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N T T I I V V E E S S The Buck Stops Here The Circle of Responsibilities for Co-op Boards

Increased scrutiny of board actions is not always accompanied by better information about exactly how directors should perform their many duties. This series of articles provides a practical guide and underlying principles for actions board members can take to improve their service to cooperatives. By James Baarda; 16 pages.

n For free hard copies, e-mail: [email protected], or call (202) 720-7395, or write: USDA Co-op Info., Stop 3254, 1400 Independence Ave. SW, Washington, D.C. 20250. Indicate title and number of copies needed.

USDA Cooperative Information Report (CIR) 61 n To download: www.rd.usda.gov/publications/publications-cooperative. Volume 84, Number 3 May/June 2017 Features Rural Cooperatives (1088-8845) is published bimonthly by USDA Rural Development, 1400 Independence Ave. SW, Stop 3254, Washington, DC. 20250-0705.

The Secretary of Agriculture has determined that publication of this 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, Government Printing Office, Washington, DC, 20402, at $23 per year. Postmaster: send address change to: p. 4 p. 24 p. 31 Rural Cooperatives, USDA/RBS, Stop 3254, Wash., DC 20250-3255.

Mention in Rural Cooperatives of company and brand names does not signify endorsement over other Learning from Food Hub Closures companies’ products and services. 04 Despite initial success, lack of a viable business model contributed to hub’s failure Unless otherwise stated, articles in this publication are not copyrighted and may be reprinted freely. Any By James Barham, Sasha Feldstein and James Matson opinions expressed are those of the writers, and do not necessarily reflect those of USDA or its employees. 12 Saving the Last Grocery Store In accordance with Federal civil rights law and U.S. Galvanized by a blizzard, people of a rural Colorado town unite to reopen store Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, By Lorraine Armstrong offices, and employees, and institutions participating in or administering USDA programs are prohibited from The co-op center that refused to die! discriminating based on race, color, national origin, 16 religion, sex, gender identity (including gender California center reinvented itself as a nonprofit when state pulled funding cord expression), sexual orientation, disability, age, marital By Dan Campbell status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not 21 Clean & Green all bases apply to all programs). Remedies and Co-op provides workers with better pay, work conditions and chances to gain skills complaint filing deadlines vary by program or incident. Persons with disabilities who require alternative By Dan Campbell means of communication for program information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA's 24 A Born Cooperator TARGET Center at (202) 720-2600 (voice and TTY) or Co-op developer thinks Asian fruits and vegetables could be the ‘next sushi’ contact USDA through the Federal Relay Service at By Dan Campbell (800) 877-8339. Additionally, program information may be made available in languages other than English. To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD- 3027, found online at How to File a Program Discrimination Complaint and at any USDA office or Departments write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632- 9992. Submit your completed form or letter to USDA by: LEGAL CORNER (1) mail: U.S. Department of Agriculture, Office of the 08 Assistant Secretary for Civil Rights, 1400 Independence 28 MANAGEMENT TIP Avenue, SW, Washington, D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: [email protected]. 31 UTILITY CO-OP CONNECTION USDA is an equal opportunity provider, employer, 33 NEWSLINE and lender.

ON THE COVER: The California Center for Cooperative Development (CCCD) is committed to creating jobs and economic progress through the formation of co-ops. Clockwise from top: Isabel Fernandez of Yolo Eco-Clean Cooperative at work; CCCD Director Kim Coontz explains co-op business Sonny Perdue, Secretary of Agriculture practices during a workshop; touring the Santa Elena

Dan Campbell, Editor farmworker housing cooperative during the “Co-op

Stephen Hall / KOTA, Design Convergence”; CCCD facilitator and farmer Mai Nguyen pours grain onto an air-screen cleaner. See Have a cooperative-related question? Call (202) 720- 6483, or email: [email protected] pages 16-27.

This publication was printed with vegetable oil-based ink.

Rural Cooperatives / May/June 2017 3 Learning from Food Hub Closures

Despite initial success, lack of a viable business model contributed to hub’s failure

By James Barham, Sasha Feldstein and James Matson

Editor’s note: Barham is a food systems specialist with the USDA Rural Business-Cooperative Service; Feldstein was formerly a research fellow with USDA Rural Business-Cooperative Service; and Matson is a consultant at Matson Consulting. This article is excerpted from the upcoming report “Running a Food Hub, Volume 4: Learning from Food Hub Closures.” Another case study will be presented in the next issue of Rural Cooperatives.

Sorting bell peppers at the now-closed Pilot Mountain Pride food hub in North Carolina. Expanding the operation to include a retail business, for which its staff had little experience, contributed to the closure of the hub.

4 May/June 2017 / Rural Cooperatives Many studies have been conducted that focus the-middle” farmers who lack the capacity to meet the on successful food hubs. USDA is looking at specific volume, quality and consistency requirements of the other side of the coin to fill a knowledge larger scale buyers, such as retailers, wholesale distributors, gap by using national data and case studies to and institutions. draw general lessons for why food hubs fail. An increasing number of individuals, organizations, By identifying lessons learned from former food hubs, we nonprofits, businesses and cooperatives are seeking to occupy hope this information will assist new and existing food hubs this space and meet the rapidly growing demand for local in addressing challenges, leading to success. food. There are more than 350 hubs in the United States, Six food hub case studies were conducted across the three-quarters of which were established during the past United States to examine reasons for closure. In this article, decade. we look at the case of Pilot Mountain Pride. It is important to note that four of the six hubs studied by USDA defines a food hub as a “business or organization USDA opened their doors during the 2008 recession.

The food hub industry demonstrates very high survival rates, which have been close to 90 percent since 2005. that actively manages the aggregation, distribution and However, external factors were rarely the main reason for marketing of source-identified food products, primarily closure. Instead, internal management and board governance [coming] from local and regional producers…” The overall issues were far greater determinants of food hub success or goal is to “strengthen their ability to satisfy wholesale, retail failure. Food hub leaders, as well as others who worked and institutional demand.” Food hubs play an important role closely with the food hub, provided much of the language in the food system by meeting the needs of small and “ag-of- and information for the respective case studies. In addition to reflecting on their own lessons, representatives of each of the food hubs gathered to identify common themes. Therefore, this report not only provides Pilot Mountain Pride LLC information that is specific to the context of new and existing food hubs, but it also provides general insights that may be applied to a variety of cases. Location: Pilot Mountain, N.C. Building and sustaining a food hub is difficult. A successful food hub relies on several moving parts, including Business structure: Not-for-profit LLC coordinating with producers, aggregating, processing and Business model: Wholesale distribution, retail space storing product, then distributing it to buyers. If one piece and distribution to CSAs fails, the whole operation can fail. No. of producers served: ~60 Additionally, food hubs must constantly balance financial Financing: Public and private grants viability with other positive economic, social and/or Sales growth: $300,000 in 2010 to less than environmental impacts within their communities. $125,000 in 2013 Maintaining that balance often leaves little room for error. Even though food hubs must be extremely meticulous, which Established: April 23, 2010 requires rigid time management, the industry demonstrates Closed: January 2015 very high survival rates, which has been close to 90 percent since 2005. Pilot Mtn. Pride formed as producer-driven nonprofit While most of the food hubs studied for this report were not incorporated as cooperatives, most can be viewed as “quasi cooperatives,” in that they share similar business structures, such as collective marketing and supply-chain

Rural Cooperatives / May/June 2017 5 transparency, along with similar cooperative values, such as agriculture) and worked with another eight or nine CSAs on shared risk and the equitable distribution of benefits. Many a more limited basis. of the lessons learned in the course of this study may prove Even though Pilot Mountain Pride had a wide and varied beneficial to co-ops and related small businesses. customer base, sales dropped to $250,000 in 2012 as the food hub struggled to keep up with demand. Initial success Despite the slight drop in sales, the hub expanded to open surpasses expectations a retail space in addition to distribution to customers. Pilot Mountain Pride was established to provide farmers Unfortunately, the retail business lasted for less than a year, within 50 miles of Winston-Salem, N.C., with access to opening in June 2013 and closing in February 2014. Bad retail, service and institutional food markets. It was funded weather contributed to the closure of the retail outlet, with through the Surry County Economic Development North Carolina experiencing heavy rains early in the growing Foundation. Pilot Mountain Pride was organized as a season and temperatures that were unseasonably cold. Crop producer-driven, not-for-profit LLC in 2010, primarily yield was poor that year, and there was not enough produce

The original business model — which called for Pilot Mountain to maximize farmer profits by returning 80 percent of revenue to the producers — proved unsustainable.

focused on the aggregation, packing, storing and wholesale distribution of fruits and vegetables to restaurants, colleges and grocery stores. Under the supervision of the foundation, Pilot Mountain was led by a board of directors, with a staff of one salaried, full-time employee, one part-time worker and several additional workers and volunteers who assisted during peak season with packing and moving product through the food hub. Funds for Pilot Mountain Pride’s start-up were provided by Surry County and numerous other business partners, as well as by local, state and federal government agencies that provided additional grants. In its first year, Pilot Mountain expected to have $30,000 to $50,000 in sales. However, gross sales for 2010 soared to almost $300,000. To meet this unexpected demand, Pilot Mountain quickly scrambled to upgrade its infrastructure and purchased additional equipment for the large volume of produce. The food hub consisted of a 12,000-square-foot warehouse, including 6,000 square feet of forced-air cooler space, and two 20x12-foot standing coolers. To handle smaller scale local deliveries to customers, the facility owned a 27-foot refrigerated box truck, but it also worked with area trucking companies to handle larger loads.

Challenges along the way The hub’s customer base grew to include three grocery One of the factors that contributed to the demise of Pilot Mountain store chains, two colleges, several restaurants and an email Pride was an over-reliance on grants to finance its start-up costs. list of 1,500 customers who received weekly information about the food hub’s product availability. The food hub also regularly supplied two CSAs (community supported

6 May/June 2017 / Rural Cooperatives coming in to keep the retail space stocked. Decision to close Another reason it failed was poor preparation for Cost increases, combined with a decrease in sales, operating a retail business, which was an entirely new ultimately led Pilot Mountain Pride to close its doors. The business area for Pilot Mountain Pride’s leadership. As a reliance on grant money and the lack of cash reserves by the result, sales declined to $125,000 in 2013 and the store second and third years of operation did not allow it to offset created additional expenses that could not be covered. Other the sales slump nor the cost of operating a retail space. costs also mounted, leading to a continual decrease in sales The hub had difficulty with some grant funders and thus and revenue. did not receive some money it had expected. The small In the original business model, Pilot Mountain attempted portion of revenue retained by the hub to cover its operations to maximize farmer profits by returning 80 percent of was ultimately not enough to sustain the business. revenue to the producers, leaving only 20 percent to pay for Pilot Mountain Pride decided to close in January 2015, labor and other operational costs. Unexpected costs, however, before the start of that year’s season, to minimize losses and made keeping operations within those allocation margins avoid leaving producers without a distributor midway very difficult. Packaging costs alone were substantially higher through the season. than expected, as much 250 percent above projections, according to some sources.

Lessons Learned

n Reliable income and cash reserves are necessary for sustainability and growth. In addition, there must be growth and dealing with unexpected setbacks. clear procedures, responsibilities and guidelines While first year sales exceeded expectations and the established at the beginning of operation for both the majority of startup funding was provided by grants, Pilot producers and the hub so that all parties are aware of Mountain Pride faced problems of inadequate cash their roles and obligations to the project. reserves and planning for scale. After a successful first year, increased costs were incurred for additional n Grant money is not always sufficient, or reliable, to infrastructure and the retail store front. When sales guarantee sustainability. dropped, and lacking financial reserves, the added costs Pilot Mountain Pride depended heavily on grants to could not be met. meet startup costs. While buoyed by better-than- Money that is “promised” through grants or other expected first year sales, the grant money base was not sources may not always come through, so more reliable enough to offset the steep sales declines the next year or sources of income are needed. The 20-percent share to provide for the move into the retail market. Problems taken by Pilot Mountain Pride to cover operating can arise when anticipated grants are not received and expenses had to also pay for packaging and freight, a cost thus should not be relied on. Food hubs need to be which the farmers probably should have shared in. prepared for an unexpected drop in grant funding.

n The food hub must be prepared for day-to-day n Greater product variety allows for more avenues of operations and use a sustainable business model. income throughout the year. Pilot Mountain Pride was established by a county The decrease in sales due to heavy rain and cold in foundation, not by farmers themselves, nor by an 2013, leading to poor crop yields, could have been offset organization familiar with the task of organizing the by more diversification in product lines, offering a wider aggregation and distribution of produce. This left the range of items for different seasons. Therefore, if one food hub ultimately unprepared for the inevitable area was impacted, the damage could be partially made problems and challenges associated with production, up during the rest of the year. Offering value-added growth and expenses. products and having the capacity to do limited A business model with a larger percentage of sales processing could increase the range of products and going to the hub, or with other ways to offset shipping extend the growing season. n and packaging costs, may be needed for business

Rural Cooperatives / May/June 2017 7 Legal Corner Despite recent challenges, Capper-Volstead continues to provide ag co-ops with antitrust protection

Still the Legal Bedrock

By W. Todd Miller and Lucy Clippinger production and sale of agricultural competitors to fix prices, to allocate products, some may wonder how a markets or customers, or to boycott Editor’s note: Miller and Clippinger are cooperative can operate in light of laws customers or suppliers. attorneys with the Baker & Miller PLLC that prohibit competitors from working These laws reflect the belief that law office in Washington, D.C., which together to set prices. markets in which businesses that are focuses on antitrust cases. The law office The Capper Volstead Act (the “Act”) competing on price and quality of provides legal counsel to the Dairy Farmers provides cooperatives with their services will produce better products of America cooperative in one of the cases primary exemption from federal and deals for consumers. In certain discussed below. The views expressed in this antitrust laws, allowing agricultural circumstances, of course, competitors article are the authors’ own, and do not producers to work together to improve can join together to create legitimate necessarily reflect those of USDA or its their economic position. This article joint ventures. The creation of the Visa employees. It should not be considered as discusses the Act and explores how it and similar credit card networks are legal advice; cooperatives should consult remains relevant to agricultural good examples of such ventures, where with legal counsel for questions about producers today. banks, which are otherwise competitors, antitrust matters related to their business. joined together in a joint venture to Overview of U.S. antitrust laws offer a new product (credit cards). A large percentage of The principal U.S. antitrust laws U.S. antitrust law also prohibits the agricultural were established when Congress passed monopolization and attempted products produced by the Sherman Act in 1890 and the monopolization. Monopolization occurs farmers in the United Clayton Act in 1914. These laws reflect when a business with substantial market States are marketed by, a commitment to a free market. They power engages in business practices or through, cooperatives. But because promote independent action by designed either to exclude competition cooperatives are combinations of what businesses that compete with each other or to gain substantial market power in might be viewed as competitors in the by prohibiting agreements among the first instance. While gaining a very

8 May/June 2017 / Rural Cooperatives substantial share of the marketplace agricultural products. Court has pointed out: “Congress did through invention or excellent Section 6 ultimately represents a not intend to extend the benefits of the marketing is not illegal, the offense of broad public policy statement: the Act to the processors and packers to monopolization focuses on unfair Supreme Court has explained that, with whom the farmers sold their goods…” business practices that unnaturally allow regard to cooperatives, “[b]y allowing Of course, one may engage in mental a competitor to gain or maintain such a farmers to join together in cooperatives, gymnastics in determining whether a dominant market share. Congress hoped to bolster their market person is a “processor” as opposed to a Antitrust laws allow legal actions by strength and improve their ability to “farmer.” Statements by the U.S. people allegedly injured by a violation weather adverse economic periods and Department of Justice regarding of the laws, as well as challenges by the to deal with processors and Capper-Volstead immunity require the government. Thus, as compared to distributors.” potential member to bear “a substantial many other jurisdictions, there is a In recognition of some of the part of the risk of loss traditional to strong and long tradition of shortcomings of the Section 6 agricultural production.” In a decision enforcement of the laws by private exemption, in 1922 the exemption was that focuses on the poultry industry parties (usually customers or competing expanded by the Capper-Volstead Act, (but has teachings that can be applied businesses) in addition to enforcement allowing exemptions to apply to more broadly), the Supreme Court by the government. cooperatives formed as corporations. explained that even someone who holds That Act specifically allows persons title to a flock of broiler chickens does Agricultural exemptions producing agricultural products as not qualify as a farmer if he does not to antitrust laws “farmers, planters, ranchmen, dairymen, own a breeder flock, hatchery or grow- The turn of this century brought [or] nut or fruit growers” to “act out facility where the flock to which he renewed interest in the Capper- together in associations” in “collectively has title is raised. Volstead Act, which soon turns 95 years processing, preparing for market, A more recent decision, which old, and the other agricultural handling, and marketing . . . such appears to have Capper-Volstead Act exemptions to antitrust laws. Much of products.” proponents unduly alarmed, suggests — this attention could be considered Thus, the key questions generally in discussing egg farmers who own negative to the Act. However, the Act become: (1) whether the cooperative is some chickens — that one must own remains strong and is an important properly made up of farmers; and (2) (or undoubtedly lease) a farm to qualify feature of the U.S. agricultural whether the cooperative is engaged in as a farmer. However, that passing landscape. activities permitted by the Act. reference is intertwined within a Before we turn to developments of broader discussion that found that the the past decade, we will look at the legal Membership considerations entity in question was really “focused framework. The Capper-Volstead Act requires on sales and marketing and contracted When Congress passed the Clayton that the cooperative’s members be with third-party farmers to produce Act in 1914, it included a provision engaged in the production of eggs on [the entity’s] behalf.” In the (Section 6) that specifically exempted agricultural products. Beyond that, the end, the chickens owned by the entity the creation of farmer cooperatives and Act does not define “farmer,” “planter,” were not enough to overcome the fact

By allowing farmers to join together in cooperatives, Congress hoped to bolster their market strength and improve their ability to weather adverse economic periods and to deal with processors and distributors. labor unions and collective activities by “ranchman,” “dairyman” or “nut or that it was primarily a distributor of farmers and workers from the general fruit grower.” While it is widely eggs. operation of the antitrust laws. Section thought the terms are to be read Suffice it to say that this will remain 6 responded to some earlier Supreme broadly, one thing is abundantly clear: an area of uncertainty, but any inquiry Court decisions holding that workers the Act is intended to exclude about whether an entity is characterized and farmers were illegally price-fixing processors and distributors of as an “agricultural producer” or under the Sherman Act when they agricultural products from cooperative something else will be fact intensive. Of joined together to market their labor or membership. As the U.S. Supreme course, the greater the entity’s income

Rural Cooperatives / May/June 2017 9 Capper-Volstead is grounded in a public policy that a farmer should not be placed in the awkward, and perhaps economically untenable, position of having to compete against a neighbor in order to sell the fruit of his or her labor. is dependent on traditional agricultural “production restraints,” which the While we do not believe Capper- production, as opposed to the plaintiffs contend are not “marketing” Volstead has been weakened by recent distribution or processing of such activities and are otherwise outside the court decisions, some in the agricultural production, the more likely it is that the scope of permissible activities under the cooperative community are concerned entity would be found to be an Capper-Volstead Act. about them — especially regarding the agricultural producer. At this point, only the potatoes case instance of a cooperative that may not — which revolved around a co-op that even be aware that is has members who Permissible activities attempted to improve depressed crop would not qualify as “producers” under The next major inquiry is whether prices through reduced plantings — has the law, which could open it to the cooperative is engaged in activities addressed the scope of permissible litigation from a competitor. that are permissible under the activities under the Capper-Volstead Two federal judges in Pennsylvania exemptions. Not surprisingly, this is Act, but this litigation is now apparently have held in the last few years that even also an area of some uncertainty. settled. In this case, the court issued an a cooperative’s good-faith belief that all Section 6 of the Clayton Act “advisory” opinion that explained that of its members qualified under the Act provides that the “operation” of the coordination of pre-planting product did not keep the cooperative from cooperative is not forbidden by the volumes is outside the scope of losing its exempt status where it antitrust laws, but it leaves exactly what permissible “marketing” under the Act. included non-producer processor or that means open to question. The Capper-Volstead Act, however, provides that agricultural producers could act together in “collectively processing, Marketing agencies in common preparing for the market, handling and marketing” the agricultural products of A discussion about the Capper-Volstead Act would not be complete without the producers. a mention of one of the more unusual features of the statute. The Act To be sure, the activities specifically allows cooperatives to form “marketing agencies in common.” encompassed by these terms are broad This allows cooperatives to join together to find ways to more effectively and include a wide variety of functions, market their members’ agricultural products. contracts and agreements to further the This extends to price and customer negotiations. Absent Capper-Volstead cooperative’s basic goal of helping its Act protection, it would be difficult to defend such agencies from an antitrust members sell their production on challenge. n favorable terms. As one court has noted, the term “marketing” itself is very broad and includes “among others, buying, selling, storing, transporting, The opinion also suggested that acreage distributor members. However, the only standardizing, financing, risk bearing reductions, production restrictions and federal Court of Appeals to rule on this and supplying market information.” It is collusive crop planning are outside the issue held that, at least where the non- also clear that it includes the setting of protections of the Act. producer members were not processors prices. The conduct being challenged, or distributors, a cooperative could still The Capper-Volstead litigation that however, involved an agreement to qualify for immunity if it mistakenly has dominated the industry during the reduce overall supply by 10 percent; had a small number of non-farmer past decade is centered on the question farmers who did not reduce production members. This underscores the need of the extent to which the cooperatives were penalized. This was monitored for cooperatives to be vigilant on this can engage in activities that may affect through GPS and aerial photography. critical issue. the production of the agricultural There were other “supply At a minimum, each cooperative product. The cases involve the egg, management” techniques at issue, should take care in signing up members mushroom, potato and dairy industries. confirming that this was a wide-ranging and make efforts on a regular basis to Plaintiffs allege in each case that the program to ensure that farmers reduced check on their producer status. Many cooperatives involved have engaged in the overall supply of potatoes. cooperatives have bylaws or similar

10 May/June 2017 / Rural Cooperatives rules that automatically expel from another (e.g., soybeans) may have recognition, and improved analysis, of membership any person who ceases to implications for a member’s planting joint ventures. Most full-service maintain producer status. These efforts decisions. cooperatives could be defended on the are important to protect, as much as Thus, an appropriate litmus test — ground that they represent a joint possible, the cooperative’s overall status wholly consistent with the legislative venture of the agricultural producers. as a farmer organization. history surrounding the Act — analyzes But there are still key differences whether the production decision is left between a world in which Capper- Co-ops still free to set prices to the farmer or has been undertaken Volstead exists and a world without it. It So where does that leave the scope of by the cooperative. If the farmer is free is widely recognized that a cooperative the activities protected by Capper- to decide how much to produce, subject may “obtain a complete monopoly, 100 Volstead immunity? to whatever appropriate incentives or percent of the product involved,” Putting aside production-side issues, disincentives that may exist that may provided that it does so by the the immunity remains fully intact and impact that decision, then it is hard to voluntary action of the agricultural cooperatives remain free to set the see how one could properly sustain a producers. A joint venture without an prices for, and to otherwise engage in, challenge to that conduct. antitrust exemption — such as Capper- the enumerated activities of their Volstead — that includes all members’ agricultural production. A world without competitors would be challenged as Regarding production issues, the basic Capper-Volstead being “over-inclusive.” question is: does the proposed conduct The Capper-Volstead Act remains an Moreover, the Capper-Volstead Act really constitute a “restraint” on important feature of the agricultural protection is not limited to “full production, or is it merely activity that economy. It helps ensure that service” cooperatives; some may have an effect on production? The agricultural producers can join together cooperatives only bargain for price. Without some other integration of activities by the members, the joining together merely to set prices would, absent Capper-Volstead protection, be a Act does not offer “absolute immunity” very risky — perhaps criminal — proposition. And the protection extends While the Capper-Volstead Act provides broad protection, it is not an to marketing agencies in common, absolute immunity from any antitrust challenge. The exemption may be lost which are often used to help better the where an otherwise exempt agricultural cooperative has entered into an economic bargaining position of the unreasonable agreement with a non-protected party (e.g., a processor or member cooperatives (and, hence, the distributor) or engaged in predatory conduct. producers who are members of those One court explained that such “predatory conduct or tactics” include cooperatives). “coerced membership, boycotts, picketing, bad faith harassment or As one contemplates the importance discriminatory pricing.” n of the Capper-Volstead Act and related agricultural exemptions, one should consider that there was a strong public former does create some risk of and improve their economic position policy reason for this treatment. The attracting problematic litigation; the through cooperatives and helps lower exemption for agricultural cooperatives latter, while it could still attract their costs of operation because those — much like the exemption for labor litigation, should be defensible. cooperatives can work together in ways unions — was grounded in a public But even the cooperative’s to achieve efficiencies, all while policy decision that a person who consideration of the production issues minimizing the risk of an antitrust operates a farm for a living should not offers continued reason for confidence lawsuit. be placed in the awkward, and perhaps in the durability of the Act. Obviously, But what would a world without economically untenable, position of merely labeling something as Capper-Volstead look like? having to compete against a neighbor in “production” or “marketing” does not Under modern antitrust law, the order to sell the fruit of his or her labor. tell the whole story. There are many mere formation or operation of a full- And while the Act has several areas of marketing decisions that will affect service cooperative would not likely be uncertain application, this is common in production — a cooperative’s decision found to be illegal. As compared to the almost every area of the law and is not a to emphasize the marketing of one of time when the Capper-Volstead Act was reason to abandon Capper-Volstead. n its members’ crops (e.g., wheat) over passed, there is today a greater

Rural Cooperatives / May/June 2017 11 Saving the Last Grocery Store

Galvanized by a blizzard, people of a rural Colorado town unite to reopen store

By Lorraine Armstrong it was a severe blow to the future of the community. The store’s closure meant people had to travel at least 35 miles Editor’s note: Armstrong is a graduating senior from Eastern one way to buy groceries and other essentials. Mennonite University in Harrisonburg, Va., who recently In addition to being the only place in town to buy completed an internship with the USDA Rural Business- groceries, the store had also been an important community Cooperative Service. This article is based on interviews conducted gathering place and a source of tax dollars. by the author and on information presented during a webinar, “Rural grocery stores function as an anchor of community “When the Last Grocery Store Closes,” conducted by Marnie life through creating identity, diversity and social Thompson, co-manager of the Fund for Democratic Communities relationships,” says David Proctor of the Center for (F4DC), and David Proctor, director of the Kansas State Engagement and Community Development at Kansas State University Center for Engagement and Community Development. University. Without these core sustaining functions, rural communities usually experience a sharp decline, socially and Walsh is a small farming and ranching economically, he notes. The community then becomes a less community on the high plains of desirable place to live, and many residents become depressed southeastern Colorado. As with many rural about their future. towns, it has for many years been struggling When a severe blizzard hit Colorado in December 2006- with a declining and aging population. In January 2007, the commute to buy food became impossible 2010, the U.S. Census counted 546 residents, down from 723 for days on end as huge snow drifts caused prolonged road in 2000. closures. That was the last straw for people who had already So when the town’s only grocery shop — the Walsh grown weary of the long commute for food. This crisis Community Grocery Store, built in 1928 — closed in 2006, underscored how, for rural people, having a local grocery

12 May/June 2017 / Rural Cooperatives Bottom-up development Walsh residents banded together to find a way to reopen the store. After conducting a business feasibility study, a committee of townspeople held conversations with Colorado State Bank, Southeast Colorado Power Co., the U.S. Small Business Administration and U.S. Department of Agriculture to discuss the benefits of forming a corporation — in which community members would own the majority of shares — to operate the grocery store. A community stock drive was launched, offering shares in the store for $50. Community members rallied behind the new business, investing about $200,000 within just a few months. At the end of 2016, the store had 4,060 shares and 312 shareholders. The Southeast Colorado Power Association also provided a zero-interest, 10-year loan for $140,000. Shareholders were motivated to invest in a business that was not only critical to the town’s future, but was structured to meet the specific needs and desires of the people of the area. The store re-opened in June 2007. Being under community ownership created a strong sense of accountability to the shareholders, and the store was soon able to attract a strong customer base, generating $1 million in sales in its first year. The store’s board of directors consists entirely of community members, but each comes from a different walk of life. One is the owner of a parts/feed/farm supply store, one is a kindergarten teacher, one is a farmer, one is retired from a baking background while the other director works at the county clerk’s office. Each one brings his or her own unique perspective to the store. Because of its remote location, the people of Walsh “realize the importance of their neighbors, because while our neighbors might need us today, we are all well aware that we may need them tomorrow,” says store General Manager Donald Rutherford. “So we have a culture of helping others.” The store draws business from a large area around Walsh. “Farmers drive 20 miles or more to get to Walsh,” says Finding enough good workers to staff the store has been a major Rutherford. “Driving to the next town over would be a huge challenge, says store Manager Donald Rutherford (left), seen here at burden.” work in the meat department with Jamie Lowe, a shift leader and meat When small towns create their own resources without the cutter. Lower: A spring snow storm in late April creates a slushy parking help of large investors or big corporate entities, it is “bottom- lot at the store. Photos courtesy Walsh Community Grocery Store up development,” says Anil Rupasingha of the Federal Reserve Bank of Atlanta. When people favor a locally owned store is not only a great convenience, but can be a necessity. rural businesses over big, outside corporations, Rupasingha “The snowstorm really made our residents realize how says it “leads to a diversified economic structure, which keeps much a store was needed,” says Judy Bezona, a founding economic and political power in the local community,” board member of the Walsh Community Grocery Store. creating an improved quality of life.

Rural Cooperatives / May/June 2017 13 Rutherford agrees. “Not only does the grocery store “Our neighbors might need us today supply the community with food, but also with tax revenue.” Those tax dollars provide the community with funds needed [and] we may need them tomorrow. So to repair water lines and streets as well as financing many we have a culture of helping others.” other civic needs. But the store still faces many challenges.

Challenges facing rural grocery stores Labor Issues There are seven major challenges facing rural grocery stores, according to surveys compiled by the Center for Labor has been a big concern in such a Engagement & Community Development at Kansas State 3 small community with an aging population. University as part of its Rural Grocery Initiative (RGI). “Labor has been the biggest struggle I have Below is how the Walsh grocery deals with them. had to face,” says Rutherford. The available pool of workers is limited, and workers are Competition with aware of that, making it harder to motivate “big box” discount stores some of them. “I try to minimize issues with labor by 1 Walsh area residents say they would being flexible while having the least prefer to commute 15 miles for fresh, local minimum employee coverage needed,” produce — even though it might cost a bit Rutherford says. He offers “more positive more — rather than driving 50-70 miles to encouragement for a job well done rather get the most “bang for their buck” at a big than consistently reprimanding for a job box store. “Some people think they can be poorly done.” Workers get more days off [more frugal] at larger stores, but when than the industry average and qualify for comparing [all the costs], that is not always employee discounts. true,” says Judy Bezona, of the Walsh store’s “The current team is great and has board. Shoppers need to also calculate costs become community focused while such as their mileage, wear and tear on their understanding that their work is vital” to the vehicle and the value of their own time. town’s survival, Rutherford adds. This is perhaps one area where remoteness helps. “One advantage we have in regard to competition with big box stores is our remoteness,” adds Rutherford. Quite Lack of Community Support simply, it lacks the population base required to attract a big box store. About 3,252 people are needed in a 4 community to maintain a successful rural grocery store, Jon Bailey writes in “ The Rural Grocery Stores: Importance and Challenges .” Operation costs Currently, the Walsh community only has about 16 percent of that “necessary” The Walsh Community Grocery Store population. Based on that calculation alone, 2 understands the importance of cost control the Walsh Community Grocery Store would through the use of sound business practices. surely falter. But there are many other factors For example, it requires the same amount of that keep rural stores afloat. Rutherford says electricity to power the store on a high-sales that about 70 percent of the community’s day as on a slow-sales day. The store grocery needs are being purchased at the counters this challenge by controlling costs store, which helps to compensate for the in other areas, such as “reducing capital in small population base. “As long we continue excessive inventory,” says Rutherford. This to encourage customer input, do our best to reduces staff hours needed to manage provide quality products at a reasonable price inventory and reduces losses to spoilage and and seek improvements, we will continue to damage. receive community support.”

14 May/June 2017 / Rural Cooperatives Low sales value Sparking social and economic change Because the entire town is dependent on Without the grocery store, Walsh would likely be a 5 one grocery store, sales may seem to be vanishing rural town. “The big difference [when booming. However, attaining profitability comparing Walsh to other stores] is that we balance the continues to be a challenge. “Since a portion need for profit with the need of the community to have of all sales goes to cover fixed costs, we do access to affordable groceries,” Rutherford says. “A sole have a bare minimum sales level [to meet], proprietor might not be content with the small profits we and we are not much over that.” have. As long as we have enough profits to continue Because of the small size of the providing groceries to the community for the long run, community, Rutherford stresses the need to we can be content in the short run.” not “get frustrated with low sales,” while The emphasis on community service has guided the striving “to find ways to increase sales and store when dealing with all of the challenges. Walsh profit margins without inflicting harm to our Community Grocery Store is playing a vital role in customer base.” Being aware of supplier helping to save the town, based on its commitment to discounts and passing on a portion of the civic duty rather than financial gain. discounts to members encourages customers “It would be sad indeed if the people who invested so to buy greater volumes, he says. much in the community in the past decades were forced to leave their homes because the community failed to provide basic groceries.” As to the store’s future: “I see a lot of potential,” says Governmental regulations Rutherford. “I took the job because the community and taxes matters to me and I want to see the store succeed. With support of the community and our team, along with a lot 6 “Some businesses create unnecessary of hard work, we will create substantial improvements.” n hassle and expense by quibbling over details with government regulators,” Rutherford says. Getting into disputes in these areas takes time away from the services the grocery store needs to provide to the community. Even though some regulations are burdensome for a business, Rutherford believes they were enacted with the best interest of the community at heart. By complying with them, he says it serves the best interests of the members.

Meeting minimum supplier buying requirements

7 “Thus far, this not been a problem for us,” Rutherford says. Creating partnerships with suppliers has helped. “One of our Rutherford helps load groceries for customer Julie Tate. suppliers reduces its sale requirement to half during the winter months…so this is how it helps us.”

Rural Cooperatives / May/June 2017 15 E. Kim Coontz, director of the California Center for Cooperative Development (CCCD), leads a workshop on co-op fundamentals. She says demand is especially rising in California for new worker and housing co-ops. Photos courtesy CCCD

THE CO-OP

CENTER THAT California center reinvented REFUSED itself as a nonprofit after loss TO DIE! of state funding

By Dan Campbell, Editor And it probably would have ended Cooperative Extension Service ended. [email protected] there had it not been for the determination and hard work of E. Kim Center launched In 2004, when state Coontz, then a cooperative facilitator with high hopes funding was eliminated with UCCC, and Leland Ruth, then the The university’ co-op center was for the University of president of the Agricultural Council of founded in 1988 by an act of the state California Cooperative California, a statewide legislative and legislature with high hopes of sparking Development Center education association for agricultural a revival of cooperative development in (UCCC), it appeared to be the end of cooperatives. Together, they led the a state that is home to some of the the road for a noble endeavor to effort to re-create the university center nation’s oldest and strongest ag co-ops. develop new cooperatives as a way to as the California Center for It was especially hoped that these new create jobs and economic advancement Cooperative Development (CCCD) as a co-ops would serve the needs in the for people struggling for a better nonprofit co-op center after its ties to state for small-scale farming, housing quality of life. the University of California (UC) and child care services.

16 May/June 2017 / Rural Cooperatives The center was located on the USDA’s Rural Business-Cooperative University of California-Davis campus, Service]. where its small staff worked in an office California Connection The primary objective of SDGG is that was part of the UC Cooperative to fund technical assistance for socially Extension Service. Its mission called for The series of articles on pages 16 disadvantaged groups, working through the center to divide its efforts equally through 27 spotlight the cooperatives and cooperative between agriculture and the broader California Center for Cooperative development centers. This year, the co-op sector. Development (CCCD) and the program provided $3 million nationally Staff was selected based on wide range of co-op development for such work. experience in either agriculture, projects it is involved in, as well as “We also get project-based money. housing, food/grocery or child care co- a look back at the history of the For example, Angelica Medina’s work ops. Coontz, the current CCCD center. CCCD is just one of a with Yolo Eco-Clean Cooperative (see director, is the only remaining staffer network of co-op development page 21) is funded with regional grants who was involved with the center centers nationwide that USDA’s and donations, as well as a generous during those first years. “I applied for Rural Business-Cooperative grant from the Catholic Campaign for the child care co-op position, based on Service helps to support through its Human Development.” experience I had, and later I expanded Rural Cooperative Development into working with other types of co- Grant (RCDG) program. Funding uncertainty ops,” Coontz recalls. creates challenges Despite the fact that staff had plenty Federal grants and smaller of co-op work to do, “there were always foundation grants must be applied for questions from the campus side: ‘what early years, which no doubt hurt its annually, which makes project planning are you guys supposed to be doing?’” stability and may have further eroded and staffing more of a challenge, Although staff did do some applied support from the university. When the Coontz says. It is never certain in any research and education work, “there decision was made by the university at given year that a co-op center will earn were feelings that our work was ‘too the end of 2004 to close the center, one of these competitive grants. applied’ [overly centered on technical Coontz wasted no time going to work The number of applicants for assistance, rather than on research and to try and save it. RCDG and SDGG funds almost always education], even though Extension is This entailed working with a couple outstrips available funding. If such supposed to do applied work.” of people who had been on the center’s grants could be awarded on a two- or The center was then getting about advisory board. “But I mostly worked three-year funding cycle, it would be an $350,000 annually from the state, which with Lee Ruth. Together, we put enormous help with planning only enabled staff to work half time. “If together a new board and succeeded in operations and projects, Coontz says. we wanted to work more than that, we re-launching the center as a nonprofit “We have built up a reserve fund — had to raise our own money [from in 2007.” from donations, not from project work. project work],” Coontz says. This CCCD no longer has formal links to But that still will only cover us for usually involved seeking grants that the university, although its projects about four-and-a-half months — and it could support co-op development work. frequently involve working with has taken a long time just to do that.” CCCD was one of the first recipients university staff. “We modeled the Coontz notes that the university co- of a USDA Rural Cooperative center after our original UC Extension op center was far from the only UC Development Grant (RCDG), which office, using many of the same kinds of Extension office to feel the budget ax. helps to fund dozens of co-op systems — but we don’t do research.” Other state Extension offices have for development centers around the nation. many years been scaling back “The RCDG program has always Funding comes operations due to shrinking budgets. provided very valuable support for the from many sources. “It is sad to see Extension people work we do,” Coontz says. “USDA’s RCDG program is still with so much expertise — people who really important in helping to pay for farmers could call for help on so many One plug pulled, our operations, even though it is just a issues — now retiring and not being another found portion of our budget. We also get replaced.” The University Center for federal funding through Socially On the bright side, some cities are Cooperatives experienced numerous Disadvantaged Group Grants (SDGG) starting to fund more co-op director and staffing changes in those [another program administered by development work, with Oakland being

Rural Cooperatives / May/June 2017 17 co-ops in with condo associations and the like,” says Coontz, adding that this is not a good fit for co-ops. More recently, another state law was passed that addresses some of the factors that have been limiting the development of housing co-ops, she notes, “but it has been a slow go.”

Issue not limited to California “For any state that has problems with housing affordability, the question is: why are we not using more co-ops to meet the need? There are some great studies that show how much more government dollars can accomplish when spent on developing housing co- ops versus one-off help for one person Inspecting the playground at the Santa Elena housing cooperative. Members of three area to buy a house. After a few years, that housing co-ops shared information about special turf grasses and playground equipment. home buyer may well turn around and sell the house for a much higher price,” a recent example, notes CCCD and Sierra see this trend continuing. helping to fuel the further housing Assistant Director Luis Sierra. “It is CCCD has always been involved price inflation. really exciting to see that catching on. with housing cooperatives, but that “With a limited equity housing co- We are praying that someday the sector will likely be an even bigger op, when you move, you will get some Housing and Urban Development side priority in the years ahead. Housing of the equity back, but the overall of the government will have parallel prices in the Golden State have risen so affordability of the unit is maintained

“With a limited-equity housing co-op, when you move, you will get some of the equity back, but the overall affordability of the unit is maintained for the next buyer. It is such a great model.”

programs to some of the rural dramatically that it is making for the next buyer. It is such a great development grant programs for co- homeownership an impossible dream model — we just need to figure out ops.” for a large percentage of the how to develop more of them.” population. Never has the need for For housing, farming, worker-owned Need soars for worker housing co-ops been greater, Coontz and all other co-ops sectors, Coontz and housing co-ops stresses. says CCCD “remains committed to Over the years, CCCD has gradually “It has been hard to get the state to finding ways to use co-ops as an increased the number of worker co-op recognize that the housing co-op model effective economic development tool. projects it has been involved in. With is worth putting more money into,” Co-ops can be used by all economic interest in this business model for Coontz says. While state legislation has groups — it is a business model that workers being on a steep rise — not just been passed to support development of will empower people who don’t have in California, but nationally — Coontz limited equity housing co-ops, it “lumps many other resources.” n

18 May/June 2017 / Rural Cooperatives CO-OPS

PROVIDE Doing work with co-ops that can “help turn people’s lives around” is one of the reasons Louis Sierra says he loves being a co-op facilitator HOUSING AND with CCCD. USDA photo by Lance Cheung.

MORE FOR bumper sticker could read: No Farmworkers, No Food.” With its need for a large seasonal and permanent farm FARMWORKERS workforce, providing good quality housing for workers has always been a big challenge in California. This, too, is an area in which the California Center for Cooperative Development (CCCD) is actively engaged. CCCD Assistant Director Louis Sierra is heavily involved By Dan Campbell, editor with providing technical assistance to farmworker housing co-ops, including several co-ops in the Salinas Valley. He also Editor’s note: This article is based on an interview conducted by has extensive experience in developing agricultural marketing USDA photojournalist Lance Cheung. The Farm Labor Housing organizations, including work training fruit and vegetable Direct Loans & Grants program of USDA Rural Development farmers to organize their own cooperative. can help develop housing for both year-round and migrant Sierra — who serves as board treasurer for the co-op he farmworkers. Farmer associations and co-ops seeking to develop calls home, Dos Pinos Limited Equity Housing Cooperative housing projects are eligible for funding. For more information, in Davis — also provides training and technical assistance to visit: www.rd.usda.gov and follow the links for “Multi-family three limited-equity farmworker housing cooperatives in the housing programs.” Salinas Valley. This area is often referred to as “America’s Salad Bowl,” because it produces such a huge amount of the “NO FARMERS, NO FOOD,” is a popular bumper nation’s fresh vegetables. If you have broccoli for dinner sticker in rural America. Even with mechanization taking on tonight, says Sierra, there is a very strong chance it was an ever-bigger role in U.S. agriculture, another apropos grown in a 10-mile strip of land near this co-op.

Rural Cooperatives / May/June 2017 19 All of the Salinas co-ops Sierra works with — Buena for the co-op,” Sierra explains. Esperanza Cooperative, Cooperativa Santa Elena and San Several solutions have been tried, including drilling a new Jerardo Housing Cooperative — were built in the 1970s as well that went horizontally under the fields into the nearby affordable housing for farmworker families. “Many of the mountains to get clean water, Sierra says. Ultimately, the units are now occupied by the second, or even the third county built a water treatment facility to serve the 60-unit generation of some of the original families. The manager of housing co-op, viewing this action as a short-term, San Jerardo co-op was raised there,” Sierra says. The emergency action. “Long term, the county did not want to younger generations have, in many cases, moved up from operate this plant,” Sierra says. farm field work to more professional agriculture jobs, or into Co-op members expressed interest in learning to run the non-ag trades, such as construction work. water plant, but others had doubts about whether co-op These housing co-ops, as with other types of co-ops, offer members had the required skills. “We helped show that members ample opportunity to develop leadership skills as through 40 years of being a co-op, they did have the skills they are elected to seats on the board or serve on committees. and ability to run a multi-million-dollar water facility.” CCCD has used funding under USDA’s Socially With help from the UC Hastings Law School and CCCD, Disadvantaged Group Grant (SDGG) program to pay for the co-op has been weighing its options for buying the water board training, including conflict resolution workshops, as plant. One way to do so involves forming a separate, mutual well as for technical assistance for updating organizational utility water company to operate the plant. “You would have documents, providing legal advice and completing financial- the same members as the housing co-op, but it would be two reserve studies. organizations.” Sierra has also worked to bring the co-op’s governance Co-op deals with bylaws into compliance with state law. “They had already water quality crisis been working that way [following democratic co-op One of the Salinas housing co-ops, San Jerardo Housing practices], but it needed to be better codified.” Cooperative, has had to deal with a serious challenge Sierra also worked with a farmworker housing co-op regarding the quality of water coming out of its taps. “This where he helped members enroll in a rental subsidy program co-op is in a part of the Salinas Valley where everyone has to through USDA. get water from wells,” Sierra says. “But there has been “That’s one of the really good feelings you get working pervasive use of pesticides and nitrogen fertilizers there over here — when you do something like that which can turn the years, which has created problems in the water table. people’s lives around.” n This situation represented both a crisis and an opportunity

Touring a farmworker housing co-op as part of the “Co-op Convergence,” organized by CCCD’s Louis Sierra. The event brought together leaders of three farmworker housing co-ops in the Salinas Valley to participate in an education program, share information and build connections. Photo courtesy CCCD Maria Fernandez cleans a customer’s home in Davis, Calif. Co-op members mix their own environmentally benign cleaning products. USDA photos by Lance Cheung

CLEAN AND Co-op provides workers with better pay, GREEN work conditions and chances to gain skills

By Dan Campbell, editor She won’t be the only full member based on the number of hours they for long. As of this writing, the co-op worked for the co-op during the AFTER 400 HOURS of vacuuming, has seven trainee members who will preceding year. scrubbing, mopping, dusting and all the qualify for full membership after Before applying to work at the co- other tasks required to keep a home working 400 hours or six months, op, prospective members get a crash ship-shape and shining, Isabel whichever comes first, for the co-op. course in co-op fundamentals and Fernandez has more than a paycheck to The next two workers will likely have practices by attending four workshops, show for her labors. She just qualified earned co-op membership by the time taught in both Spanish and English. for membership in the new Yolo Eco- you read this. The 400-hour/six-month work Clean Cooperative. The co-op board, Once they become members of the requirement for membership in the co- currently comprised of community co-op — which uses only natural, op provides the needed trial period to volunteers, in late March voted her in “green” cleaning products — workers determine if the worker and the co-op as the first official worker-member of qualify for the co-op’s year-end profit- are a good fit for each other, explains E. the co-op. sharing program. This patronage is Kim Coontz, CCCD director.

Rural Cooperatives / May/June 2017 21 “This is a build-and-recruit model co-op,” Coontz explains, in which pre- development and early-launch decisions are made by a steering committee and temporary board, composed of six community volunteers and CCCD staff. This board shepherds the business while initial member-candidates go through the membership process. Volunteers leave the board as worker- members join it. By the end of the co- op’s first year, the board will be composed entirely of worker-members.

Training workers to be managers Yolo Eco-Clean is currently being managed by Angelica Medina, a co-op facilitator with CCCD. Medina’s work includes marketing the co-op, which involves finding the cleaning jobs, arranging work contracts, etc. Long term, Medina’s mission is to teach the workers to master the more sophisticated business skills needed so that they can run the co-op themselves.

CCCD facilitator Angelica Medina (right) discusses the day’s jobs with co-op members. She is the co-op’s business manager at present, but is teaching co-op members to assume her duties. Right: Delia Garcia will leave behind a shining, spotless kitchen when she finishes. opportunity to grow as a person and very well together,” Medina says. She is professionally.” The schedule flexibility, proud of the espirit de corps members she continues, allows her to work the have developed. needed number of hours while also At present, the co-op’s work is providing the ability to spend time with primarily cleaning homes, but it has her family. three commercial clients and Medina is “It provides my family with a life of seeking additional commercial clients. better quality. It has also allows me to help my husband with the house bills. Board transition planned My family and I see this as a bet, and Co-op bylaws provide for the we are betting on the success of [the co- gradual transition from community op]. I am really proud to be a member volunteer directors to worker directors, of Yolo Eco-Clean Co-op.” as the latter gain knowledge and skills. “Our focus at CCCD is to develop co-ops that Eventually, workers will comprise the create jobs for under-served community members, including worker-ownership Master mixers board majority. The bylaws stipulate opportunities,” says Angelica Medina. Yolo Eco-Clean not only uses that there be a permanent board chair “green” cleaning products, but it saves for a “nonprofit director,” with a “Angelica’s goal here is basically to money by having workers mix their primary role being to ensure that the work herself out of a job!” says Coontz, own. They use common household business remains a co-op, Coontz with a laugh. “Not really though, ingredients, such as baking soda, explains. because she will then move on to vinegar and the essences of lemon, If there is ever an effort to de- another co-op project.” orange and peppermint. The latter mutualize the cooperative (so that it For the workers, all of whom are ingredients not only leave a pleasant would no longer be a co-op), the vote working mothers who speak Spanish as scent behind, but some (such as of the nonprofit director would be their primary language, the co-op peppermint) help repel ants and some required for the motion to pass, Coontz provides a better pay scale than is other insects. explains. typical for housecleaning work. In “We don’t use any bleach or other While the co-op’s business plan calls addition to a chance to share in the toxic materials,” Medina stresses. Using for Yolo Eco-Clean to expand service profits, the co-op is also an avenue for natural cleaning ingredients has health into other parts of the county, efforts more steady work with flexible working benefits for humans (especially those are still made to concentrate jobs as hours. The latter is very important for a who may suffer from asthma or much as possible in an area close to a working mother who must balance allergies) and for their pets, she adds. worker’s home, minimizing their drive- work and family demands, Coontz says. They also create far less impact on the time, which can be a major expense. According to a recent CCCD environment when washed down the The Yolo Eco-Clean business office is newsletter, members of the co-op “have drain. currently housed at the CCCD Davis opportunities to try on ‘new hats’ as “A lot of marketing goes into selling office in Yolo County, west of they engage in business strategy, public [commercial] green cleaning products, Sacramento. relations, accounting, marketing and but no law says they have to list the Once Medina no longer needs to leadership. Empowerment and social ingredients,” says Coontz. “A lot of the devote so much time to managing the capital are natural outcomes of worker time, you have to take their word for it Yolo Eco-Clean Cooperative, her next cooperatives. The tangible personal and [being green], and you pay a lot more project will likely be to help develop a societal benefits include skill for it.” Most of these commercial home health care co-op. Such a co-op development, job satisfaction, increased green-cleaning products on the market, would provide the care needed to help civic engagement and even increased she adds, are made from the same basic seniors and the disabled stay in their [worker] happiness.” ingredients that the co-op mixes. own homes for as long as possible, says “Our focus at CCCD is to develop Like any worker co-op, learning to Coontz. “It’s another huge area of need co-ops that create jobs for under-served compromise and reach joint decisions that the worker co-op business model community members, including takes time and effort. Co-op members can help meet.” worker-ownership opportunities,” currently gather for a business meeting Medina says. every two weeks. Note: This article is based on interviews Fernandez, the mother of three “Getting the members to come conducted by USDA photojournalist Lance children, including one preschooler, together and make decisions can be Cheung and by the author. n says the co-op “gives you the hard some days, but overall they work

Rural Cooperatives / May/June 2017 23 Dried jujubes are a value-added fruit produced by the Hi Desert Jujube Cooperative. Ume plumbs, seen here at blossom, are another traditional Asian fruit being grown by a cooperative, with assistance from CCCD. Photos courtesy CCCD

A

By Dan Campbell, editor BORN “Chinese dates” in America, which are [email protected] used both as a food and a medicine. COOPERATOR They are also growing ume plums, used Editor’s note: This article is based on in a wide variety of Asian foods and interviews conducted by USDA sauces, among other crops. photojournalist Lance Cheung, a USDA- What was their attraction to this sponsored panel talk on diversity within co- desert area? “The land was cheap and ops, and on subsequent interviews. these crops can be grown in an arid Co-op developer environment,” says Mai Nguyen, a TO SOME PEOPLE, the Lucerne cooperative development associate with Valley in the high desert country of San thinks Asian fruits and the California Center for Cooperative Bernardino County, Calif., is “drive- Development (CCCD). “Growing these through country” — an arid place to crops in the high desert with very little cross on the trip from Los Angeles to vegetables could water is highly relevant for California,” Las Vegas. But for a cooperative of especially in times of drought. about 80 farmers, most of whom are be the ‘next sushi’ The farmers have “come together to Korean immigrants, it’s the place where increase their power through the they are growing traditional East Asian economy of scale. Together, they can fruits and vegetables — foods that are compete,” Nguyen (pronounced “new- often difficult to find in U.S. food en”) continues. While the co-op has “a stores. strong board that is very responsive to The Hi Desert Jujube Cooperative’s the membership and understands how a main crop is jujubes, sometimes called co-op business must operate…it faces

24 May/June 2017 / Rural Cooperatives many business challenges, especially in indicate that they’re not putting any has also been difficult to get technical getting organic certification.” chemicals on their crops. Nguyen is support for growing and marketing The organic regulations run to about thus helping them understand the their crops. Even in a state known for 150 pages, “much of it in very technical organic rules and procedures. its wide variety of specialty and niche- language,” says Nguyen, who translated market crops, there isn’t much help the regulations into Korean for them. Little technical support available for the Asian crops. But it’s not just a language issue. To available for crops Indeed, Nguyen says they’ve been these farmers from another land and The co-op has been seeking financial advised not to grow the Asian crops culture, some of the rules just don’t support under some USDA programs because “there isn’t enough of a market make any sense, namely why they must for beginning and socially for them. But we know that there is. fill out pages of paperwork and pay disadvantaged farmers, although it has We meet so many people in Los thousands of dollars for a label to not yet been successful in the effort. It Angeles and other places who are excited that these crops are being Mai Nguyen, a co-op facilitator with CCCD, on her farm near Petaluma, Calif., where she grows grown close to them. It’s just been a garbanzo beans (seen here) and four varieties of heritage wheat. The varieties that thrive will be struggle to find [advisors] who are harvested for seed. USDA photo by Lance Cheung. knowledgeable about these specific crops.” Nguyen encountered similar obstacles as a farmer. “Extension agents would try to deter me from growing the crops, for the same reasons.” Not enough attention has been paid to the East Asian demographic market, Nguyen says, adding that its potential for sales is greatly under appreciated. Co-op leaders think there is also a huge potential “crossover” market if the broader American public can be prompted to taste and try these foods. Today’s “exotic fruit” may become tomorrow’s staple. “You can make the analogy to sushi as a healthy and tasty” Asian food, Nguyen continues. “Fifteen years ago, few people were eating sushi in America — most people found it rather repulsive. Now it’s wildly popular.” Among other farmer co-op development projects Nguyen is involved in is the Solidarity Farm Co- op in San Diego County. This co-op is growing organic produce which is being marketed in San Diego through a community supported agriculture (CSA) subscriber program (see the Sept.-Oct. 2016 Rural Cooperatives , page 28).

A born cooperator Nguyen feels like “a born cooperator. My mom trained me in co- op principles from childhood.” After a treacherous escape from Viet Nam,

Rural Cooperatives / May/June 2017 25 Nguyen’s parents arrived in the United managed a co-op food waste-reduction immigrants — and who was excited States with very little. project, co-founded the Toronto about co-ops — guess who she thought “It was the same for most of the Sustainable Food Cooperative (a worker of first? people in the community I grew up in. co-op that operated a café), and worked Lacking prospects for good jobs or to help refugees in the United States, Grain farming leads to housing, people had to work together. Canada and abroad through machine-sharing co-op They formed lending circles — which organizations such as the International Nguyen also has a small farm in Lake were like informal credit unions — so Rescue Committee, the Democratic County, Calif., where sustainable and that they could afford to buy a home Alliance for Burma and CultureLink. drought-tolerant farming methods are outside the [high crime] area they had Nguyen also coordinated one of the used. Initially it produced row crops, been resettled into. nation’s first farmers’ market food but after suffering some serious injuries “I saw my mom always when hit by a truck while asking others what issues making a delivery, it became they were facing, and physically hard to do the looking for ways they could type of labor needed for row address their needs together crops. So Nguyen switched — a democratic, to growing less labor- participatory approach. intensive heritage grain Having lived through the varieties. fall of Saigon to communist That decision was in part rule, she really valued the prompted by “a general void right to free speech and of organic grains at farmers’ freedom to organize and for markets in California. We self-determination, because have farmers markets that all that had been taken away are full of wonderful fruits from her. My mom saw how and vegetables. But grains the power of cooperation are also a huge staple of our enabled her to make a new diet.” life in the U.S.” Some heritage grain More formal exposure to varieties are well suited to U.S. cooperatives came after dryland farming, Nguyen Nguyen joined a student notes. “These grains are housing co-op at the important for a bio-diverse University of California- farm sector. They store Berkeley. That led to carbon and produce onsite becoming immersed in straw that provides bedding nitty-gritty co-op issues, material.” This straw is ranging from how to use important for dryland Roberts Rules of Order to farming, they explain, run a membership meeting, because it helps keep to finding a compromise as precious moisture from rain to what brand of honey to stock in the Mai Nguyen helps educate consumers about in the ground. kitchen. heritage grains. These grains were once in “A big barrier for small-scale grain “When you’ve got a bunch of 20- danger of disappearing, but are now finding a farmers is getting appropriately scaled year-olds running a house, you really market niche. Photo courtesy CCCD farm equipment — like seed cleaners, have to learn to cooperate!” Nguyen gravity tables and augers.” For large says, with a laugh. machines, like combines, the purchase In the years between college and stamp-match programs and supported price is often cost prohibitive for small- going to work for CCCD, Nguyen had refugee farmer initiatives in San Diego. scale farmers, Nguyen says. widely ranging experiences working So, when a friend saw a job To bridge the gap, Nguyen felt it with co-ops and international assistance description from CCCD looking for would make sense to work with others organizations. Nguyen started the West someone with farming experience and to pool money to buy equipment that Coast Cooperatives Conference and who had worked with refugees and could be shared, since the gear is often

26 May/June 2017 / Rural Cooperatives only used for a limited time once each year. Working with a small group of like-minded farmers, the Bandit Seed Co-op was formed. Members scoured classified ads across the country to find used farm equipment, some of which needed restoration work but would be well suited for their operations. To help market heritage grains, Nguyen created a special catalog. “People were lost about marketing heritage grains. They want to tell their stories, but didn’t know how. So I was like: ‘why don’t we just make a catalog?’” Nguyen designed and published the grain catalog, which was well received at the Cascadia Grain Conference, a meeting of heritage grain growers. “In our little world, the conference is a big Hwa Young Chung, president of the Hi Desert Jujube Cooperative, is ready to market the Asian deal, and they were very excited about fruits grown by his co-op at the Hi-Desert Festival. the catalog.” Nguyen was invited to be a guest To separate wheat from chaff – and to sift out weed seeds – Mai Nguyen pours organic grain speaker at the most recent conference onto an air-screen cleaner. Nguyen has also produced a heritage grain catalog to help market in January 2017 in Olympia, Wash. the crops and educate consumers about them. Photos courtesy CCCD The catalog project is seen as something that will help build cooperation among heritage grain farmers and lends itself to supporting the work and mission of CCCD. The plan is to update the catalog annually, as soon as growers have a good estimate of what heritage grains and volumes they will be harvesting. Along with a directory of grain farmers and what they have for sale, the catalog “tells the story of these heritage grains…and the effort to revitalize them.” For example, Nguyen says the Sonora variety “is one of the oldest wheats grown in the Americas. It was California’s main crop in the 1800s because it can be dryland farmed. Both sides ate it during the Civil War and it was exported worldwide.” When newer varieties of wheat were introduced, Sonora faded away. “Then, one farmer started growing it again,” and its popularity is gradually increasing. “These types of stories are told in the catalog — that there is a continued on page 39

Rural Cooperatives / May/June 2017 27 Management Tip How would proposed tax reforms impact farmer co-ops?

By Meegan Moriarty Blueprint call for a reduction of the at a disadvantage compared with other Legal and Policy Analyst number of tax brackets and the rate of pass-through entities, the NCFC has USDA Rural Business-Cooperative Service tax for individuals. Currently, requested in testimony that patronage e-mail: [email protected] individuals are subject to seven tax distribution be subject to the new 25- brackets, with a top individual rate of percent pass-through rate, rather than President Trump is 39.6 percent. Under the Blueprint, to individual rates, as is the case under eager for tax reform, individual income would be taxed at 12, current law. and Congress has 25 or 33 percent. The President’s plan The Blueprint would allow promised to pass tax would provide three tax brackets, at 10, individuals to deduct 50 percent of net legislation before the 25 and 35 percent. capital gains, dividends and interest August recess. How would tax reform Under both plans, the new standard income (depending on the tax bracket, affect cooperatives and farms? deduction would be higher than the at 6, 12.5 or 16.5 percent). The Tax experts provided some answers current law’s standard deduction. President wants a 15-percent tax rate at an April 5 hearing before the House Further, many individual exemptions, for C-corporations (which would also Committee on Agriculture. The deductions and credits are proposed to apply for cooperative earnings not hearing addressed proposed changes in be eliminated, but the mortgage interest passed through as patronage); the the House Ways and Means and charitable contribution deductions Blueprint calls for a 20-percent Committee’s June 2016 “Blueprint,” would remain. The President’s plan corporate tax. Under the Blueprint, officially titled “A Better Way for Tax would double the standard deduction, both the individual and corporate Reform.” Witnesses stressed the unique but does not address whether personal alternative minimum tax would be nature of cooperatives and agriculture, exemptions would be kept. The Trump repealed to help simplify the tax code. the tight margins under which farms plan would also eliminate the deduction and ranches operate, and the fluctuating for state and local taxes. Border adjustability tax nature of farm income in which years of Although the Blueprint contemplates Under current law, the United States prosperity can be followed by years that taxpayers currently in the 10- taxes the worldwide income of with low commodity prices or weather percent bracket would pay less in taxes corporations; many of its trading disasters. than under current law, Patricia A. partners (including the European Experts focused on tax rate cuts, the Wolff with the American Farm Bureau Union) instead impose a value-added proposed border adjustability tax, the Federation cautioned that the effort to tax (VAT). Under a VAT, inputs to deduction for domestic production flatten the tax rate structure and reduce produced goods are taxed as they are activities, the estate tax, like-kind the number of deductions could result added along the value chain. The exchanges, the interest expense in a tax increase for farmers and Atlantic magazine provides the deduction and a miscellany of ranchers. following simplified example for how a provisions that facilitate tax planning The Blueprint would create a new 10-percent VAT would work: for farmers. The National Council of business tax rate of 25 percent for sole A farmer sells wheat to a baker for 20 Farmer Cooperatives (NCFC) weighed proprietorships or pass-through entities cents. The baker pays the farmer 22 cents in through testimony submitted for the on “active business income” with and the farmer sends a 2-cent VAT tax to record. owners’ “reasonable compensation” the government. The baker sells a loaf of passed through and subject to the bread to a supermarket for 60 cents. The Tax rates three-tiered individual rates. The supermarket pays the baker 66 cents and According to 2015 USDA President’s plan would permit pass- the baker sends the government 4 cents and Agricultural Resource Management through entities to be taxed at 15 gets a 2-cent credit for the tax already paid. Survey data, 97 percent of U.S. farms percent, the rate that he has also The store sells the loaf for $1. The are subject to taxation at individual proposed for the corporate tax. consumer pays $1.10. The store sends the rates. President Trump and the Concerned that cooperatives would be government 4 cents total, the 10 cents it

28 May/June 2017 / Rural Cooperatives collected in the VAT on its sales, minus the consumption-based system, where a border adjustment credits, since 6 cents it paid to the baker, which it gets “border adjustment” would make commodities are pooled. back as a credit. The government has exports tax-free and would disallow the received 2 cents from the farmer, 4 cents business expense deduction for Domestic production from the baker and 4 cents from the store, imported goods. The result could be a activities deduction for a total of 10 cents on the final sale of $1 boon to exporters, including the many This deduction, provided for by for a 10-percent VAT. (For more, see The agricultural producers who sell their Internal Revenue Code Section 199, has Atlantic , March 1, 2010, goods abroad. However, NCFC been helpful for cooperative tax https://www.theatlantic.com/business/ar expressed concern, in testimony planning because cooperatives have the chive/2010/03/how-does-a-value- submitted for the record, that the option of passing it through to their added-tax-work-anyway/36834/. border adjustability tax would impose members or keeping it at the Under World Trade Organization what would amount to a 20-percent cooperative level. The deduction (WTO) rules, a country with a corporate tax rate on goods needed by applies to proceeds from a range of destination-based VAT system can make agricultural organizations, including cooperative agricultural products, a “border adjustment” when goods are imported retail products, machinery, including dairy, crops, livestock and exported. This “border adjustment” fertilizer and fuel. even oil and gas refining. The Blueprint allows the country where the item was The President’s plan does not proposes to repeal the deduction made to exempt the exported item from include a border adjustability provision. because it would raise revenue that taxes. The assumption is that the item Instead, it proposes a “territorial” tax Congress can use to offset the cost of will be taxed in the trading partner system, in which the United States does proposed rate reduction and other country where it is imported and not tax foreign income of U.S. simplification measures. NCFC believes

Farm Bureau expressed support for current law provisions…that allow for accelerated cost recovery for business expenses, including write-offs of equipment, production supplies and pre-productive costs.

consumed. Goods imported from the companies. Instead, the income is taxed that Congress should retain the trading partner country will also be in the jurisdiction where the income deduction, saying that section 199 taxed in the country where the goods was earned. The President’s plan does “benefits are returned to the economy are consumed. In this way, cross-border not describe taxation of U.S. earnings through job creation, increased transactions between two countries that that have remained in foreign spending on agricultural production both have VAT taxes involve equal jurisdictions and have not yet been and increased spending in rural treatment of goods. subject to tax in the United States. communities.” Under current law, the cost of goods While economists argue that the exported from the United States economic effects of the border Estate tax implicitly includes a portion of the adjustability tax would be to cause an Former House Agriculture amount that was paid by U.S. increase in the value of the dollar Committee member and current Ways companies as income tax. No border abroad, NCFC is concerned that the and Means Committee member Rep. adjustment is allowed under WTO dollar may not strengthen against other Kristi Noem of South Dakota, along rules for goods from countries with currencies and, if it does, trading with other agriculture tax experts at the traditional corporate income tax partners may impose retaliatory tariffs hearing, advocated repeal of the estate systems. But goods imported from VAT on exports. Witness Doug Claussen tax, as proposed in the Blueprint. Noem countries do not have that implicit tax with K-Coe Isom LLP, a certified said her father died at age 49 in a farm cost, making U.S. goods more public accounting firm, said that there accident, requiring her to leave college expensive and adding to a trade are complex problems with tracking and help run the family farm. Shortly imbalance. which farmers’ products in the value after her father’s death, the family The Blueprint would move toward a chain are being exported and are due received a bill for the estate tax. To pay

Rural Cooperatives / May/June 2017 29 it, the family had to mortgage the farm, disincentive for land transfers. Williamson, economist for USDA’s diminishing investment in the farm Economic Research Service. Witnesses during the term of the loan. Like-kind exchanges testified that it is especially important For 2017, generally, estates with a Witnesses agreed that tax reform for farmers to have access to flexible tax fair market value of $5,490,000 and up should preserve the availability of provisions that help with stabilizing must file the estate tax return. Many of Internal Revenue Code Section 1031 income. the witnesses at the hearing, as well as like-kind exchanges. Like-kind several of the Agriculture Committee exchanges are an effective means for Other tax issues members, expressed support for the farmers to exchange similar property Cash vs. accrual accounting — tax’s repeal. However, Rep. Darren Soto for similar property and defer tax by Although not part of the Blueprint, in of Florida expressed concern that, while keeping a basis in the new property at 2013 the Ways and Means Committee there is sympathy for repealing the the same level as the basis in the old proposed eliminating cash accounting estate tax for farmers’ families, there is property. Like-kind exchanges are for certain taxpayers. Members of the less sympathy for repealing the tax for permitted for land, buildings, Committee seemed sympathetic to wealthy survivors of, for example, hedge equipment and breeding and witness requests that Congress preserve fund managers. President Trump’s plan production livestock, and allow farmers farmer access to cash accounting. With would repeal the estate tax. to make necessary improvements cash accounting, a tax is due when the without incurring additional debt to pay taxpayer actually receives payment. In Stepped-up basis taxes. contrast, with the accrual method of Farm Bureau’s Wolff applauded the accounting, the tax is due when the proposed reduction in the capital gains Interest deduction obligation to pay is incurred. tax rates and discussed how capital gains The Blueprint would eliminate the LIFO — Cooperatives should taxes apply when individuals inherit real deduction for interest payments as a continue to have access to the last-in, estate. Individuals are not required to business expense, except to offset first-out (LIFO) accounting method, pay tax as the fair market value of their interest income. Since farmers have according to NCFC. Under LIFO land increases. Landowners retain a limited access to equity financing, accounting, goods last acquired are “basis” in the land —– generally, the eliminating the deduction for interest presumed to be sold first. According to

NCFC believes that Congress should retain the domestic production activities deduction because it creates jobs, increases spending on ag production and boosts spending in rural communities.

amount at which the land was acquired. would make it more difficult to finance NCFC, taxpayers who use the first in, When the land is transferred, the land and farm equipment acquisitions, first out (FIFO) accounting method are difference between the basis and the witnesses agreed. The Trump taxed as if all inventory had been sold, amount for which the land is transferred administration is aware that certain even though the farmer had received no is taxed at capital gains rates. industries are concerned about the cash to pay the tax on the deemed sale. When land is inherited, however, the effects of losing the interest deduction, Installment method — An income basis is “stepped up” to the fair market Treasury Secretary Steven Mnuchin stabilizing provision favored by the value of the property, and the difference said on April 26 ( Wall Street Journal , Farm Bureau is the installment method, between the basis and the stepped-up April 27). which permits farmers and ranchers to value is not taxed. Wolf said that the report sales of crops and livestock and current law rules, with respect to Tax planning for producers recognize income when payment is inherited property and stepped-up Volatility can result in dramatic received in a subsequent year. basis, should not be repealed under tax changes in farm income from year to NOL carry forwards and backs — reform. Claussen noted that year. Under a graduated tax system, Another income “smoothing” provision discontinuing the stepped-up basis in farmers are likely to pay more in taxes allows taxpayers to carry forward and inherited land could create significant than individuals with steadier incomes, back certain net operating losses tax liability on sale, creating a according to hearing witness James continued on page 39

30 May/June 2017 / Rural Cooperatives Utility Co-op Connection For Georgia’s Sawnee EMC, serving growing member base means more than supplying electricity

By Anne Mayberry, Legislative and Public Affairs Advisor USDA Rural Utilities Service

“We’re more than electricity — we’re service.” That’s the motto of Sawnee Electric Membership Corporation, a rural electric cooperative utility serving north-central Georgia. What Sawnee EMC does is similar to what the other 1,000 rural electric co-operative utilities across the United States do in their service territories: Focus on community needs. Students study in the library of Lanier Technical College, one of several colleges that have built Like most other rural electric co-ops, facilities in Sawnee’s service area and are bringing new jobs to the community while helping “Sawnee works to improve the local residents gain skills needed for career development. Photo by Dave Parrish, courtesy Lanier Technical College. quality of life by assisting our communities and keeping electric rates affordable,” says Blake House, vice work. These trips often inspire students sponsor Operation Round-Up president of member services for Sawnee. to pursue future careers in public service. programs to provide support for those Co-ops have a history of being more in need. Co-op customers round up than just a source of electric power for Capital credits a plus their electric bills to the nearest dollar; homes and businesses. According to the for co-op members the cumulative, donated funds are then National Rural Electric Cooperative Cooperatives are supported by donated for a variety of community Association, because concern for members, many of whom see a return programs. Sawnee’s Round-Up program community is a core principal of the on their investment through capital provided $2 million for charitable cooperative business model, typical credit or patronage capital programs. organizations during the past decade. cooperative-sponsored economic Under these programs, dollars While co-ops’ commitment to development initiatives include generated in excess of the utility’s community — one of the seven community revitalization projects, job operating costs are returned to cooperative principles — is a core creation, improvement of water and consumer-members. principal of the cooperative business sewer systems, and assistance in delivery “Our newer customers, who often model, it is also as much a part of the of health care and educational services. don’t know what a co-op is, also don’t history of cooperatives as is providing In short, co-ops seek to improve the know what patronage capital is,” House electricity to rural America. quality of life for their members and says. “But once they find out, they Georgia played a key role in the their communities. prefer getting their power from co-ops. early history of the electric cooperative Most rural electric co-ops sponsor The cooperative business model is eye movement. President Franklin youth scholarship programs that send opening for those who have never been Roosevelt’s trips to Warm Springs, Ga., high school students to Washington, a member of a cooperative.” are credited for helping to elicit his D.C., to see their federal government at Rural electric cooperatives also support for rural electrification, as it

Rural Cooperatives / May/June 2017 31 was on these trips that he discovered Assembly approved the Electric of the things your members need.” the difficulty of life in rural America Membership Corporation Act, which Sawnee’s support of education in its without electricity. opened the door to providing electricity service territory may be another factor to rural Georgia. in the area’s growth. USDA’s new Overcoming the By July 16, 1938, community leaders report, “ Rural Education at a Glance, “privilege of geography” in Georgia’s Forsyth County 2017 Edition ,” notes that education is Author of Light Up Our Land , Hank incorporated the Forsyth County closely linked to economic outcomes. McQuade, notes in his 1990 book that Electric Membership Corporation, Thus, one of Sawnee’s priorities is to while the economy may have which used 163 miles of line to provide provide reliable electric service to the contributed to rural hardship in the electricity to 750 rural homes. By 1950, 51 schools and colleges in its service 1930s, there was another obstacle to Forsyth County EMC became Sawnee area, including several new schools built rural economic growth: Electric Membership Corporation, so during the past two years to support “Despite the grinding poverty, named because the co-op’s headquarters rapid population growth. hunger and desperation that millions of Americans faced, the farmers and small business people of America’s rural areas were convinced there was one privilege they were being denied that was not the result of the economic debacle. Rather, that privilege was based simply on geography. Rural residents were continuously and emphatically told they

The Sawnee EMC cooperative not only keeps the electricity flowing to its members’ homes and businesses, but it is also focused on building stronger communities in its service area of north- central Georgia. Photo courtesy Sawnee EMC

was located in the foothills of Sawnee The cooperative has also funded Mountain, named for a Cherokee computer labs and outdoor learning Indian chief. centers. “These programs help our kids, Today, Sawnee serves one of the our schools and tie us to the fastest growing regions in the nation, community,” House says. according to data from the 2010 “Students go where the jobs are,” he Census. The cooperative utility continues. “The lack of jobs is often a provides electricity to more than reason that students elect not to return 154,000 residential and 16,000 to their rural area after college. Adding commercial and industrial customers new schools, and 250 or so new It was during one of his trips to Warms across seven counties, bordered by Lake teachers, provides jobs for those who Springs, Ga., to soak in the therapeutic pools Lanier and the Sawnee foothills. grow up here and choose to return and there, that President Franklin D. Roosevelt (in fill those jobs.” Educational institutions, car) saw firsthand how desperate the need Avoiding out-migration crisis was for a rural electrification program. Photo such as Gwinnett and Lanier Technical courtesy Franklin D. Roosevelt Presidential For the most part, Sawnee has College, that have built facilities in Library avoided the out-migration problem that Sawnee’s territory are helping to bring has caused so much economic jobs to the community and offer simply lived too far from the utility stagnation in other rural areas. Its opportunities for people to enhance lines of the private power companies to proximity to Atlanta and the scenic their academic, personal and career receive electricity in their homes and quality of the service territory have no development. towns.” doubt helped the Sawnee area avoid Georgia worked quickly to take “losing its best and brightest.” Growth generates more growth advantage of the new Rural “We are blessed with both the “Growth drives economic Electrification Act, approved by benefits and challenges of growth,” development, which in turn drives more Congress in May of 1936. On March notes House. “Growth is a blessing. It growth,” House says. “Grocery stores 30, 1937, the Georgia General provides you with the funds to do many continued on page 39

32 May/June 2017 / Rural Cooperatives Newsline Co-op developments, coast to coast

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

Co-op extends has drawn remarkable support from the stimulate the planting of 50,000 trees. tree-planting program very beginning,” says Bob Behr, CEO The Citrus World cooperative of Florida’s Natural. “Despite the Three Farm Credit (better known as Florida’s Natural, after widely publicized struggles of the associations merging it’s orange juice brand) is launching a Florida citrus grower, we see the Three Farm Credit associations — second, $10-million tree planting interest in our incentive program as a based in Illinois, Minnesota and program to help its members replace focus for our future and the success of Wisconsin — are merging, effective orange and grapefruit groves ravaged by our grower-members. It is exciting to July 1. Members of 1st Farm Credit citrus greening disease (see the March- see the continued dedication and Services (Illinois), AgStar Financial Services (Minnesota) and Badgerland Financial (Wisconsin) voted for the merger to create Compeer Financial. The new organization’s headquarters will be in Sun Prairie, Wis. Each organization’s existing offices will continue to provide local service. Rod Hebrink, president and CEO for AgStar Financial since 2014, will lead the merged organization. Hebrink served as AgStar’s chief financial officer for nearly 30 years. The board of the merged organization will be comprised of 14 member-elected directors and three outside appointed directors. There will be equitable representation of board members, in proportion to the number of stockholders from each of the three Many new citrus groves, such as this, will be planted in Florida thanks to the Citrus World areas. (Florida’s Natural) cooperative’s decision to spend $10 million on a second round of its Planting The boards of the three Incentive Program. The effort is helping to counter the devastation of citrus greening disease. organizations began exploring a Photo courtesy Ernst Peters of The Ledger potential merger in February 2016, leading to a unanimous April issue of Rural Cooperatives for a resiliency of our grower members as recommendation in August to move full report on the situation). they look to the future.” forward. Stockholders received ballots The Planting Incentive Program Behr added that Citrus World’s and detailed information about the (PIP) began in 2014 when the co-op financial position is strong and the proposal in March, after the Farm committed $10 million to help investment with the growers enables the Credit Administration granted members plant 1 million trees. This continued growth of the Florida’s preliminary approval to proceed. The second round for the PIP is expected to Natural brand. favorable vote for the merger was add another 1 million trees and 2 Due to the success of the planting announced April 7. million boxes of citrus when the new program for orange and grapefruit, the The new organization will operate in orchards reach full bearing age. board has also approved the Lemon 144 counties through 47 offices in parts “The Planting Incentive Program Planting Incentive Program to of Illinois, Minnesota and Wisconsin. It

Rural Cooperatives / May/June 2017 33 will have $18.6 billion in assets. The LLC, with agronomy products and governments cannot abide by Canada’s merger provides expanded capital that services. disregard for its trade commitment to will help Compeer Financial invest in Premier Cooperative was formed in the United States and its intentional technology and other resources to 2009 with the unification of Fisher decision to pursue policies that are support its client base. It also creates a Farmers Grain & Coal, Grain Prairie choking off sales of American-made more diverse portfolio that will create Co-op and Farmers Elevator Co. of milk to the detriment of U.S. dairy additional stability and better position Jamaica. Rising Farmers Grain Co. farmers.” the organization to share its earnings joined Premier in 2011. Through the Vilsack, former U.S. secretary of with stockholders through a cash predecessor co-ops, Premier traces its agriculture, also noted that while farm patronage program. origins back to the early 1900s. families in the Northeast and Midwest are suffering the immediate Premier Co-op buys Dairy groups urge action consequences of the loss of Canadian JBS grain elevators on Canadian trade issue markets, “thousands more will suffer if Premier Cooperative, Champaign, U.S. dairy trade organizations are Canada persists in using its programs to Ill., is purchasing three grain elevators urging the Trump Administration to distort the global milk powder markets — at Royal, Collison and Rossville — fight back against “protectionist so critical to tens of thousands of from JBS United Inc. of Sheridan, Ind. Canadian trade policies that are American dairy farmers.” slamming the door to American dairy exports in violation of existing trade Dan Block new CEO commitments between the two at DairyAmerica nations.” DairyAmerica — a federated co-op The National Milk Producers that is the world’s largest dried skim Federation (NMPF), which represents milk marketer — has appointed Dan most U.S. dairy co-ops, the U.S. Dairy Block as CEO. Block joined Export Council (USDEC) and the DairyAmerica in 2011, most recently International Dairy Foods Association serving as chief commercial officer and One of Premier Cooperative’s grain facilities. The co-op is purchasing three more grain (IDFA) called on the federal leading the company’s global sales facilities from JBS United Inc., pushing its government and governors of northern strategy. annual grain sales to about 70 million bushels. states to take immediate action in “Dan has the vision, strategy and response to what they see as “Canada’s track record to violation of its trade commitments to help DairyAmerica The grain marketed through the the United States.” and its members additional facilities is projected to In a joint press release, the U.S. capitalize on the increase Premier's grain sales to about dairy groups said Canada’s new “Class opportunities in 70-million bushels annually. 7” pricing policy is “designed to the global The co-op says the new elevators disadvantage U.S. exports to Canada marketplace and complement Premier’s existing facilities and globally.” As a result, “multiple continue to in Champaign, Vermillion, Ford and dairy companies in Wisconsin and New successfully grow Piatt counties. The purchase also York have been forced to inform many our business,” says Board President provides access to markets not currently of their supplying farmers that the Andrei Mikhalevsky. available to the co-op. Premier will now Canadian market for their exports has Block has spent more than 20 years have facilities on four Class 1 railroads, dried up. For some farmers, this means driving growth for leading dairy and opening more markets for its members. that the company processing their milk food organizations in global A 110-car shuttle train loader on the and shipping it to Canada can no longer markets. Prior to joining DairyAmerica, Union Pacific Railroad at Royal will accept it starting in May.” he held key sales and leadership connect Premier customers to the Jim Mulhern, CEO of NMPF, says positions with Glanbia Nutritionals Southwest United States and the “Canada’s protectionist dairy policies Inc., Hoogwegt U.S. Inc. and Archer Mexican grain market. The 10-car are having precisely the effect Canada Daniels Midland. Block is a graduate of loader on the CSX Railroad at Rossville intended: cutting off U.S. dairy exports the University of Illinois-Urbana, with ships to the Eastern and Southeastern of ultra-filtered milk to Canada despite a bachelor’s degree in agriculture. United States. long-standing contracts with American “The opportunities for Premier provides more than 2,800 companies.” DairyAmerica are significant, and we members with grain and energy Tom Vilsack, president and CEO of have a strong team in place to services, and, through United Prairie USDEC, adds: “Our federal and state accomplish our goals as well as traverse

34 May/June 2017 / Rural Cooperatives the ever-changing market conditions we face globally,” says Block. DairyAmerica members are: Agri-Mark Inc., ACE Institute slated in Denver California Dairies Inc., O-AT-KA Milk Producers Inc. and United “Co-op Education for the Next Generation — passing Dairymen of Arizona. along a passion for democratic principles” is the theme of the Association of Cooperative Educators CoBank supports (ACE) annual institute July 18-21 at Regis University wildfire relief in Denver, Colo. Registration is now open at: CoBank — a cooperative bank www.ace.coop. serving agribusinesses, rural In addition to exploring a wide variety of co-op infrastructure providers and Farm education topics, the conference will include study Credit associations — is launching a visits to cooperatives in the Denver area, as well a $150,000 charitable fund to support visit to the state’s majestic Rocky Mountains. wildfire relief efforts throughout Among topic “tracks” for the institute are: Kansas, Oklahoma and Texas. Recent n Platform solutions — The internet has opened ways that people can fires have impacted farming and work together to offer services and goods. Does co-op education have a ranching communities in all three place in helping people keep control of their work products? states, burning hundreds of thousands n Co-ops are no longer on the fringe — universities are introducing more of acres, destroying property and killing programs to teach about co-op solutions. Explore these programs and their livestock. potential to expand co-op understanding and use. In Kansas, an estimated 700,000 n Back to basics — Re-emphasizing education for members and acres have burned throughout more employees about democratic organizations and co-op principles is essential. than 20 counties in the state’s southwest n The GIGabyte economy and co-ops — Explore new ways co-op and central regions. In Oklahoma, educators and developers can help workers to navigate cooperative about 400,000 acres have burned and a ownership. state of emergency has been declared in ACE is an organization of cooperative researchers, leaders, educators, 22 counties. An estimated 325,000 acres practitioners and developers. Formed in 1952, the association bridges have burned throughout the Texas geopolitical, cultural and language barriers to unite cooperative panhandle. educators throughout the United States, Canada and the Caribbean. “These wildfires have had a devastating impact,” says Tom Halverson, CoBank's president and CEO. “CoBank is committed to working with our customers, other Farm Credit organizations and local relief agencies to support farmers, ranchers and other victims of these fires.”

Former Sunkist CEO Russ Hanlin Sr. dies Russell Hanlin Sr., who was president and CEO of Sunkist Growers for 20 years, has died at age 84. Three U.S. presidents — Jimmy Carter, Ronald Reagan and George H.W. Bush — tapped Hanlin for his experience in global trade. He was appointed to the President’s Advisory Committee for Trade Negotiation, the President’s Export Council and the President’s Attendees at a recent ACE Institute gather for a “selfie” photo. This year’s conference in Commission on Executive Exchange. Denver will explore a wide range of issues that should help advance the state of co-op Hanlin’s commitment to global trade education efforts in North America. Photo courtesy ACE was also honored abroad, according to

Rural Cooperatives / May/June 2017 35 Sunkist. Hanlin was inducted into the investments in new and existing plants, effective safety culture that today has World Trade Hall of Fame for his work as well as progressing on our strategic become a model for the agriculture in opening overseas markets to initiatives.” industry. American products and received the In 2016, DFA marketed 62.6 billion Wheat Growers Board President Hal Maple Leaf award for promoting trade pounds of milk for both members and Clemensen credited Locken for and understanding between the United others through the cooperative’s adapting the cooperative to meet the States and Canada. consolidated businesses, which current and future needs of its The Emperor of Japan awarded represent about 29 percent of the members, “assuring that the co-op Hanlin a national decoration for nation’s total milk production. The remains innovative, progressive and meritorious service and distinguished average 2016 price paid to members per relevant for generations to come.” achievement for his role in creating a hundredweight of milk was $16.22, “I have been honored to work with positive business relationship between compared to $17.18 in 2015. the tremendously talented, extremely the United States and Japan. He Cash distributed to members in 2016 dedicated Wheat Growers employee chaired the Los Angeles Vancouver totaled $42 million, compared to $35 team, who strive every day to provide Sister City Committee and the Japan million in 2015. Members received $21 outstanding service to our 5,100 America Society of Southern California. million in equity retirements and $21 farmer-member owners,” Locken says. He served as chairman of the million of allocated patronage “It has been the most rewarding and National Council of Agricultural dividends. inspiring period of my professional Cooperatives and of the United Fresh The co-op in 2016 announced plans career in agriculture.” Fruit & Vegetable Association and was to construct a new cheese plant in Pearson was the board’s unanimous a member of the U.S./Hong Kong Michigan with Glanbia PLC. This choice as the new CEO. He joined Economic Council. project is driven by Michigan’s growing Wheat Growers as senior vice president milk supply and an increasing of operations in 2013 and was Record profit for DFA worldwide demand for dairy products. promoted to chief operating officer last Dairy Farmers of America (DFA) had Foremost Farms USA and Michigan year. A native of Corning, Iowa, net income of $131.8 million for 2016, Milk Producers Association co-ops are Pearson spent 14 years in local co-op up from $94.1 million for 2015. The also involved in the project. systems there, rising from an entry-level increase was attributed to higher sales job to chief operating officer. volumes, overall operating efficiencies Pearson to succeed Locken He also serves as board president of and lower commodity input costs. The at Wheat Growers Co-op Dakotaland Feeds and is a member of record earnings were also buoyed by Dale Locken, CEO of Wheat James Valley Grain Cooperative and the the acquisition of the remaining 50- Growers (formerly South Dakota Agriculture Retailers Association, percent equity interest in Wheat Growers), will be retiring Aug. among other memberships. He has an DairiConcepts, a manufacturer of 1. Locken has served almost 15 years at undergraduate degree in agriculture cheese, dairy ingredients and dairy the helm of the Aberdeen, S.D.-based studies from Iowa State University. flavor systems that operates eight grain cooperative. “Chris is passionate about farmer facilities. He will be succeeded success, deeply knowledgeable in what DFA’s net sales of $13.5 billion for by Chris Pearson, it takes to run a successful cooperative 2016 were down from $13.8 billion Wheat Growers’ and firmly committed to the employees in 2015, primarily due to lower milk current chief who support our farmer-members,” prices. The U.S. annual average all- operating officer. Clemensen says. “In this challenging milk price was $16.24 per Under Locken’s agriculture climate, we knew we needed hundredweight in 2016, compared leadership, the a CEO to align with our strategy and with $17.12 per hundredweight in LOCKEN cooperative expanded culture.” 2015. grain storage, “Being owned by dairy farmers, upgraded grain- Fenske CEO at Co-op we are always working to strengthen handling facilities, Grain & Supply our milk marketing business and to added shuttle- Cooperative Grain and Supply, bring value to our dairy-farmer loading facilities and Hillsboro, Kan., has selected Jerry members,” says Rick Smith, president expanded its Fenske as its new CEO. Fenske has and CEO. “While 2016 was a year of agronomy service most recently been serving as general challenges for many of our farmers, centers. Wheat manager of the Leavenworth County DFA itself continues to grow and Growers also Cooperative Association in Lansing. PEARSON remains focused on continuing our developed a strong, Prior to that, he was manager of the co-

36 May/June 2017 / Rural Cooperatives op’s energy department. Opened in 2012, the co-op has yet to Valley Ag, where he was senior vice Fenske started his cooperative career be profitable. That should change this president of strategic projects. Before working for the Farmers Cooperative year, according to Jeremy Lisy, the co- that he was vice president/relationship Association, Manhattan. He is a op’s vice president for sales. manager for CoBank and was the owner graduate of the University of Kansas. “When I came here, we had 15 of Heartland Strategies Business He began the new job on April 1. people working and the greenhouse was Consulting. 60-percent empty,” he explains. “They Grawe’s “background and experience Keller to lead didn’t know what to grow or who to sell will be a valuable asset for CAS as we Accelerated Genetics it to. Some of the products they were develop new opportunities for the three Janet Keller has been hired as president and CEO of Accelerated Genetics, a livestock breeding cooperative based in Baraboo, Wis. Keller had previously served as the co-op’s vice president for communications, public relations and advertising. Most recently, she was employed by World Dairy Expo as the communications and public relations manager. Keller brings more than 23 years of industry experience to her new job, Hydroponically grown crops thrive inside the giant greenhouse of the Green City Growers including management, marketing, herd cooperative in Cleveland. analysis, photography, distribution, training, semen inventory management and animal health product knowledge. growing weren’t right for chefs,” he cooperatives and their respective The co-op believes that Keller’s told Cleveland Scene . member-owners,” says Carl Dickinson, extensive communication experience, Lisy talked to chefs around the city CAS board chairman. along with her cooperative business to see what they wanted, then added Grawe has a BA in finance knowledge, will help move the company different types of lettuces for the co- management from Loras College in forward. op’s packaged blends, and sales shot Dubuque, Iowa, and an MBA in She will direct initiatives at the co-op upward. This year the co-op expects Finance from Rockhurst College in to increase gross profits and sales while sales to top $3 million, double the sales Kansas City, Mo. He is also a graduate reducing expenses and making the of two years ago and enough to push of the Land O’ Lakes Executive cooperative more member-focused, the operation into the black. Development Program and the Institute according to an article in the Wisconsin for Cooperative Leadership at the State Farmer . Grawe new CEO at University of Missouri in Columbia, Consolidated Ag Solutions Mo. Green City Growers Jeff Grawe has been named president nears profitability and CEO of Consolidated Ag Solutions NFU opposes Green City Growers, a worker- Inc. (CAS), where he succeeds Robert Dow-DuPont merger owned urban farming co-op in Dude. CAS is a cooperative formed in Following European Union approval Cleveland, is approaching profitability, 2015 to create strategic advantages for of the proposed merger between Dow according to a March article in three ag cooperatives: Central Valley Ag Chemical Co. and DuPont Co., Cleveland Scene magazine. The co-op in York, Neb., Landus Cooperative in National Farmers Union (NFU) is operates one of the nation’s largest Ames, Iowa, and Wheat Growers calling on the Trump Administration to hydroponic greenhouses, covering 3.2 (formerly South Dakota Wheat block the deal. The merger, if approved acres in an economically depressed part Growers) in Aberdeen, S.D. by the U.S. Justice Department, would of the city. Grawe comes to CAS from Central create the largest biotechnology and

Rural Cooperatives / May/June 2017 37 seed firm in the nation. USDA’s Organic Integrity Database at: “The reduction in competition that http://organic.ams.usda.gov/integrity/. would be wrought by a Dow-DuPont Launched in 2015, the database merger will result in less innovation, discourages fraud by providing more higher prices and less choice for accurate and timely information about farmers,” says NFU President Roger operations certified to use the USDA Johnson in a letter to President Trump. organic seal. “Given the damaging and lasting effects this merger will have on family farmers Wisconsin supply and rural America, we urge you to co-ops pursue merger oppose this merger.” The boards of Country Visions Johnson noted that the Dow- Cooperative, Reedsville, Wis., and DuPont merger occurs amidst a massive Kettle Lakes Cooperative, Random wave of consolidation in the agricultural Lake, Wis., have signed letters of intent inputs sector. The combination of the Team-building exercises such as this will be to pursue a merger. Merger discussions two companies, coupled with the part of the Cooperative Leadership Camp, began after the co-ops first agreed to concurrently proposed mergers of hosted in June by the Cooperative Council of form a joint venture to build a new, Carolina. Bayer-Monsanto and ChemChina- state-of-the-art agronomy facility in Syngenta, threatens to limit major Plymouth, Wis. players in the agrichemical and seed cooperative or by 4-H (CCNC can help Country Visions is a farm supply sectors to just four companies. That is connect students with possible cooperative operating in eastern bad news for farmers who rely on sponsors). Wisconsin and in the Upper Peninsula competitive pricing for their inputs, Campers must possess an interest in of Michigan. It has annual sales of $158 Johnson says. developing their leadership skills. For million from divisions for agronomy, “The merger of Dow and DuPont, more information, contact the CCNC grain, petroleum, propane and retail the 4th and 5th largest firms, would office at (919)-834-5544, or e-mail: stores. Country Visions is also a 60- give the resulting company about 41 [email protected]. Registrations are percent owner of CP Feeds, which percent of the market for corn seeds due June 1. manufactures and sells more than $146 and 38 percent of the market for million in feed to area farmers. soybean seeds,” says Johnson. “If the Organic farms show Kettle Lakes Cooperative is a farm Dow-DuPont and Bayer-Monsanto continued growth supply co-op in eastern Wisconsin mergers were both approved, there The organic food industry continues currently operating just south of would effectively be a duopoly in the to grow domestically and globally, with Country Visions trade area. Kettle corn and soybean seed markets.” 24,650 certified organic operations in Lakes annual sales of $40 million come the United States and 37,032 around from agronomy, grain, feed and retail. Carolina to hold the world, according to USDA. The Kettle Lakes is also a 50-percent owner co-op youth camp 2016 count of U.S. certified organic of Co-Energy Alliance, which sells Cooperative Leadership Camp, farms and businesses reflects a 13- petroleum and propane. hosted by the Cooperative Council of percent increase between 2015 and Membership voting is scheduled in North Carolina (CCNC), will be held 2016, continuing the trend of double- late June. If approved by members, the June 19-23 at the FFA Center in White digit growth in the organic sector. The joint organization will begin business Lake, N.C. The five-day resident number of certified operations has on Sept. 1, says Country Visions CEO camping program features interactive increased since the count began in Steve Zutz. Member information workshops and presentations, team- 2002; this is the highest growth rate meetings will be held prior to the vote. building activities and recreation, plus since 2008. Co-op leaders say the merger will small group sessions with an emphasis Organic certification is an “opt-in” result in better purchasing power for on how cooperatives operate. voluntary standard that is managed the co-op and new joint operations that To be eligible for the camp, a through a public-private partnership. drive efficiencies for the business. n participant must be a rising high school USDA accredits and oversees about 80 sophomore, junior or senior and have at businesses and state governments that least one letter of recommendation directly certify organic farms and from a co-op sponsor or school staff businesses. member. The student must also be The complete list of certified organic sponsored by a CCNC member farms and business is available through

38 May/June 2017 / Rural Cooperatives Utility Co-op Connection more labor is required to maintain focused on providing reliable, continued from page 32 dependable electric service — an affordable electricity to help sustain and especially critical factor for business generate growth is simply the result of a operations. Expanding facilities require “co-op mindset.” additional labor to install and maintain House explains: “In many ways, we and shopping venues follow the the system, bringing even more jobs don’t have customers — we have rooftops, which follow jobs. We’re always into the area. owners. We need to do all we can to planning 10 years ahead in our area.” Ensuring that internet access is serve our owners, and that includes free Sawnee’s territory has also available is also vitally important all energy audits, donations to civic experienced a recent surge in customers. “High speed broadband organizations and working locally to commercial retail growth. As both today is somewhat comparable to elec- help one another. It’s ingrained in how residential and commercial facilities trification a century ago,” says House. we were formed almost 80 years ago. expand in Sawnee EMC’s service area, Part of the reason why Sawnee is so It’s in our blood.” n

Management Tip current law provisions under Internal accounting firm, called attention to continued from page 30 Revenue Code Section 168 that allow additional special provisions that for accelerated cost recovery for farmers have under current law that business expenses, including write-offs could potentially be lost under tax of equipment, production supplies and reform. For example, farmers have (NOLs). Witnesses objected to the pre-productive costs. This provision can flexibility on when they can recognize Blueprint’s proposal to limit these be coordinated with Internal Revenue the receipt of crop insurance proceeds. provisions. Code Section 179, under which farmers Farmers also can take advantage of Deductions for business can choose to immediately deduct up to flexible taxation of Commodity Credit expenditures — The Blueprint would $510,000 (indexed for inflation) in Corporation loans; they can pay tax on allow an immediate deduction for the expenditures for equipment. Witnesses a loan when received, or treat the loan cost of business investment in also argued to keep provisions of as a true loan. equipment, building and intangible current law that allow producers to When a crop is sold, the farmer can assets, but not land. On April 26, deduct soil and water conservation repay the loan and get a deduction. If Mnuchen said that the administration expenditures, the cost of raising the loan is treated as a true loan but is also favors an immediate write-off for livestock and the cost of raising crops. forfeited, the farmer recognizes income. business capital expenses ( Wall Street Other special rules for agriculture — Further, special rules are available Journal , April 27). Witness Christopher Hesse, of Clifton under current law to defer livestock Farm Bureau expressed support for Larson Allen LLP, a certified public sales. n

A Born Cooperator technical information to share with caller is excited because the members continued from page 27 commercial bakers, because “there is a just had a really good meeting and are learning curve to incorporating these making progress toward a goal, like whole grains into their products.” acquiring a shared-space facility. In January, Nguyen visited six “Then I would get to interact with person behind these seeds, not just a farmers markets in Los Angeles County some partners we are working with to company.” to make the pitch for supporting create new jobs…and helping socially Nguyen would like California products with local whole grains. disadvantaged farmers, because there farmers markets to require that any “Places like Beverly Hills are starting to are still so few resources for them.” wheat-based products sold include 20 get the whole-grain gospel!” Ultimately, Nguyen sees the core of percent local, whole grains. “I got the a co-op facilitator’s work as being a idea from New York, where they Ultimate goal: problem solver. require 15 percent local grain content solving problems “I like brainstorming with people to in baked products; it has been very With so many “oars in the water,” help them find ways to solve problems. helpful for their grain farmers.” what is a good day like for Nguyen? I want them to feel like they have the Nguyen is working with a “That would be when the phone tools needed to make progress. That commercial baker who uses whole rings about 6 a.m., and it’s a call from a comes from working together to share grains, with the goal of creating farmer co-op I’m working with. The knowledge.” n

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