground in a virtual objectives came into clearer focus after Programs. marketplace founding co-op members Chris and In 2004, a group of mostly organic, Sherri Schmidt attended a regional n response to the fresh and specialty produce growers in agricultural marketing workshop hosted I growing demand for Rawlins County, Kan., began to discuss by leadership from the Kansas Farmers locally grown and ways of coping with the physical Union and Ogallala Commons. sustainably produced distances between potential customers The workshop showcased the foods, two cooperatives and their farms. Growers had to travel Oklahoma Food Co-op (OFC), an have taken root in the Rocky Mountain long distances to reach numerous online community of producers and region. The High Plains Food farmers’ markets along the Front consumers that is dedicated to Cooperative (HPFC) serves member Range, which was inefficient, expensive supporting local growers. Inspired by consumers and producers in a virtual and resulted in a larger “carbon the OFC example, the Schmidts and a marketplace, using Internet-based sales. footprint” than the environmentally growing team of interested stakeholders The Colorado Farm and Art Market minded growers desired. began to firm up plans for what would (CFAM) builds relationships through The group considered teaming up become the High Plains Food fostering personal contact between with a local food distributor to access Cooperative (HPFC). growers and buyers at bi-weekly larger retail markets. However, doing so Like the Oklahoma cooperative, farmers’ markets. would have maintained the physical HPFC would have an online presence

24 November/December 2011 / Rural Cooperatives aimed at uniting interests in locally fee of $100, or an annual payment of cultivating farmer-consumer grown food and locally made products. $40, the 150 HPFC consumer-members relationships and enhancing rural However, in addition to supporting have access to a catalogue of value- sustainability. “On the website, we have local producers, HPFC would also added products that can be shipped to to write a story about our products — reflect the desires of the original the buyers’ home or delivered to a why someone would want to buy them Rawlins County growers to promote nearby drop point for an additional fee. and what’s the advantage,” says Laura food that was grown in an HPFC also has a physical Reeser, a co-op member who sells herbs environmentally sustainable manner distribution site in north Denver, and eggs. “This allows me to actually

Nearly 61 percent of responding fresh produce growers in Colorado are interested in joining a cooperative to assist with reaching new customers…

develop a relationship with the customers.” In a sense, the website creates a “virtual bridge” between producers and consumers that encourages interactions and transactions while also educating buyers on sustainable production practices.

Benefits of virtual marketing While links with customers are strengthened through HPFC, the website has also assisted in fostering the breadth of connections between isolated producers and markets. The Denver metro area includes 2.7 million people with a wide variety of niche tastes. The presence of HPFC’s network in the Facing page: Serah Trobridge checks out an herb garden that is yielding products for the High region has allowed some producers to Plains Food Cooperative (HFPC); above: Anna Morton buys carrots at the Venetuccii Farms grow their businesses. booth at the Colorado Farms and Art Market (CFAM) in Colorado Springs. Photos courtesy Barbara Cooper, owner of Cooper HPFC and CFAM Kitchens in rural McDonald, Kan., says and to support socially responsible coincidentally at the confluence of three the co-op affiliation and web presence business practices of stewardship and neighborhoods designated as “food enabled her to “expand my production cultural diversity and member deserts.” Food deserts are areas without by 25 percent because of all the orders empowerment. access to affordable, fresh food and are that come in from Denver. The website common in many low-income urban gives us the opportunity to reach some Consumer-centric philosophy areas. The distribution site location of those urban markets and sell our Three years after opening the co-op’s underscores a problem identified by the fresh items, something we couldn’t do “virtual doors” in 2008, producer- initial founders of the HPFC: that by ourselves.” members now span three states people need and deserve access to Reeser found similar results. She was (Colorado, Nebraska and Kansas) and quality, fresh food. able to triple the size of her egg and the co-op’s online marketplace offers a In addition to striving to provide herb business, working through the co- tremendous variety of seasonal healthful products for consumer- op. Consumers in her local market were products. For a one-time membership members, HPFC is committed to not only very price sensitive, but they

Rural Cooperatives / November/December 2011 25 also didn’t have a “taste” for some of bounty with the public. Members are so encouragement to others considering her gourmet herbs, such as epazote, passionate about the organization’s establishing a new co-op. “Be patient,” sorrel, lime thyme and lovage. In the she says, “it takes a while Denver market, she found food to build up customers and connoisseurs with more sophisticated find other producers.” culinary pallets and a desire for her According to Hagney, specialty products. cooperative entrepreneurs Beyond market access, the online should also keep in mind cooperative provides a method for that “just about anything simply staying in business and is possible, if you have the connecting consumers to production dedicated people who are agriculture. “The co-op is an willing to put the effort opportunity for people to stay on the forth to develop the farm…and for consumers to know what market.” food tastes like,” says Jo Hagney, For many fresh and current HPFC treasurer and founding specialty food growers co-chair of the co-op. along the Front Range, “We realized that even though HPFC serves as an maybe we couldn’t produce a lot of example of how to products, we had neighbors who could,” successfully merge adds HPFC President Chris Schmidt. philosophical and “By being able to market food products economic interests in a to people either in the Front Range or way that supports the elsewhere in Colorado, HPFC is a way growing local food of increasing our income and helping movement. With out with the financial situation in our consumer demand for area.” value-added food products on the rise and growing Seeds of success Dan Fields of Double Beaver Hay and Cattle company (also interest in sustainable Key personnel who are willing to seen driving a horse-drawn wagon on facing page) works on agriculture, HPFC a list of his upcoming deliveries. He and his wife, Yvonne, have sacrifice and serve the co-op are appears poised to been a driving force in the High Plains Food Cooperative. “Be essential to building a successful capitalize on market patient – it takes a while to build up customers and find other business endeavor. “We started with producers,” says Yvonne. momentum and create eight or so very dedicated people who real member benefits were interested in trying to get objectives that many volunteer their from a virtual marketplace. something going — not for personal time to ensure that deliveries are made, gain, but to be able to help out bills are paid, and the day-to-day jobs Colorado Farm and Art Market: neighbors and friends by marketing a associated with running the cooperative Market with a mission product they have,” says Chris Schmidt, are completed. Frustrated with a lack of managerial reflecting on the dedication that has In addition to a set of core values, support for local and organic producers allowed the fledging cooperative to stay the founding members attribute the at a popular Colorado Springs market, in business and grow in a crowded organization’s early success to a variety growers banded together to form a new market. The same individuals are still of strategic business decisions and a organization in 2003 that would supporting the cooperative and form realistic outlook. When asked what promote their distinctive products. The the organization’s “backbone,” he notes. advice they’d offer a producer who is mission of this new association would Mutual support is a unifying factor interested in forming a marketing be to educate consumers about local for many of the co-op’s producers. cooperative, Hagney cautions: “Find a food systems and promote the message Their philosophical outlook, which is support system, because you cannot do of sustainable agriculture while putting widely promoted by the organization’s it all by yourself.” a “face” on area farmers. founders, serves to strengthen While it may be challenging to In the early days of the market, connections between the growers and organize a complex new business and growers were approached by a group of create a network of environment- and difficult to wait through periods of Southern Colorado artisans and asked health-conscious producers who are market adaptation, Yvonne Fields of to form a joint venture. The proposed enthusiastic about sharing nature’s Double Beaver Hay Cattle offers organization would showcase not only

26 November/December 2011 / Rural Cooperatives fresh, locally grown produce, but also atmosphere of learning and discovery at information on this program, visit: high-quality regional art in a variety of the market. The Colorado Springs Slow www.rurdev.gov, or call 800-670-6553). media, providing a multi-sensory Food chapter is part of an international While seeking technical assistance, experience that would appeal to a wide group of food enthusiasts who are Hobbs and other members solidified range of patrons. dedicated to “sustainable local their business philosophy. An This meeting of the minds resulted agriculture” and to “counteracting fast educational mission was selected with in the formation of what is now called eating and a fast food lifestyle.” the goal of informing consumers of the the Colorado Farm and Art Market Members encourage others to literally differences between store-bought

“Start small and follow your dream. If you believe in the concept, get in there and push for it.”

(CFAM), a cooperative of 40 vendors slow down to enjoy the food they eat produce and locally grown, organic and numerous consumer-members. and participate in local food traditions. products that are purchased direct from The group regularly offers samples to the producer. Community of customers CFAM patrons using locally grown The commitment to supplying value- On a typical Wednesday afternoon in products available for sale at the added produce sets CFAM apart from September, a wide cross-section of market, thereby promoting vendors’ other area farmers’ markets that offer Colorado Springs residents can be goods and providing education on conventional produce. Not surprisingly, found shopping at the CFAM in serving suggestions. the produce available at CFAM often America the Beautiful Park. The market commands a premium. Through is easily accessible from Interstate Member outlook: education and the building of personal Highway 25 and draws crowds from Dan Hobbs relationships, Hobbs says consumers are nearby downtown, the University of Grower Dan Hobbs helped to found “more willing to pay a higher price for Colorado-Colorado Springs, the U.S. CFAM in 2003 as a new kind of locally grown and organic produce that Air Force Academy and local farmers’ market, one that was is not sourced from a grocery store neighborhoods. Young families, “democratic and sold organic food chain.” In this manner, the educational students, “urban-hipsters” and retirees direct from those that produce it mission serves to support small-scale mingle among booths overflowing with locally.” A fifth-generation Coloradoan farmers and to contribute to sustainable the season’s offerings. who farms organic vegetables and open- agriculture. Anna Morton, a student, explains pollinated seeds in Avondale, Hobbs is Area chefs who are attracted by the that she prefers local, fresh produce and also executive director of the Organic desire to support local agriculture and feels that local farmers create a Seed Alliance and a former cooperative sourcing fresh, diverse products are welcoming experience. To better serve specialist with the Rocky Mountain patronizing CFAM in increasing their growing customer base, CFAM’s Farmers Union (RMFU). numbers. The strengthening board of directors organized an He brought a wide range of relationship between restaurants and additional Saturday market that is now experience and expertise to CFAM. In market vendors has led to a chef’s tour held in northern Colorado Springs. particular, through his role with and increased direct sales. The Saturday market attracts a great RMFU, Hobbs was able to assist the Despite these positive developments, number of families and patrons, who, group in forming a business and Hobbs believes that wider acceptance of on average, are slightly older and have marketing plan while also finding legal local and organic produce is hindered higher incomes, relative to the help to get the group incorporated. The by growers’ inability to supply fresh downtown market goers. Rocky Mountain Farmers Union product year-round. As such, The Slow Food Movement and Cooperative Economic Development distribution has primarily been limited Colorado State University Extension Center provided in-kind assistance and to “white tablecloth” restaurants that are among those that make regular helped CFAM to secure a USDA Rural specialize in seasonal dishes and/or appearances and contribute to an Business Enterprise Grant (for more strongly promote local partnerships

Rural Cooperatives / November/December 2011 27 with producers. share owners who purchase a portion of Growing consumer knowledge about To capitalize on demand during the a cow’s production in advance. the benefits of eating healthier, limited growing season, Hobbs and By selling at CFAM and direct to purchasing locally and supporting other vendors try to keep abreast of restaurants and visitors at the ranch, environmentally friendly agricultural trends in consumer taste and Wiley is able to create personal practices have also assisted the preferences. Recent interest in “open- relationships with customers and to cooperative. However, it is the pollinated” or “true-to-type” produce teach them about the importance of “community of customers” that sustains offers a promising opportunity for respecting the environment and the organization and to whom the growers, such as the multiple varieties supporting local growers. Through board looks to for continued success. of heirloom garlic marketed by Hobbs. education, he has found that customers Other areas of potential growth have come to appreciate the Wiley’s Growing markets through include biodynamic, or so-called products even more and that they in education and access “beyond organic,” produce, grass-fed turn share what they have learned with Despite differences in business beef and raw milk. Although consumer friends and relatives. models, HPFC operates “virtually” interest has been somewhat limited, at This grassroots marketing campaign while CFAM markets take place at least one producer believes that through has been an effective way to grow multiple locations in the Colorado education, patrons will come to demand. However, Wiley has found Springs area; both cooperatives share a appreciate these value-added products that seasonality and limited supply desire to promote healthful eating and in greater numbers. create natural restrictions on the scope closer connections with the land and of Larga Vista’s operations. As a small farming families. Member outlook: farmer, it is “hard to make ends meet,” HPFC markets products from a Doug Wiley he says. diverse multi-state area, giving the For more than 20 years, Doug Wiley With limited production of organic organization an advantage over has farmed on his family’s Larga Vista produce and grass-fed beef, the Wiley’s traditional farmers’ markets that draw Ranch in Boone, Colo. As proponents operation is too small to attract orders vendors from relatively smaller of sustainable agricultural systems, from grocery stores. While restaurants geographic areas. CFAM strives to Wiley and his wife, Kim, strive to can provide an additional source of provide in-depth food education and create an agricultural ecosystem that is demand, sales through CFAM and sensory experiences for market patrons in harmony with the natural direct from the ranch are the most and to build community among patrons environment and surrounding important sources of revenue. and vendors. Significant increases in community. “The greatest gift we can “It is the people that make the market sales have demonstrated that the leave our kids is productive and fertile difference and make the work different approaches taken by the co- soils,” says Wiley. worthwhile, says Wiley, reflecting on ops have resulted in similar positive Educating consumers about the the hard work necessary to make Larga outcomes. benefits of biodynamic produce, grass- Vista Ranch profitable. Growing popularity with market fed beef and milk is a passion for the patrons may, in part, be a result of Wiley family. As CFAM members, they CFAM’s community of customers increased producer participation. Both are able to tap into the organization’s In the years since CFAM’s formation HPFC and CFAM have added many resources to help share information in 2003, the market has succeeded in growers to their membership roles in about sustainable agriculture and the sustaining itself in the midst of strong recent years. New members may be “need to develop markets for local competition and in educating a loyal inexperienced and looking to break into foods.” Enhanced local and national and growing customer base. In the local foods movement or established awareness of the benefits of value-added particular, board members take pride in enterprises seeking new outlets for their and locally grown products has their efforts to reach out to low-income products. Regardless of background, increased the number of consumers families and the market’s ability to partnering with either cooperative has demanding the Wiley’s goods, and they spread a philosophy of food as pleasure the potential to leverage individual service a growing and loyal customer and sustainable agricultural systems as a marketing efforts. base. means of building stronger A recent USDA Rural Development- To make food pick-up more communities. funded study (conducted by the authors convenient for their primarily Colorado Associations with like-minded of this article) found that nearly 61 Springs-based customers, the Wiley groups, such as the Slow Food percent of responding fresh produce family now brings raw (or Movement, have assisted the young growers in Colorado are interested in unpasteurized) cow’s milk to CFAM market to gain distinction as have joining a cooperative to assist with during the market season. By state law, relationships with area restaurants that reaching new customers, while more raw milk can only be provided to cow- promote local and organic food. continued on page 40

28 November/December 2011 / Rural Cooperatives Is ‘loca l’ enough?

Keeping customers happy in farmer co-op stores

By Norbert Wilson, Thomas Hall, Deacue Fields about the evolving customer base of these stores. Many of the e-mail: [email protected] new customers were part-time and hobby farmers. Some were new members of the community with little experience Editor’s note: Norbert Wilson is associate professor and Deacue taking care of a few of acres of land. These customers were Fields is associate professor and Extension economist in the coming to the stores with problems and questions. Wildlife Department of Ag Economics and Rural Sociology at Auburn enthusiasts, for example, came in looking for salt licks, seed University in Alabama. Thomas Hall is Extension economist with and fishing products. The renovations were an effort to keep the Alabama Cooperative Extension System and formally with the up with these new customers. Alabama Farmers Cooperative. While the customer base was evolving, farmers still played an important role in the life and membership of these n the fall of 2007 and spring of 2008, we cooperative stores. As we talked to more managers, we heard I traveled around Alabama to talk with a refrain about the importance of customer service. The managers of Alabama Farmers Cooperative managers knew that the needs of the customer were (AFC) member cooperative stores. We were important, especially in light of the diversity of competitors, on a mission to understand why and how including the “big box” retail stores and the Internet, some of the farmer co-op stores had converted to retail cropping up around their stores. These retailers offered stores. tough competition on prices. As one customer said, AFC At the time, we knew of co-op stores that had made the member cooperative stores are preferred because they are transition to more retail-oriented stores because they had a local. large percentage of non-farm clientele. In addition to the However, is local enough to keep customers coming back? traditional feed and farm supplies, these facilities handled In our discussions, none of the managers mentioned some combination of a garden center supplies, pet supplies, conducting efforts to evaluate customer satisfaction or farm clothing, lawn equipment, hunting supplies, etc. The customer service. They mentioned a great deal of anecdotal stores also offered such additional services as pet grooming evidence, but nothing empirical came to light. We began to and lawn and garden equipment maintenance and repair. see this dearth of information as an opportunity for us to As we met with the managers, we learned a great deal contribute to the well-being of farmer cooperative stores in

Rural Cooperatives / November/December 2011 29 our state. In combining these findings with the work that had been We thus refocused our investigation on a more expansive done in the past with SERVQUAL, they created the Retail concept than just customer service. Through an analysis of Service Quality Scale (RSQS). RSQS includes 28 items, of service quality in farm retail stores, we hoped to better assist which 17 were derived from SERVQUAL and the additional stores in meeting the needs of their customer base. 11 items were added from existing literature and qualitative research. Dabholkar and colleagues concluded that RSQS Alabama Farmers Cooperative background was suited to measure a mix of services and goods, like those Our test case, Alabama Farmers Cooperative (AFC), was found in a specialty or department store. established in 1936 and represents one of three regional, RSQS has five dimensions: state-based cooperatives still in existence in the United 1. Physical aspects: Store layout, appearance and States. AFC currently has 37 member cooperatives with 90 convenience; retail locations. Despite numerous challenges, AFC has 2. Reliability: Keeping promises and performing services consistently used innovative approaches to maintain correctly (doing it right); competitiveness. 3. Personal interaction: Personnel being courteous, helpful AFC is a regional, federated supply and marketing and inspiring confidence in customers; agricultural cooperative that provides its members with 4. Problem solving: The handling of returns and exchanges, products and services. AFC has a long tradition of being as well as complaints; and deeply involved with the farmers of Alabama and the 5. Policy: Policy on quality of merchandise, parking, panhandle of Florida. Since its beginning, AFC has grown to operation hours and credit cards. include more than 2,300 employees and has become one of In light of this model development, we developed a study the largest farmer-owned agriculture-related businesses in the that sought to provide management of local farm supply Southeast, with annual revenue of more than $300 million cooperative stores with suggestions that can help them meet (Allen 2009, AFC 2009). the service quality needs of their customer base. Going into the study, we believed that certain customer segments had Service quality different perceptions of service quality. Hence, perceptions Yes, the customer is always right — and in every way! were examined relative to demographic and socioeconomic According to research findings, service quality is multifaceted characteristics of the member-patrons. We measured the and subsumes the concept of customer service. Customers customers’ perceptions of service quality by using a scale perceive services — which includes everything that a business instrument containing items from the RSQS. offers customers — in terms of its quality and how satisfied they are with their overall experience (Zeithaml, 2000). For Questionnaire example, service quality includes having a product, when a With approval from AFC member cooperatives and customer wants it, at the price that she or he expects. Auburn University, we sent out surveys based on RSQS. The Likewise, service quality includes having staff members survey contained 28 items from the RSQS scale, as proposed who are knowledgeable, competent and courteous and who by Dabholkar and colleagues. An additional item was added can assist customers with their purchases. Service quality also which asked the respondent about patronage paid to the includes store policies on credit cards and hours of operation patron from the local cooperative. A seven-point Likert scale that meet the customers’ needs. All of these factors and more — where “7” signified “Strongly Agree” and “1” signified constitute service quality. Given the breadth of the concept of “Strongly Disagree” — was used with the 29 items. service quality, all store employees, managers and cooperative Respondents were asked to provide demographic and board members should be interested in evaluating service socioeconomic information. For example, we asked quality, not just customer service. respondents: “When you shop at this co-op store, what best A firm’s prerequisite for success is its ability to deliver describes you?” The respondent was to check one of four superior service (Parasuraman et al.,1988). To gauge a firm’s options: farmer, hobby farmer, homeowner or wildlife service quality, one must be able to measure consumers’ enthusiast. perception of quality. In order to have an objective approach to measure perceived quality, Parasuraman and colleagues Our findings developed an empirical method dubbed SERVQUAL. A total of 301 surveys were collected out of the 5,000 Originally, SERVQUAL was not oriented to retail mailed. Of those, 276 were deemed usable, which equates to establishments, so Dabholkar et al. (1996) developed and a usable response rate of 5.5 percent. Of these 276 survey empirically validated a scale to measure retail service quality. responses, 92.7 percent said their race was white. The In developing the instrument, these researchers interviewed youngest respondent was 25 and the oldest was 87. Of the customers in retail establishments and recorded the thought respondents, 85.5 percent were male. The median age was 60 process of these customers during shopping (they followed for men, 55 for women. customers around the store as they shopped). For education level, 34 percent said they had either a

30 November/December 2011 / Rural Cooperatives policies and reliability.

Recommendations Based on the groupings and tendencies of the customers within these groups, we have developed recommendations for farmer co-op stores. Homeowners who shop at AFC member cooperative stores tend to be most interested in high-quality customer service and personal interaction. These member-patrons, relative to others, tend to place greater emphasis on individual attention Store layout, appearance and convenience are key aspects in determining the appeal of a farm from employees who are supply store for members. Photos courtesy Alabama Farmers Cooperative. courteous, professional, prompt and knowledgeable. These college or advanced degree, while 38.7 percent had “some member-patrons also want high-quality merchandise and college” and 26 percent had either a high school education or interactions with staff resulting in error-free sales, returns less. Because most of the participants identified themselves as and exchanges. Given the dominance of this group, emphasis farmers, we compared our results with those of the U.S. on maintaining high-quality customer service and personal Census of Agriculture, 2007. The census showed that the interactions is the clearest “takeaway” from this study. average age of Alabama farmers is 57.6, that 91.8 percent are College-educated customers and farmers who are white and that 84.8 percent of the famers are male. Though dependent on farming for income, prefer stores that are our response rate is low, our survey reflects the demographics clean, accessible and convenient. As this group is not as of Alabama agriculture. dominant as the first, appearance and accessibility may not be Using a statistical technique called “principle component the top priority for a store. analysis” (PCA), we were able to group 185 respondents into The least dominant group includes wildlife enthusiasts and one of the three groups, which mimic the five groups of older member-patrons who tended to be more concerned RSQS. Our results suggest that customers of farmer about store policies and reliability as important components cooperatives may approach these retailers differently than of service quality. A core feature of this interest is to have other retailers. The groupings reflect customers whose convenient operating hours, the ability to use major credit responses suggest a strong interest in, or concern for, cards, availability of financing options and to receive particular service quality areas. adequate patronage. However, this group and the The “customer service and personal interaction” group is “appearance and accessibility” group are less dominant, the largest of the three groups, comprising 58.9 percent of leaving “service quality/customer service and personal the sample. This group includes the largest proportion of interaction” as the key area for co-ops to focus on. homeowners. Based on further analysis, we could see that Not only is the customer right, but so are the managers self-identified homeowners are 28 percent more likely to be that we interviewed. Of the components of service quality, in this category than the other two groups. Likewise, younger managers are most focused on customer service and personal member-patrons tend to be in this group. interactions. Our findings show that that the interest in The “appearance and accessibility” group is the second customer service and personal interactions is predicated on largest group, representing 24.9 percent of respondents. It customer demographics, and some member-patrons are more includes the greatest concentration of farmers (who usually interested in other aspects of service quality beyond customer depend on farming for most of their income) and hobby service and personal interactions. farmers. Better educated individuals in this group are 9.3 While our findings are limited to the member-patrons that percent more likely to express concern for appearance and we surveyed, they are indicative of the need of local farmer accessibility than the other areas. cooperatives to pay attention to customer service. However, The smallest group is the “policies and reliability” group, store appearance, policies and reliability are other facets of representing 21.6 percent of the sample. It includes the service quality that will keep customers coming back. largest percentage of self-reported wildlife enthusiasts and Editors note: For article references, e-mail the author at: older member-patrons. These member-patrons are 24 [email protected]. I percent more likely to express concerns of or interest in

Rural Cooperatives / November/December 2011 31 Making the connection

The ‘co-op’ brand can help strengthen links with members and consumers

By Bruce J. Reynolds, Ag Economist membership and participation in it, or trademarks and have greatly enhanced Cooperative Programs to non-member customers who have a the reputation of those brands with USDA Rural Development preference for dealing with their new status as representing farmer- e-mail: [email protected] cooperatives. The cooperative brand owned businesses. informs market participants and the An example is the acquisition of the he first U.S. census of public that cooperatives have widely Welch’s grape juice company and its T all types of cooperatives dispersed ownership among individuals name brand by the National Grape was mandated by or businesses with economic interests Cooperative Association. The Welch’s Congress in 2006 and that are aligned with customers to brand has been successfully promoted completed in 2009 by provide reliable products or services. with a variety of marketing programs, researchers at the University of Cooperatives maximize earnings for including emphasis on its farmer- Wisconsin. The resulting report — members but are not designed as ownership status (http://www.welchs Research on the Economic Impact of investment assets to be bought and sold. .com/about-welchs/farmers/dave- Cooperatives — identified more than The cooperative brand has value tied to nichols). 29,000 U.S. cooperatives. It provides the extent to which it succeeds in The cooperative brand complements data on cooperatives in different sectors conveying a special trust to members, to the trade names of member associations of the economy and documents the non-member customers and to the and their specific brands of products national “footprint of the cooperative general public. and services. Much of the public, brand.” For many cooperatives, it makes whether non-member customers or The purpose of a brand is to identify sense to identify themselves in a concise potential members, may not be familiar source and to signify positive and descriptive way that either defines with cooperatives and their attributes. associations in the minds of consumers what they do or where they are located, For this reason, many organizations and producers — the brand’s good will. using one or two words. have discovered that marketing their The term “cooperative” or “co-op” can There is not a pressing need to cooperative brand can be advantageous, function in a manner analogous to a include the term “cooperative” in their as discussed in an article — “Marketing brand as well. The cooperative brand names when their organizational status the Co-op Brand” — that appeared in identifies the user as democratically is understood by the relevant the Cooperative Business Journal (March- owned and controlled by the members. population from which they draw April 2006 issue). The article refers to The cooperative brand is, to some members. the “.coop” domain as one of many extent, a “public good” that is available In fact, some cooperatives have initiatives for marketing the cooperative to benefit anyone who seeks active acquired firms with international brand.

32 November/December 2011 / Rural Cooperatives Brand awareness joint ventures. About 110 of these joint ships, directors and distributions of Farmer cooperatives have had a long ventures include non-cooperative patronage dividends. Because all tradition in the United States and have business partners. partners are cooperatives, these joint a substantial share of activity in the Like any business, the degree of ventures promote the benefits of agricultural economy, typically success among these co-op joint cooperative membership. accounting for 25-30 percent of the ventures varies greatly. In general, When cooperatives combine their nation’s farm marketings (USDA, however, they tend to provide an services for members under one name, Agricultural Cooperative Statistics, economic gain through greater scale for but have non-cooperative firms as 2009). As shown in the census project, pricing power, risk sharing and reduced partners, the promotion of cooperative there is substantial activity in a few duplication in personnel and assets. values and benefits tends to be lost. sectors besides agriculture, such as the There are also certain disadvantages to These cooperatives function as holding role of credit unions in retail banking joint ventures, specifically in companies for ownership of the and in the insurance industry, in which complicating the assignment of operating joint venture entities. Rights mutual associations have a strong intellectual property rights, such as to their trade-name, trademarks, or financial position, as well as in several trademarks and patents. service marks may be abandoned due to other sectors of the economy. Joint ventures may have drawbacks not being used in commerce. The level of public awareness of for cooperative development. In some Although the original members are cooperatives is difficult to measure. A instances, joint ventures serve still patrons and receive dividends, the belief that cooperatives have potential customers who have potential to be cooperative brand can be diminished. for improving economic conditions members of a cooperative instead. To The partner cooperatives in these joint worldwide, however, is one of the that extent, opportunities for new ventures are open to new members, but motivations for the United Nations cooperative formation are diminished. after a few years of operating under the (UN) designation of 2012 as the year of Many agricultural joint ventures joint venture trade name with non- cooperatives. This action by the UN operate in wholesale types of markets cooperatives as partners, a new will contribute to more awareness of where a “cooperative” identity might generation of farmers may not develop the cooperative brand. not carry much value for their customer an appreciation for belonging to a firms or service providers. There are cooperative. Branding co-op joint ventures exceptions, as when customers — An alternative is to use a separate Agricultural cooperatives often particularly food or ingredient name for the joint venture’s legal and formed joint ventures as federated businesses — may prefer buying from tax filings only, so that cooperative cooperatives prior to the 1980s. There organizations with direct links to identities can be maintained. are at least 38 relatively large federated farmers and ranchers. For serving such cooperatives (a cooperative of coopera- customers, cooperatives operating in Identifying as co-ops tives) in operation today. Recent joint joint ventures can pursue branding Cooperatives have the potential to ventures by cooperatives have pre- strategies that identify their businesses benefit farmers, consumers and dominantly been organized as limited as owned by farmers. workers. A major obstacle to bringing liability companies (LLCs), even Branding strategies should not be their potential to fruition is a general though a cooperative federation would neglected, especially when organizing lack of knowledge about co-ops by the work as well, particularly when access to serve customers who have a potential public. The coming year of recognition to equity capital is not a constraint. to become members of either the joint for cooperatives by the U.N. may Some agricultural cooperatives are venture, if formed as a cooperative, or provide more familiarity. Continued also involved in joint ventures with of cooperatives that are partners in the efforts by cooperatives in marketing the non-cooperative business partners. But business. In recent years, some co-op brand will benefit them and even in these cases, the shared business agricultural cooperatives have been increase the interest of others to organ- could be organized as a cooperative. A operating joint ventures that deal ize similar member-owned businesses. joint venture organized as an agri- directly with farmers and ranchers. Even cooperatives without large cultural cooperative with non- Each cooperative partner has its own volume dealings in major retail markets cooperative members, however, would membership, and in some cases the can cumulatively improve awareness of likely lack the Capper-Volstead ad- joint venture is organized to provide the co-op brand by displaying and vantages of limited exemptions from services for non-member farmers and promoting their identity as member- anti-trust. ranchers. In other cases, cooperative owned businesses. With the economic Based on preliminary results of joint venture partners combine their pressures to form alliances, maintaining USDA’s 2010 survey of more than 2,300 operations for members under one a cooperative identity need not be lost agricultural cooperatives, 216 co-ops name, as if they had all merged. But when organizing and participating in reported involvement in 305 different they maintain their separate member- joint ventures. I

Rural Cooperatives / November/December 2011 33 Newsline Co-op developments, coast to coast

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

2012 Co-op Hall of Fame Cooperative Development Foundation enterprises. He has also done inductees announced (CDF), which administers the Hall of extensive international cooperative Four outstanding cooperative leaders Fame. “Induction to the Cooperative development work. will receive the cooperative commun- Hall of Fame is reserved for those who • William Davisson (Agriculture and ity’s highest honor when they are have made genuinely heroic Farm Credit) recently retired after 12 inducted into the Cooperative Hall of contributions to the cooperative years as CEO of GROWMARK Inc. Fame next spring. The 2012 inductees community.” He focused on sales and improved are: cooperative educator Michael Those selected (and the co-op operations, leading GROWMARK Cook; cooperative agri-business leader sectors they work in) for induction in through a period of strong growth, William Davisson; consumer coopera- 2012 are: including the top three income years tive developer Bill Gessner; and • Michael Cook (Education) is the in the cooperative’s history. He cooperative banker Charles Snyder. Robert D. Partridge Endowed recognized the value of co-op These cooperative leaders will be Professor in Cooperative Leadership partnerships and joint ventures in an recognized at the annual Cooperative and executive director of The increasingly competitive industry and Hall of Fame dinner and induction Graduate Institute of Cooperative is credited with creating an innovative ceremony at the National Press Club in Leadership (GICL) at the University co-op structure that led to improved Washington, D.C., on May 2. In of Missouri-Columbia. Cook’s applied cash patronage flow back to conjunction with the dinner, a public research on the role of cooperatives in GROWMARK members. forum will be held that afternoon, the changing global marketplace — • Bill Gessner (Consumer Goods & Services) is a cooperative developer and member of the CDS Consulting Cooperative. Gessner’s involvement in the food cooperative community has spanned 35 years, and he is credited with having helped transform the food co- Cook Davisson Gessner Snyder op community from a hodgepodge of individual stores into focusing on topics related to the United combined with his writing, consulting an integrated, values-driven national Nation’s declaration of 2012 as the and cooperative business experience community of consumer-owned retail International Year of the Cooperative. — has enabled him to develop groceries that has changed the way “The roster of the Cooperative Hall educational materials, classroom America thinks about food. In of Fame tells the story of the U.S. curricula and a portfolio of business addition to extensive mentoring and cooperative community through the advisory services that have provided a consulting work, he is credited with lives and accomplishments of ex- generation of cooperative leaders with helping to establish the Cooperative traordinary individuals,” says Gasper the tools to be more effective Grocers Information Network Kovach Jr., board chair of the managers of cooperative business (CGIN), the National Cooperative

34 November/December 2011 / Rural Cooperatives Grocers Association (NCGA) and the the 2012 International Year of Coopera- N.Y. Rea notes that Stammer’s wide CDS Consulting Cooperative. tives, he said “the timing is right for me range of co-op experience includes • Charles Snyder (Banking and Co-op to move on to the next chapter in my government relations, milk marketing, Development) is president and CEO career. I will remain at NCBA until a consumer sales/marketing and plant of National Cooperative Bank (NCB), successor is selected in early 2012.” operations. “We recognize, and are where he began in 1983 as corporate “I want to thank the NCBA staff, proud of, the role Rich has played to vice president and chief financial board of directors and membership for get us where we are today, and the officer, being promoted to his current all the support they have provided to board is confident that we will have position in 1992. Snyder has played a me. It has been a privilege to be a continued growth and profitability transformational role in navigating leader of NCBA. I hope to remain under his leadership,” Rea adds. the early years of the bank’s existence active in the cooperative movement and “We have great farmer-members, and re-positioned NCB to be the continue my contributions to employees and great brands. We’re set complex financial institution it is cooperation.” for continued growth and profitability today, providing full-service banking in the future,” Stammer says. “My goal services to cooperative enterprises. Agri-Mark names is to continue to move us forward and He is responsible for NCB’s Stammer new CEO further improve an already great commitment to “mission banking,” Richard Stammer became the new company and great cooperative." and he has played leadership roles in CEO of the Agri-Mark dairy “We have a very complex business,” promoting the growth of the cooperative Nov. 1. He has worked for says Vermont dairy farmer Paul Percy purchasing/shared services co-op the Methuen, Mass.-based co-op for the of Stowe, Vt., one of the 14 dairy sector, the establishment of the past 29 years, serving most recently as farmers who serve on the co-op’s board. dot.coop domain name and the the co-op’s chief operating officer and “We operate four processing plants development of successful marketing president of the co-op’s Cabot and throughout the region that act as local pieces, such as the annual Co-op 100, McCadam branded business. Stammer outlets for member milk and, at the which gives cooperatives valuable has been responsible for the growth of same time, support our large, national exposure to new audiences. Cabot from a small Vermont brand to wholesale and retail businesses. Rich The Hall of Fame gallery is on an award-winning national brand. knows the whole business inside and display in the offices of the National In April of this year, Paul P. Johnston out, from one end to the other.” Cooperative Business Association in announced his plans to retire after 47 Agri-Mark had $780 million in 2010 Washington, D.C., and is online at: years at the cooperative, the last 35 sales from the sale of its member milk, www.heroes.coop. For induction dinner years as CEO. Since that time, the cheese and dairy products. Rea says that information, contact CDF at 703-302- the past five years have been 8097, or: [email protected]. the most profitable in the history of the cooperative, and Paul Hazen stepping Johnston leaves “with a great down at NCBA legacy and with great After 25 years with the National appreciation from both Cooperative Business Association, members and employees including 12 as its president and CEO, alike.” Paul Hazen has announced that he is stepping down from the post. Wegner to lead “I have enjoyed working for NCBA Darigold and the cooperative movement, but the Jim Wegner has been greatest benefit has been getting to Stammer Wegner picked to succeed retiring know the people and their stories,” John Underwood as president Hazen said in a letter to members. “I organization’s board has worked with a and CEO of Northwest Dairy have learned that cooperators all over search firm to identify qualified Association (NDA) and Darigold. The the world — whether in the U.S., Brazil candidates for Agri-Mark’s top selection was announced to the Seattle, or in Zambia — are all united because management position. Wash.-based co-op’s 550 member- of the same cooperative principles and “After a thorough, national search, owners and 1,600 employees in July. values. That is our greatest strength.” the board of directors is confident we Wegner, previously Darigold’s senior He went on to call NCBA a “vibrant have selected the best person to lead vice president of technical services, and growing organization with a strong our cooperative, ensuring its continued assumed his new role on Aug. 1. experienced staff.” With cooperatives success,” says Board Chairman Neal Underwood is serving as special around the globe preparing to celebrate Rea, a dairy farmer from Cambridge, executive to the board and will assist

Rural Cooperatives / November/December 2011 35 with the transition. Wegner has 35 years of experience in the dairy industry. In addition to his executive roles at Darigold, he spent 28 years at a national dairy company where he was director of dairy operations, overseeing its U.S. and Canadian dairy plants. Wegner has served on the board for many state and national dairy industry organizations and has been an effective national voice in negotiating dairy policy. “We have a tremendous story to tell. NDA/Darigold is much more than just a regional dairy cooperative,” Wenger says. “While well known in the region for our Darigold-label products, we also have a large export business and have become a key player overseas as a supplier of high-quality dairy ingredients.” Darigold’s annual sales exceed $2 billion per year, he notes, and the co- op’s producers “help feed the world by generating more than 8 billion pounds of milk each year.” “Jim has been a key figure in Children at an orphanage in Tanzania enjoy packets of Blue Diamond almonds, improving and supporting Darigold’s provided by visiting co-op members from California. Photo courtesy Bekah Burroughs plants and has shown exemplary and Blue Diamond leadership in the areas of safety, quality, waste reduction and productivity,” Board Chairman Jim Werkhoven says. apart from the Maasai people of East the tour bus pulled up, the tribe lined He also saluted Underwood, who has Africa, a semi-nomadic tribe that has up, shoulder-to-shoulder, to greet them. been with the organization for nearly resided on the border of Kenya and The warriors performed a traditional 30 years, the last seven as president and Tanzania since the 19th century. The dance, accentuated by very high CEO. Maasai herd cattle, sheep and goats as jumping. “John was instrumental in develop- sources of income and for food. “Close to 75 children, age two ing Darigold’s core purpose and vision, Before leaving for Africa, the Mead’s through 8th grade, were lined up, quiet reinvigorating the Darigold brand and tour guide said it would be appropriate as can be, waiting to see us,” Joyce says. has been a champion of strategic to bring gifts for the Maasai children — Every child received a packet of al- planning and continuous improvement items such as hats, candy, coloring monds. For the Meads, the decision to initiatives,” Werkhoven says. “He has books and notebooks, crayons and share Blue Diamond almonds with the led the organization to dramatic pencils would all be well received, they Maasai was a way of connecting across operational efficiencies and record- were told. The Meads, as life-long Blue cultural and geographic boundaries to, setting returns for the cooperative’s Diamond members (Jim’s father was as Jim explains, “extend Blue Diamond’s member-owners. We extend our among the 230 founders of the co-op) reach across the globe.” warmest appreciation for John’s long- decided to bring packets of their co-op’s Baylor University freshman Bekah term commitment to Darigold’s success Smokehouse almonds. Burroughs and her father, who grows and wish him all the best in his “I’ve seen [photos of] almonds on almonds in California’s Central Valley, retirement.” top of Kilimanjaro, on top of Everest also recently shared Blue Diamond and at the Great Wall, so we decided to almonds with children in Tanzania. Almonds build good take them to East Africa!” says Jim. They were on a teaching mission at an will in East Africa Their tour group met the Maasai at an orphanage affiliated with a nonprofit Jim and Joyce Mead, almond entrance to Amboseli National Park, a group. growers from Chico, Calif., live worlds gated reserve where the Maasai live. As “We wanted to take something

36 November/December 2011 / Rural Cooperatives representing California that was across the United States gathered in tours of the Oklahoma City Bombing nutritious,” explains Burroughs. “Most Oklahoma City, Okl., Sept. 20-23 for National Memorial and the Producers of the children and adults at the the biennial fall meeting of the Nation- Cooperative Oil Mill. orphanage had never heard of almonds al Conference of State Cooperative before, and they absolutely loved Councils (NCSCC). The meeting was Farm Credit to use USDA them!” hosted by R.J. Gray, executive director grant to help train “next-gen” of the Oklahoma Agricultural farmers USDA to help electric Cooperative Council, completing his Seeking to enhance the success of co-ops improve service two-year term as NCSCC president. the next generation of America’s Agriculture Secretary Tom Vilsack in The meeting provides a forum for farmers and ranchers, the Farm Credit October announced funding for rural state council representatives to learn Council — in partnership with the electric cooperative utilities to improve from other states about their programs Wallace Center of Winrock Inter- distribution systems and build “smart- and activities and to look for ways state national and through a grant from grid” technologies in 27 states, all as co-op councils can work together. USDA — is launching a project to part of the Obama Administration’s Attendees also receive updates from evaluate and improve the effectiveness continued focus on investments in national and regional partners and of training programs for beginning infrastructure that creates rural jobs. USDA. farmers and ranchers. “This investment in the electric grid There are more than 30 state Agriculture Deputy Secretary will help address the growing need for cooperative councils across the country, Kathleen Merrigan announced that electric service nationwide and spur job USDA has creation by building out rural infra- awarded $18 structure,” Vilsack said during an million in address at a National Rural Electric grants to Cooperative Association regional organizations meeting in Denver, Colo. “Smart-grid that will technology can help better manage provide power use, provide rate stability for training and businesses and create the climate for job assistance to growth in rural America.” beginning The funds are provided through the farmers and Rural Utilities Program of USDA Rural State Co-op Council members tour the Producers Cooperative Oil Mill ranchers, Development. More than $40 million is as part of a national meeting in Oklahoma City. including a being provided for smart-grid grant of technologies and to build or improve about nearly 6,000 miles of electric lines. $675,000 to Funding for distribution cooperatives, no two of which are exactly alike. Some the Farm Credit Council for a project which provide power to consumers, will are staffed part-time, while others have to improve the effectiveness of benefit more than 38,000 rural several full-time staff on the payroll. educational material for beginning businesses and residents. Providing educational programs is a farmers. Included in the funding are three relatively universal function among the The project involves reviewing loans for Colorado projects that will councils, but some expand services to beginning farmer training curricula and help keep electricity reliable and include cooperative development, programs to assess the content, suit- affordable for rural communities. In advocacy/lobbying or other functions. ability and delivery methods used. The Virginia, a loan of $90 million to the During the formal business session, a primary focus of the assessment will be Northern Virginia Electric Cooperative new slate of officers was elected for a the components of a successful financial will be used to build a 49.9 megawatt two-year term ending in 2014. They skills education. The grant will be woody biomass generation facility. The include: President Rod Kelsay of Mid- focused on efforts in the southeast project is projected to generate about 6 America Cooperative Council; Vice United States, with a special emphasis percent of the cooperative's future President Emily Rooney of the on beginning farmer training programs power needs for the years 2014 through Agricultural Council of California; and that serve minority farmers. 2030. Secretary Brian Gion of the Montana “More effective financial skills Council of Cooperatives. Brenda training will enable beginning farmers State council members Forman, South Dakota Association of to analyze their economic conditions, gather in Oklahoma Cooperatives, will continue as treasurer. consider their personal goals and State co-op council executives from The NCSCC meeting included evening abilities, gauge the risk capacity of their

Rural Cooperatives / November/December 2011 37 farm businesses, improve their access to community, USDA is stepping up its inspired, instructed and encouraged credit and thereby increase the overall efforts to supplement its seven Agri- communicators of all ages, skill levels growth and economic sustainability of cultural Trade Advisory Committees and years of service in their chosen agriculture in America,” says Gary (ATACs) with new members, especially field. Generations of CCA members Matteson, Farm Credit Council’s vice those who represent minorities, women relished their first-name-basis president for young, beginning, small or persons with disabilities. friendships and associations with farmer programs and outreach. Applicants should represent a U.S. Forrest.” “Beginning farmers and ranchers entity with an interest in agricultural Bradley joined CCA in 1967, the face unique challenges, and these grants trade and have expertise and knowledge same year he became director of will provide needed training to help of agricultural trade as it relates to communications with Mid-America. He these producers become profitable and policy and commodity-specific issues. served as CCA president in 1976-77. In sustainable,” says Merrigan. “As part of Agricultural trade plays a vital role in 1981, he was awarded CCA’s highest its historic mission of service to U.S. the health of the nation’s economy, so honor: the H.E. Klinefelter Award. In agriculture and rural America, the having a voice on one of these com- 1985 (when the organization changed farmer-owned lending institutions of mittees can make a significant impact its name from the Cooperative Editor’s Farm Credit System are leading on government decisions. In fiscal 2011, Association to CCA), he was named the providers of credit to young, beginning U.S. agricultural exports were forecast organization’s third executive secretary, and small farmers and ranchers.” to reach a record $137 billion, which serving in that position through 1991. Over the course of the three-year supported more than 1 million U.S. During that period he was also editor of grant, Farm Credit expects to develop a jobs. CCA News. model for building relationships Members of these seven trade Bradley was a key member of the between independent beginning farmer committees receive briefings by the National Council of Farmer Coopera- training programs and their local Farm U.S. secretary of agriculture and the tives’ Public Relations Committee from Credit cooperatives nationally. USDA’s U.S. trade representative; committee 1987-93. He retired from Mid- National Institute of Food and Agri- members are asked for their views on a American Dairymen in 1994 and had culture (NIFA) awarded the grants wide range of agricultural trade issues. been an honorary CCA member since through its Beginning Farmer and Members can play an active role in 1995. He was also a noted local Rancher Development Program deliberations while representing U.S. newspaper columnist and freelance (BFRDP). agricultural interests. For more writer who often focused on young information about submitting an people and their accomplishments. USDA seeks diversity application, visit: www.fas.usda.gov/ on trade panels itp/apac-atacs/advisorycommittees.asp, Eastern Grain The face of American agriculture is or contact Steffon Brown at 202-720- Marketing launches changing. The number of farms in the 6219, or [email protected]. GROWMARK’s grain division is United States has grown 4 percent and entering a new venture with Heritage the operators of those farms have Forrest Bradley, co-op FS, Gilman: Eastern Grain Marketing become more diverse in the past five communicator, dies LLC (EGM). The company’s main years, according to results of USDA’s Forrest W. Bradley, 87, died Oct. 2 office is located in Gilman, Ill. Dana most recent Census of Agriculture. in his hometown of Springfield, Mo. Robinson, EGM general manager, says The 2007 Ag Census The former communications the venture will strengthen the package counted nearly 30 percent director with Mid-America of grain services offered to farmers in more women as principal Dairymen Inc. (later one of eastern Illinois. farm operators. The count the founding co-ops of Dairy “EGM combines our local of Hispanic operators grew Farmers of America), Bradley knowledge and expertise with sufficient by 10 percent, and the was called a “mover and resources to expand grain marketing number of American Indian, motivator” for improving co- alternatives and grain handling services Asian and black farm op communications through for the growers in eastern Illinois,” operators increased as well. his leadership positions in the Robinsion says. “This adds value to the The U.S. Census Bureau Bradley Cooperative Communicators crops grown in eastern Illinois, and also reports that the number of Association (CCA). added value will be realized by the minority-owned businesses grew more In a memorial in a recent CCA growers through higher payments for than 45 percent between 2002 and newsletter, Jerry Kirk of Tennessee their crop.” 2007. Farmers Cooperative said that Bradley, Growers will have greater access to To reflect the diversity of the during nearly two decades of active grain markets via a rail shuttle loader agricultural sector and business membership in CCA, “tirelessly EGM will construct in western

38 November/December 2011 / Rural Cooperatives Kankakee County. EGM plans to Swiss Valley entered into a joint venture Because the new site is located in construct about 2 million bushels of with Emmi-Roth Käse USA to establish southwestern Wisconsin, Boelens noted grain storage space at the shuttle White Hill Cheese in August 2010, that Swiss Valley cooperative members location. with the goal of increasing production are unaffected by the shift. “Co-op EGM is the fourth regional grain of Baby Swiss and other Swiss cheese member milk is the sole milk supplier marketing venture formed in Illinois varieties. to White Hill, which means there is between FS member cooperatives and “We were eager to move our still a secure market for our members’ GROWMARK. Platteville production to a more milk,” Boelens said. The former modern and expanded facility, and we manufacturing plant in Platteville is no Swiss Valley Farms moves found that opportunity with White longer operational. Former Platteville Platteville production Hill,” says Swiss Valley CEO Don employees were encouraged to apply Swiss Valley Farms has transitioned Boelens. The Shullsburg site, which was and interview for positions at White production of its Baby Swiss cheese acquired by Swiss Valley in 2005, Hill Cheese. Swiss Valley is considering wheels, loaves and no-salt-added Swiss consists of a 24,000-square-foot cheese future opportunities for the Platteville blocks from its former manufacturing manufacturing plant, a 50,000-square- property, which is still owned by the site in Platteville, Wis., to White Hill foot warehouse and a waste-water cooperative. I Cheese Co. LLC in Shullsburg, Wis. treatment facility.

PCCA posts record net margins in volatile year

Plains Cotton Cooperative Association (PCCA) had continued. “Unfortunately, the crop simply did not record net margins of $41.2 million for fiscal 2010-2011. produce the yields that we, the USDA, the gins, and our Further cash distributions to members of $36.3 million members expected.” were made in Septem-ber, comprised of $19.5 million in PCCA’s Warehouse Division received the third largest cash dividends, $4.7 million in stock retirements and volume in its history. “We worked through the heaviest $12.1 million in retirement of per-unit retains. shipping demand in the division’s history,” Darneille said, “All divisions were profitable despite the greatest “but our warehouses performed well above industry volatility any market has ever experienced,” PCCA shipping standards while receiving record amounts of President and CEO Wally Darneille said at the co-op’s inbound cotton from the gins.” annual meeting in September. “After several years of PCCA’s Textile and Apparel Division returned to world cotton production that was lower than demand, profitability during the year as efforts to develop more unforeseen late-season crop problems in the United value-added business paid off with 13 new accounts, States, China and Pakistan coincided to create an including several high-end brand names such as explosive price situation during the winter. To the best of American Eagle Outfitters, Urban Outfitters and Under our knowledge, we paid significantly more equity to our Armour. marketing pool members than any other pool where “We also entered the European and Indian jeans producers are not required to shoulder personal markets, an accomplish-ment once believed to be financial risk. In fact, the premiums we achieved over impossible,” Darneille reported. “Our jeans sales to the Commodity Credit Cor-poration loan were more than Replay, a high-end Italian brand, will contain denim six times higher than the average of the last 10 years.” made at our American Cotton Growers mill. Indian PCCA’s West Texas/Oklahoma/ Kansas marketing pool Terrain, a department store chain in Bombay, is offering was the second largest ever, despite the late-season a line of our jeans bearing the Cotton USA logo. We also adverse weather. “The adverse weather last October launched our university-branded jeans products at Texas affected volume more than was initially apparent, or our Tech, Texas A&M, Alabama, Georgia, Auburn and other results would have been even better,” Darneille schools.” I

Rural Cooperatives / November/December 2011 39 Mission-driven marketing state- or region-specific sites. continued from page 28 Access to receptive audiences may be achieved through non-electronic means as well. Case studies and articles in non-cooperative-oriented trade publications (e.g., Spudman than 46 percent of respondents said gaining more sales and Progressive Grocer) may serve to enhance the visibility resources would motivate them to join a co-op. Encouraging of local co-op organizations and provide a reference point for member-growers to share personal stories of how these those who are otherwise unfamiliar with the business form. benefits are being achieved through participation in An alternative and grassroots approach to communicating the marketing-oriented co-op’s such as CFAM and HPFC may value of cooperatives may be as simple as meeting with be a compelling means of advocating for co-op membership. potential members at their place of business or market In general, recommended methods of growing cooperative location. market participation among producers are similar to those In the heavy recruitment phase of membership, both that have been successfully employed to increase consumer HPFC and CFAM employed many of the methods described patronage. Namely, co-ops are encouraged to provide above. Ultimately, membership and patronage have increased education and access. Sharing credible personal stories of for both, providing evidence of the symbiotic relationship success can be one component of a cooperative education between grower-member involvement and consumer support. program that showcases multiple experiences at well-timed Reflecting on the hard work it has taken create a workshops and seminars. sustainable co-op, Jo Hagney of HPFC recommends that To appeal to time- and location-constrained producers other organizations “start small” and “follow your dream. If who want to learn more about cooperatives, an online and you believe in the concept, get in there and push for it.” Her interactive website that features case studies, personal enthusiasm reflects the passions that producer-members have experiences, interviews and other resources may provide for the CFAM and HPFC co-ops. The shared clarity of greater access to useful information. The Cooperative purpose has lead to the formation of marketable identities for Community of Practice on eXtension is an excellent model of both organizations, which serve to attract customers while such an interactive website that may be used as a template for uniting existing and new producers. I

How co-ops do it Other marketing cooperatives continued from page 19 The unique economics of cooperative marketing operation is applicable in the situation where the cooperative is the and the manufacturing processors will use 2.5 million exclusive marketing agent of the milk produced by members. pounds. The cooperative will have 4.2 million pounds of milk Other agricultural commodities (such as fruits, vegetables, a day in excess of demand by fluid plants and manufacturing nuts, poultry, sugar, etc.) that exclusively rely on the processors (table 2). cooperative to market members’ products would have unique On the other extreme, the same calculation will show that economics of cooperative operation similar to that of dairy the daily excess volume will be 2.9 million pounds in the fall cooperatives. months (September through November); a reduction of 1.3 However, they differ from milk in some important aspects. million pounds a day from May. The main difference is that milk is a “flow” product — day in If the cooperative has its own manufacturing plants to use and day out — while other farm commodities are harvested a constant volume of 2.9 million pounds of milk a day, then in lumps toward the end of the growing season of several the cooperative still needs to have facilities to handle a weeks or months. seasonal surplus of 1.3 million pounds of milk a day in May. In the analysis of the economics of cooperative marketing During other months, the seasonal surplus balancing facilities of milk, the unit of time used is on a per day basis. The same will be under-utilized and will run dry in the fall months, analysis of other commodities has to use a unit of time that is resulting in costly plant operations. appropriate for a particular commodity. If a cooperative does not have enough surplus balancing Some producers of commodities that are storable and have capacity (or in the case of bargaining cooperatives that do not a long marketing season (such as grains and oilseeds) may have any plant capacity), there are two ways for them to view the cooperative as but one of multiple outlets and dispose of surplus milk. They can sell the surplus milk in the market through it only if the cooperative offers the best spot market, usually at a price discount, or they can pay a terms and services among all alternatives. In such a case, the “tolling fee” to have the milk manufactured into storable cooperative may still maintain its uniqueness in its coopera- dairy products at plants owned by others. tive structure, organization, governance and equity financing. The price discount and the tolling fee are charges for Its marketing operation, however, is not different from other defraying the costs of owning and operating surplus handling marketing firms (firms other than cooperatives). I plant facilities.

40 November/December 2011 / Rural Cooperatives 2011 Article Index

Information appearing in Rural Cooperatives magazine during calendar year 2011 has been indexed to help you find past articles. Articles are indexed by issue and page. Back issues can be found on-line at: www.rurdev.usda.gov/rbs/pub/openmag.htm

TITLE FEATURES ...... Issue—Page Agriculture of the middle: opportunity for co-ops ...... Jan./Feb. 14 Alaska fishing co-op’s longevity tied to ability to adapt ...... Sept./Oct. 17 All the right moves Supply co-op adjusts and thrives in changing Central Texas market ...... Sept./Oct. 6 Banking on butanol Missouri’s Show Me Energy Co-op pursuing $55 million plant ...... July/Aug. 26 Boot camp for co-ops: Workshops for Indiana farmers markets provide strategies for managers, vendors ...... Sept./Oct. 18 Breeding a merger Full gamut of merger issues arose during consolidation of A.I. co-ops in Northeast ...... May/June 24 Capital investments improve services for members ...... May/June 34 Chad Parker to lead USDA Co-op Programs ...... Sept./Oct. 39 Climbing the hill Hillside Farmers Co-op helps Latino producers ...... Jan./Feb. 13 Convergence of Interests From forestry to local foods, multi-stakeholder co-ops gaining in popularity ...... March/April 14 Co-op ideas can help education ...... Jan./Feb. 30 Co-op launch demonstrates co-ops helping co-ops, commitment to community ...... Sept./Oct. 22 Co-op mergers require insight, commitment ...... May/June 27 Co-op sales, income second highest ever; 7,000 jobs added ...... Sept./Oct. 4 Cooperation on tap Multi-stakeholder co-ops are force behind new Austin brewpub and fledgling effort in Seattle ...... May/June 28 Co-ops for caregivers Homecare co-ops viewed as one answer to long-term care needs in rural America ...... May/June 18 Co-ops partner with schools, health clubs, churches ...... May/June 6 Co-ops saluted as ‘vital economic force’ at USDA event ...... Nov./Dec. 20 Co-ops: Sprouting ideas and innovations! USDA’s Cooperative Month salute profiles 11 noteworthy co-ops ...... Sept./Oct. 16 Crash course in cooperation Rural auto body shops form co-op for group purchasing, information sharing ...... Nov./Dec. 13 Crow Lake Wind powers up Nation’s largest co-op wind farm includes community- and college-owned turbines ...... March/April 10 Dairy co-ops: what they are and what they do ...... March/April 18 Davisson oversaw major expansion of co-op ...... March/April 29 Doctors organizing co-op to improve medical care in rural Pennsylvania ...... Sept./Oct. 28

Rural Cooperatives / November/December 2011 41 Don’t let ‘em go! Switchgrass plant switches on How co-ops can keep vital businesses, services Pre-process logistics of handling biomass for ethanol in rural communitie ...... Sept./Oct. 30 seen as potential role for co-ops ...... May/June 12 Drought takes heavy toll on Texas ranches, farms ...... Sept./Oct. 8 Taking the plunge Energy mandates underlie push for new energy crops ...... March/April 8 American Prawn Co-op helping aquaculture Expanding your customer base take root in tobacco country ...... July/Aug. 4 Kentucky supply co-op adapts to serve “mini” farms, Tanzanian dairy farmers and co-ops benefit homeowners ...... Jan./Feb. 11 from USDA, Land O’Lakes help ...... May/June 22 Farm Credit turns 95 Telling the co-op story at USDA ...... Sept./Oct. 41 Producer-owned lending system celebrates birthday Tomato co-ops help craft better food safety standards ...... Jan./Feb. 18 with online salute to its members ...... Sept./Oct. 14 Trail-blazing co-op helps Colorado ranchers ...... Sept./Oct. 20 Finding a way Upward Spiral USDA husband/wife team helps form soybean Once on the ropes, Minnesota Food farmer’s associations in Afghanistan ...... July/Aug. 20 Co-op bounces back ...... Nov./Dec. 8 From the Ground Up ...... Sept./Oct. 12 USDA ag experts bring knowledge, skills to Afghanistan ...... July/Aug. 23 Good governance and strategic decisionmaking ...... Jan./Feb. 27 USDA program helps offset cost of flex-fuel pump installation ...... May/June 16 Groomed for success Virtual food hub helps Virginia producers Kansas farm supply co-op adjusts to tap into local food markets ...... May/June 4 urbanizing market with new goods, services ...... Jan./Feb. 9 Welcome to the Caves of Faribault Growing Minnesota dairy capacity ...... Sept./Oct. 32 Historic sandstone caves home to Swiss Growing toward ‘Independence Day’ Valley’s blue cheese ...... March/April 30 MFA Oil pursuing next-generation biofuel project Why do co-op boards sometimes micromanage? ...... March/April 33 to reap energy from non-productive land ...... March/April 4 Why do members participate in ag co-ops? ...... Nov./Dec. 4 Hogs on the range Carolina growers form co-op to supply local MAGAZINE DEPARTMENTS pasture-based pork market ...... July/Aug. 11 How co-ops do it COMMENTARY Dairy co-ops are a prime example of the Co-ops: A vital source of rural jobs ...... Nov./Dec. 2 economics of co-op marketing ...... Nov./Dec. 16 Don’t bet against the American farmer ...... March/April 2 Is ‘local’ enough? From small beginnings ...... July/Aug. 2 Keeping customers happy in farmer co-op stores ...... Nov./Dec. 27 Know your farmer, know your co-op! ...... Jan./Feb. 2 International Year of Cooperatives resolution ...... Nov./Dec. 12 National Cooperative Month Proclamation ...... Sept./Oct. 2 Kentucky supply co-op adapts to serve “mini” farms, homeowners .... Jan./Feb. 11 Winning the future with food hubs ...... May/June 2 Keys to success for food hubs ...... May/June 9 Leadership co-op creates jobs, opportunities for Native Americans .. Sept./Oct. 29 FOCUS ON Legends of the Lakes Walton EMC: Using cooperative principles helps save an industry ...... Sept./Oct. 24 Co-op program helps rescue disabled woman’s home ...... Sept./Oct 33 Long-term trends show co-ops relying less on member equity while use of debt increasing ...... May/June 31 MANAGEMENT TIP Market edge for the Wedge How managing a co-op differs from Food co-op’s warehouse/distribution division a key running an investor-owned firm ...... March/April 29 cog in developing regional food system ...... July/Aug. 16 The most important things I learned about running a co-op ...... Jan./Feb. 17 Market for ‘seconds’ proves elusive to date ...... July/Aug. 10 Making the connection NEWSLINE The co-op brand can help strengthen links USDA’s Lewis wins honor ...... Jan./Feb. 31 with members and consumers ...... Nov./Dec. 30 U.S. Agbank, CoBank pursue merger MFA Oil Biomass receives USDA BCAP funding ...... July/Aug. 29 DFA members learn grazing strategies; co-op acquires Hispanic cheese brand Miscanthus facts ...... March/April 7 Urban co-op development initiative launched Mission-driven marketing Nilsestuen Fund to promote co-op education Rocky Mountain co-ops expand opportunities for CHS names Casale president and CEO sustainable food production ...... Nov./Dec. 22 Jeff Solberg new CEO at GROWMARK MMPA wins Dairy Plant of the Year ...... March/April 37 April class slated for co-op developers New structure symbolizes success of Lexington Farmers Market ..... Sept./Oct. 21 Landmark names Bob Carlson as CEO New study gauges outlook for California dairy co-ops ...... March/April 26 TFC enjoys turnaround year in 2010 New web tool helps dairy farmers capture energy savings ...... Sept./Oct. 36 LO’L updates social responsibility report Ostrander Co-op joins Century Club ...... May/June 34 CWT launches membership drive Ownership succession crucial for rural America Co-ops can play role in helping keep farms Clinton presents PCCA subsidiary with ACE Award ...... March/April 34 and ranches in producer hands ...... Jan./Feb. 4 CHS returns $231 million to owners; Building shuttle-train loading elevators Pilot Mountain Pride forges links between growers and buyers ...... July/Aug. 8 Wickham to lead NCFC Planting the seeds for new food co-ops ...... Sept./Oct. 26 Co-Bank earnings climb 8.6 percent Sailing turbulent seas New Zealand co-ops aiding earthquake victims Despite volatile markets, co-ops need to look LO’L sales second best in its 90 years to long-term competitive advantages ...... Jan./Feb. 24 Gray to lead SRSA Setting a ‘Fresh Standard’ ...... Jan./Feb. 21 Co-chairs picked for Co-op Caucus Shine a light Foremost distributes $31 million to members International Year of Co-ops is unique chance Changes to VAPG program announced to put co-ops in spotlight ...... Nov. /Dec. 10 Sunkist sales top $1 billion; Gillette picked as new chairman Smith, Jenkins win communications honors ...... Sept./Oct. 34 CCA cooking up ‘hot communications’ Split decision Virginia electric co-ops join forces to purchase Co-ops rally to help Japan ...... May/June 36 investor-owned assets, then split service territory ...... July/Aug. 30 DFA promotes environmental stewardship United Co-op celebrates 75th anniversary Cotton co-op sponsors denim design competition

42 November/December 2011 / Rural Cooperatives Organic Valley expands members, products in Northeast Agriculture of the middle: opportunity for co-ops ...... Jan./Feb. 14 CHS Acquires Eastern European Grain Co. Boot camp for co-ops: Schlangen new board chair at AMPI Workshops for Indiana farmers markets Sunkist to brand table grapes provide strategies for managers, vendors ...... Sept./Oct. 18 Evergreen model impresses HUD official Climbing the hill Prairie Skies Co-op to build biofuels facility Hillside Farmers Co-op helps Latino producers ...... Jan./Feb. 13 Record-setting year for Westby Creamery Convergence of Interests Virginia broadband co-op’s efforts create jobs From forestry to local foods, multi-stakeholder co-ops gaining in popularity ...... March/April 14 Dairy Month campaign delivers 100,000 meals ...... July/Aug. 35 Co-op launch demonstrates co-ops helping co-ops, Fund established for victims of spring storms commitment to community ...... Sept./Oct. 22 CHS aiding disaster victims Cooperation on tap CoBank-U.S. AgBank merger gets preliminary approval Multi-stakeholder co-ops are force behind new West Virginia co-op marketing natural Angus beef Austin brewpub and fledgling effort in Seattle ...... May/June 28 Co-ops join forces to promote healthy school lunches Co-ops for caregivers GROWMARK finalizes Select Seed acquisition Homecare co-ops viewed as one answer to Binder new CEO at FCCServices long-term care needs in rural America ...... May/June 18 Grainland Co-op members approve joining CHS Co-ops saluted as ‘vital economic force’ at USDA event ...... Nov./Dec. 20 Hazen addresses White House Councils Crash course in cooperation Accelerated Genetics honored for export success Rural auto body shops form co-op for Dairy co-op CEO sentenced for fraud group purchasing, information sharing ...... Nov./Dec. 13 USDA accepting VAPG applications Doctors organizing co-op to improve medical care in rural Pennsylvania ...... Sept./Oct. 28 .. Farmer Co-op Conference to focus on Don’t let ‘em go! globalization, innovative finance ...... Sept./Oct. 38 How co-ops can keep vital businesses, NFU supports Year of Cooperatives; Johnson stresses need for rural development services in rural communities ...... Sept./Oct. 30 Nearly half of nation’s milk supply now under FARM umbrella Finding a way Blue Diamond wins food safety award; hosts event focusing on trade, jobs USDA husband/wife team helps form soybean Livestock genetics co-op wins Compass Award farmer’s associations in Afghanistan ...... July/Aug. 20 CHS, Cargill eye expanded scope for TEMCO From small beginnings ...... July/Aug. 2 CDF fund to help co-ops hit by hurricane Hogs on the range Missouri co-op, USDA help college expand energy program Carolina growers form co-op to supply local CoBank, U.S. AgBank merger approved by stockholders pasture-based pork market ...... July/Aug. 11 Worker co-ops eligible for SBA pilot program Keys to success for food hubs ...... May/June 9 Leadership co-op creates jobs, opportunities 2012 Co-op Hall of Fame inductees ...... Nov./Dec. 32 for Native Americans ...... Sept./Oct. 29 Paul Hazen stepping down at NCBA Legends of the Lakes AgriMark names Stammer new CEO Using cooperative principles helps save an industry ...... Sept./Oct. 24 Wegner to lead Darigold New structure symbolizes success of Almonds build good will in East Africa Lexington Farmers Market ...... Sept./Oct. 21 USDA to help electric co-ops improve service Pilot Mountain Pride forges links Farm Credit to use USDA grant to help train “next-gen” farmers between growers and buyers ...... July/Aug. 8 USDA seeks diversity on trade panels Planting the seeds for new food co-ops ...... Sept./Oct. 26 Forrest Bradley, co-op communicator, dies Taking the plunge Eastern Grain Marketing launches American Prawn Co-op helping aquaculture PCCA posts record net margins in volatile year take root in tobacco country ...... July/Aug. 4 Tanzanian dairy farmers and co-ops UTILITY CO-OP CONNECTION benefit from USDA, Land O’Lakes help ...... May/June 22 Bridging the gaps: New Mexico co-op Trail-blazing co-op helps Colorado ranchers ...... Sept./Oct. 20 expanding broadband in rural West ...... Jan./Feb. 29 Upward Spiral Wisconsin coal-burning plant converts to biomass ...... July/Aug. 14 Once on the ropes, Minnesota Food Co-op bounces back ...... Nov./Dec. 8 USDA ag experts bring knowledge, skills to Afghanistan ...... July/Aug. 23 SUBJECTS Virtual food hub helps Virginia producers tap into local food markets ...... May/June 4 Ag of the Middle Agriculture of the middle: opportunity for co-ops ...... Jan./Feb. 14 Co-op Principles/Advantages/Impact Co-ops saluted as ‘vital economic force’ at USDA event ...... Nov./Dec. 20 Aquaculture Dairy co-ops: what they are and what they do ...... March/April 18 Taking the plunge How co-ops do it American Prawn Co-op helping aquaculture Dairy co-ops are a prime example of the economics take root in tobacco country ...... July/Aug. 4 of co-op marketing ...... Nov./Dec. 16 International Year of Cooperatives resolution ...... Nov./Dec. 12 Broadband Making the connection Bridging the gaps: New Mexico co-op The co-op brand can help strengthen links with expanding broadband in rural West ...... Jan./Feb. 29 members and consumers ...... Nov./Dec. 30 Shine a light Communications International Year of Co-ops is unique chance to From the Ground Up ...... Sept./Oct. 12 put co-ops in spotlight ...... Nov. /Dec. 10 Smith, Jenkins win communications honors ...... Sept./Oct. 34 Why do members participate in ag co-ops? ...... Nov./Dec. 4

Consumer Co-ops Co-op Statistics Cooperation on tap Long-term trends show co-ops relying less on member Multi-stakeholder co-ops are force behind new Austin equity while use of debt increasing ...... May/June 31 brewpub and fledgling effort in Seattle ...... May/June 28 Co-op sales, income second highest ever; 7,000 jobs added ...... Sept./Oct. 4 Co-op Development Cotton

Rural Cooperatives / November/December 2011 43 All the right moves Long-term trends show co-ops relying less on member Supply co-op adjusts and thrives in equity while use of debt increasing ...... May/June 31 changing Central Texas market ...... Sept./Oct. 6 Farm Credit turns 95 Fishing Producer-owned lending system celebrates Alaska fishing co-op’s longevity tied to ability to adapt ...... Sept./Oct. 17 birthday with online salute to its members ...... Sept./Oct. 14 Legends of the Lakes Drought takes heavy toll on Texas ranches, farms ...... Sept./Oct. 8 Using cooperative principles helps save an industry ...... Sept./Oct. 24

Craft Co-ops Food Co-ops Mission-driven marketing Boot camp for co-ops: Rocky Mountain co-ops expand opportunities Workshops for Indiana farmers markets for sustainable food production ...... Nov./Dec. 22 provide strategies for managers, vendors ...... Sept./Oct. 18 Co-op launch demonstrates co-ops helping Dairy co-ops, commitment to community ...... Sept./Oct. 22 Breeding a merger Don’t let ‘em go! Full gamut of merger issues arose during How co-ops can keep vital businesses, consolidation of A.I. co-ops in Northeast ...... May/June 24 services in rural communities ...... Sept./Oct. 30 Dairy co-op survey reveals financial performance trends ...... Jan./Feb. 22 Market edge for the Wedge Dairy co-ops: what they are and what they do ...... March/April 18 Food co-op’s warehouse/distribution Growing Minnesota dairy capacity ...... Sept./Oct. 32 division a key cog in developing regional food system ...... July/Aug. 16 How co-ops do it Mission-driven marketing Dairy co-ops are a prime example of the Rocky Mountain co-ops expand opportunities for economics of co-op marketing ...... Nov./Dec. 16 sustainable food production ...... Nov./Dec. 22 Mission-driven marketing Planting the seeds for new food co-ops ...... Sept./Oct. 26 Rocky Mountain co-ops expand opportunities Upward Spiral for sustainable food production ...... Nov./Dec. 22 Once on the ropes, Minnesota Food New study gauges outlook for California dairy co-ops ...... March/April 26 Co-op bounces back ...... Nov./Dec. 8 New web tool helps dairy farmers capture energy savings ...... Sept./Oct. 36 Tanzanian dairy farmers and co-ops benefit Food Safety from USDA, Land O’Lakes help ...... May/June 22 Setting a ‘Fresh Standard’ ...... Jan./Feb. 21 The most important things I learned about running a co-op ...... Jan./Feb. 17 Tomato co-ops help craft better food safety standards ...... Jan./Feb. 18 Welcome to the Caves of Faribault Historic sandstone caves home to Swiss Foreign Co-ops Valley’s blue cheese ...... March/April 30 Finding a way USDA husband/wife team helps form soybean Directors/Governance farmer’s associations in Afghanistan ...... July/Aug. 20 Good governance and strategic decisionmaking ...... Jan./Feb. 27 Shine a light Why do co-op boards sometimes micromanage? ...... March/April 33 International Year of Co-ops is unique chance to put co-ops in spotlight ...... Nov. /Dec. 10 Environment/Energy Tanzanian dairy farmers and co-ops benefit Banking on butanol from USDA, Land O’Lakes help ...... May/June 22 Missouri’s Show Me Energy Co-op pursuing $55 million plant ...... July/Aug. 26 USDA ag experts bring knowledge, skills to Afghanistan ...... July/Aug. 23 New web tool helps dairy farmers capture energy savings ...... Sept./Oct. 36 Wisconsin coal-burning plant converts to biomass ...... July/Aug. 14 Forestry Convergence of Interests Farm Supply and Services From forestry to local foods, multi-stakeholder All the right moves co-ops gaining in popularity ...... March/April 14 Supply co-op adjusts and thrives in changing Central Texas market ...... Sept./Oct. 6 Fruits, Nuts, Vegetables Breeding a merger Market for ‘seconds’ proves elusive to date ...... July/Aug. 10 Full gamut of merger issues arose during Pilot Mountain Pride forges links between growers and buyers ...... July/Aug. 8 consolidation of A.I. co-ops in Northeast ...... May/June 24 Setting a ‘Fresh Standard’ ...... Jan./Feb. 21 Co-op mergers require insight, commitment ...... May/June 27 Tomato co-ops help craft better food safety standards ...... Jan./Feb. 18 Co-op sales, income second highest ever; 7,000 jobs added ...... Sept./Oct. 4 Davisson oversaw major expansion of co-op ...... March/April 29 Grains/Oilseeds Drought takes heavy toll on Texas ranches, farms ...... Sept./Oct. 8 Capital investments improve services for members ...... May/June 34 Expanding your customer base Finding a way Kentucky supply co-op adapts to USDA husband/wife team helps form soybean farmer’s serve “mini” farms, homeowners ...... Jan./Feb. 11 associations in Afghanistan ...... July/Aug. 20 Groomed for success Ostrander Co-op joins Century Club ...... May/June 34 Kansas farm supply co-op adjusts to urbanizing market with new goods, services ...... Jan./Feb. 9 Health & Home Services How managing a co-op differs from Convergence of Interests running an investor-owned firm ...... March/April 29 From forestry to local foods, multi-stakeholder Is ‘local’ enough? co-ops gaining in popularity ...... March/April 14 Keeping customers happy in farmer co-op stores ...... Nov./Dec. 27 Co-ops for caregivers Ostrander Co-op joins Century Club ...... May/June 34 Homecare co-ops viewed as one answer to long-term care needs in rural America ...... May/June 18 Finance/Tax/Legal Co-ops partner with schools, health clubs, churches ...... May/June 6 Dairy co-ops: what they are and what they do ...... March/April 18 Farm Credit turns 95 Legal/Legislative Producer-owned lending system celebrates Energy mandates underlie push for new energy crops ...... March/April 8 birthday with online salute to its members ...... Sept./Oct. 14 From the Ground Up ...... Sept./Oct. 12 Tomato co-ops help craft better food safety standards ...... Jan./Feb. 18 Livestock & Poultry

44 November/December 2011 / Rural Cooperatives All the right moves Leadership co-op creates jobs, Supply co-op adjusts and thrives opportunities for Native Americans ...... Sept./Oct. 29 in changing Central Texas market ...... Sept./Oct. 6 Breeding a merger Renewable Energy Full gamut of merger issues arose during Banking on butanol consolidation of A.I. co-ops in Northeast ...... May/June 24 Missouri’s Show Me Energy Co-op pursuing $55 million plant ...... July/Aug. 26 Drought takes heavy toll on Texas ranches, farms ...... Sept./Oct. 8 Crow Lake Wind powers up Farm Credit turns 95 Nation’s largest co-op wind farm includes community- Producer-owned lending system celebrates birthday and college-owned turbines ...... March/April 10 with online salute to its members ...... Sept./Oct. 14 Don’t bet against the American farmer ...... March/April 2 Hogs on the range Energy mandates underlie push for new energy crops ...... March/April 8 Carolina growers form co-op to supply Growing toward ‘Independence Day’ local pasture-based pork market ...... July/Aug. 11 MFA Oil pursuing next-generation Trail-blazing co-op helps Colorado ranchers ...... Sept./Oct. 20 biofuel project to reap energy from non-productive land ...... March/April 4 MFA Oil Biomass receives USDA BCAP funding ...... July/Aug. 29 Management Switchgrass plant switches on All the right moves Pre-process logistics of handling biomass for ethanol Supply co-op adjusts and thrives in seen as potential role for co-ops ...... May/June 12 changing Central Texas market ...... Sept./Oct. 6 USDA program helps offset cost of flex-fuel pump installation ...... May/June 16 Davisson oversaw major expansion of co-op ...... March/April 29 Wisconsin coal-burning plant converts to biomass ...... July/Aug. 14 Groomed for success Kansas farm supply co-op adjusts to urbanizing Service Co-ops market with new goods, services ...... Jan./Feb. 9 Crash course in cooperation How co-ops do it Rural auto body shops form co-op for group Dairy co-ops are a prime example of the purchasing, information sharing ...... Nov./Dec. 13 economics of co-op marketing ...... Nov./Dec. 16 How managing a co-op differs from running Succession Planning an investor-owned firm ...... March/April 29 Ownership succession crucial for rural America Sailing turbulent seas Co-ops can play role in helping keep farms Despite volatile markets, co-ops need to and ranches in producer hands ...... Jan./Feb. 4 look to long-term competitive advantages ...... Jan./Feb. 24 The most important things I learned about running a co-op ...... Jan./Feb. 17 Sustainable/Local/Organic Why do co-op boards sometimes micromanage? ...... March/April 33 Climbing the Hill Hillside Farmers Co-op helps Latino producers ...... Jan./Feb. 13 Marketing Convergence of Interests Alaska fishing co-op’s longevity tied to ability to adapt ...... Sept./Oct. 17 From forestry to local foods, multi-stakeholder Co-op sales, income second highest ever; 7,000 jobs added ...... Sept./Oct. 4 co-ops gaining in popularity ...... March/April 14 How co-ops do it Co-ops partner with schools, health clubs, churches ...... May/June 6 Dairy co-ops are a prime example of the From small beginnings ...... July/Aug. 2 economics of co-op marketing ...... Nov./Dec. 16 Hogs on the range Making the connection Carolina growers form co-op to supply local The co-op brand can help strengthen links pasture-based pork market ...... July/Aug. 11 with members and consumers ...... Nov./Dec. 30 Keys to success for food hubs ...... May/June 9 Market for ‘seconds’ proves elusive to date ...... July/Aug. 10 Know your farmer, know your co-op! ...... Jan./Feb. 2 New study gauges outlook for California dairy co-ops ...... March/April 26 Market edge for the Wedge Pilot Mountain Pride forges links between growers and buyers ...... July/Aug. 8 Food co-op’s warehouse/distribution division a Virtual food hub helps Virginia producers key cog in developing regional food system ...... July/Aug. 16 tap into local food markets ...... May/June 4 Mission-driven marketing Welcome to the Caves of Faribault Rocky Mountain co-ops expand opportunities for Historic sandstone caves home to Swiss sustainable food production ...... Nov./Dec. 22 Valley’s blue cheese ...... March/April 30 Taking the plunge American Prawn Co-op helping aquaculture take Medical root in tobacco country ...... July/Aug. 4 Doctors organizing co-op to improve Virtual food hub helps Virginia producers tap into medical care in rural Pennsylvania ...... Sept./Oct. 28 local food markets ...... May/June 4 Winning the future with food hubs ...... May/June 2 Member Realations/ Services Capital investments improve services for members ...... May/June 34 Technology Is ‘local’ enough? Growing toward ‘Independence Day’ Keeping customers happy in farmer co-op stores ...... Nov./Dec. 27 MFA Oil pursuing next-generation biofuel project to Why do members participate in ag co-ops? ...... Nov./Dec. 4 reap energy from non-productive land ...... March/April 4 Switchgrass plant switches on Mergers/Acquisitions Pre-process logistics of handling biomass for Breeding a merger ethanol seen as potential role for co-ops ...... May/June 12 Full gamut of merger issues arose during Virtual food hub helps Virginia producers tap consolidation of A.I. co-ops in Northeast ...... May/June 24 into local food markets ...... May/June 4 Co-op mergers require insight, commitment ...... May/June 27 Split decision Trade Virginia electric co-ops join forces to purchase Sailing turbulent seas investor-owned assets, then split service territory ...... July/Aug. 30 Despite volatile markets, co-ops need to look to long-term competitive advantages ...... Jan./Feb. 24 Minority Co-ops Climbing the hill Hillside Farmers Co-op helps Latino producers ...... Jan./Feb. 13 Co-ops saluted as ‘vital economic force’ at USDA event ...... Nov./Dec. 20

Rural Cooperatives / November/December 2011 45 Urbanization Shine a light All the right moves International Year of Co-ops is unique chance to put Supply co-op adjusts and thrives in changing co-ops in spotlight ...... Nov. /Dec. 10 Central Texas market ...... Sept./Oct. 6 Switchgrass plant switches on Expanding your customer base Pre-process logistics of handling biomass for ethanol Kentucky supply co-op adapts to serve “mini” seen as potential role for co-ops ...... May/June 12 farms, homeowners ...... Jan./Feb. 11 Groomed for success Canales, Judy Kansas farm supply co-op adjusts to urbanizing Co-op role in rural development ...... Jan./Feb. 2 market with new goods, services ...... Jan./Feb. 9 Clamp, Christina USDA Programs University course promotes co-op development MFA Oil Biomass receives USDA BCAP funding ...... July/Aug. 29 to meet community needs ...... Jan./Feb. 16 Ownership succession crucial for rural America Co-ops can play role in helping keep farms Coontz, Kim and ranches in producer hands ...... Jan./Feb. 4 Co-op launch demonstrates co-ops helping co-ops, USDA ag experts bring knowledge, skills to Afghanistan ...... July/Aug. 23 commitment to community ...... Sept./Oct. 22 USDA program helps offset cost of flex-fuel pump installation ...... May/June 16 Crow, Andrew Utility Co-ops Co-ops: Sprouting ideas and innovations! Bridging the gaps: New Mexico co-op expanding USDA’s Cooperative Month salute profiles 11 broadband in rural West ...... Jan./Feb. 29 noteworthy co-ops ...... Sept./Oct. 16 Crow Lake Wind powers up Nation’s largest co-op wind farm includes community- Czech, Adam and college-owned turbines ...... March/April 10 Climbing the hill Split decision Hillside Farmers Co-op helps Latino producers ...... Jan./Feb. 13 Virginia electric co-ops join forces to purchase investor-owned assets, then split service territory ...... July/Aug. 30 Davisson, Bill Walton EMC: How managing a co-op differs from running an Co-op program helps rescue disabled woman’s home ...... Sept./Oct 33 investor-owned firm ...... March/April 29 Wisconsin coal-burning plant converts to biomass ...... July/Aug. 14 Devoy, Zach Worker-owned co-ops Trail-blazing co-op helps Colorado ranchers ...... Sept./Oct. 20 Crash course in cooperation Rural auto body shops form co-op for group Diamond, Adam purchasing, information sharing ...... Nov./Dec. 13 Market edge for the Wedge Co-ops for caregivers Food co-op’s warehouse/distribution division a key Homecare co-ops viewed as one answer to cog in developing regional food system ...... July/Aug. 16 long-term care needs in rural America ...... May/June 18 Dilland, John AUTHORS The most important things I learned about running a co-op ...... Jan./Feb. 17

Bau, Margaret DuMont, Amber Co-ops for caregivers Smith, Jenkins win communications honors ...... Sept./Oct. 34 Homecare co-ops viewed as one answer to long-term care needs in rural America ...... May/June 18 Edberg, Kevin Upward Spiral Bond, Jennifer Keeling Once on the ropes, Minnesota Food Co-op bounces back ...... Nov./Dec. 8 Mission-driven marketing Rocky Mountain co-ops expand opportunities Ellerby, Justin for sustainable food production ...... Nov./Dec. 22 New study gauges outlook for California dairy co-ops ...... March/April 26

Brockhouse, Bill Ellis, Robert A. Hogs on the range Split decision Carolina growers form co-op to supply local Virginia electric co-ops join forces to purchase pasture-based pork market ...... July/Aug. 11 investor-owned assets, then split service territory ...... July/Aug. 30 Mission-driven marketing Rocky Mountain co-ops expand opportunities Enns, Kellie for sustainable food production ...... Nov./Dec. 22 Mission-driven marketing Rocky Mountain co-ops expand opportunities Brooks, Greg for sustainable food production ...... Nov./Dec. 22 Smith, Jenkins win communications honors ...... Sept./Oct. 34 Eversull, E. Eldon Campbell, Dan Co-op sales, income second highest ever; 7,000 jobs added ...... Sept./Oct. 4 All the right moves Long-term trends show co-ops relying less on member Supply co-op adjusts and thrives in changing equity while use of debt increasing ...... May/June 31 Central Texas market ...... Sept./Oct. 6 Drought takes heavy toll on Texas ranches, farms ...... Sept./Oct. 8 Feeney, Nancy From small beginnings ...... July/Aug. 2 Welcome to the Caves of Faribault From the Ground Up ...... Sept./Oct. 12 Historic sandstone caves home to Swiss Valley’s Growing toward ‘Independence Day’ blue cheese ...... March/April 30 MFA Oil pursuing next-generation biofuel project to reap energy from non-productive land ...... March/April 4

46 November/December 2011 / Rural Cooperatives Freeman, Jean Nathan, Joe Why do co-op boards sometimes micromanage? ...... March/April 33 Co-op ideas can help education ...... Jan./Feb. 30

Gion, Brian Newell, Karoline Leadership co-op creates jobs, opportunities for USDA ag experts bring knowledge, skills to Afghanistan ...... July/Aug. 23 Native Americans ...... Sept./Oct. 29 Pitman, Lynn Giszpenc, Noemi Sailing turbulent seas Don’t let ‘em go! Despite volatile markets, co-ops need to How co-ops can keep vital businesses, services look to long-term competitive advantages ...... Jan./Feb. 24 in rural communities ...... Sept./Oct. 30 Reid, Stuart Gray, Thomas W. Planting the seeds for new food co-ops ...... Sept./Oct. 26 Agriculture of the middle: opportunity for co-ops ...... Jan./Feb. 14 Why do members participate in ag co-ops? ...... Nov./Dec. 4 Reynolds, Bruce Making the connection Habenstreit Linda. C. The co-op brand can help strengthen links A ‘Green Miracle’ ...... Jan./Feb. 4 with members and consumers ...... Nov./Dec. 30 Ownership succession crucial for rural America Hogeland, Julie Co-ops can play role in helping keep farms Tomato co-ops help craft better food safety standards ...... Jan./Feb. 18 and ranches in producer hands ...... Jan./Feb. 4

Hyman, Jennifer Routt, Nathan Tanzanian dairy farmers and co-ops benefit from New structure symbolizes success of Lexington Farmers Market ...... Sept./Oct. 21 USDA, Land O’Lakes help ...... May/June 22 Smith, Cathy Kalchik, Tom Doctors organizing co-op to improve medical Legends of the Lakes care in rural Pennsylvania ...... Sept./Oct. 28 .. Using cooperative principles helps save an industry ...... Sept./Oct. 24 Thompson, Stephen Keeton, Kara Banking on butanol Expanding your customer base Missouri’s Show Me Energy Co-op Kentucky supply co-op adapts to serve “mini” pursuing $55 million plant ...... July/Aug. 26 farms, homeowners ...... Jan./Feb. 11 Cooperation on tap Multi-stakeholder co-ops are force behind Lemke, Dan new Austin brewpub and fledgling effort in Seattle ...... May/June 28 Growing Minnesota dairy capacity ...... Sept./Oct. 32 Crash course in cooperation Rural auto body shops form co-op for group Liebrand, Carolyn purchasing, information sharing ...... Nov./Dec. 13 Dairy co-op survey reveals financial performance trends ...... Jan./Feb. 22 Crow Lake Wind powers up Nation’s largest co-op wind farm includes Ling, K. Charles community- and college-owned turbines ...... March/April 10 Dairy co-ops: what they are and what they do ...... March/April 18 Groomed for success How co-ops do it Kansas farm supply co-op adjusts to urbanizing Dairy co-ops are a prime example of the market with new goods, services ...... Jan./Feb. 9 economics of co-op marketing ...... Nov./Dec. 16 Todd, Anne Lund, Margaret Pilot Mountain Pride forges links between growers and buyers ...... July/Aug. 8 Convergence of Interests Taking the plunge From forestry to local foods, multi-stakeholder American Prawn Co-op helping aquaculture co-ops gaining in popularity ...... March/April 14 take root in tobacco country ...... July/Aug. 4

MacLeod, Rebecca; Madeja, Robert Tonsager, Dallas New web tool helps dairy farmers capture energy savings ...... Sept./Oct. 36 Co-ops: A vital source of rural jobs ...... Nov./Dec. 2 Don’t bet against the American farmer ...... March/April 2 Matson, James Keys to success for food hubs ...... May/June 9 Trocha, Debbie Virtual food hub helps Virginia producers tap into Boot camp for co-ops: local food markets ...... May/June 4 Workshops for Indiana farmers markets provide strategies for managers, vendors ...... Sept./Oct. 18 Mayberry, Anne Bridging the gaps: New Mexico co-op expanding Wadsworth, James broadband in rural West ...... Jan./Feb. 29 State cooperative councils adapting to help Wisconsin coal-burning plant converts to biomass ...... July/Aug. 14 members in turbulent times ...... Jan./Feb. 28

Merrigan, Kathleen A . Willette, Janet Kubat Know your farmer, know your co-op! ...... Jan./Feb. 2 Ostrander Co-op joins Century Club ...... May/June 34 Winning the future with food hubs ...... May/June 2 Wilson, Norbert; Hall, Thomas; Fields, Deacue Mull Wike, Eva Nell Is ‘local’ enough? Finding a way Keeping customers happy in farmer co-op stores ...... Nov./Dec. 27 USDA husband/wife team helps form soybean I farmer’s associations in Afghanistan ...... July/Aug. 20

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