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Rural Coopjan 06 Postprint Rural COOPERACOOPERAUSDA / Rural Development TIVESTIVESJanuary/February 2006 WWineine co-opco-op takestakes rootroot page 9 Rural January/FebruaryCOOPERACOOPERA 2006 TIVESTIVESVolume 73 Number 1 FEATURES 4 Making the Grade Off-grade potatoes have a home, thanks to Keystone plant Rural COOPERATIVES (1088-8845) is published By Dan Campbell bimonthly by Rural Business–Cooperative Service, U.S. Department of Agriculture, 1400 Independence Ave. SW, Stop 0705, Washington, DC. 20250-0705. p. 4 9Fruits of Their Labor The Secretary of Agriculture has determined that Co-op winegrowing takes root in North Carolina publication of this periodical is necessary in the transaction of public business required by law of By Bruce Pleasant the Department. Periodicals postage paid at Washington, DC. and additional mailing offices. Copies may be obtained from the Superintendent of 14 Voice of experience: co-ops are resilient Documents, Government Printing Office, Washington, DC, 20402, at $23 per year. Postmaster: send address By Scott Yates change to: Rural Cooperatives, USDA/RBS, Stop p. 9 3255, Wash., DC 20250-3255. 16 Trade, Farm Bill challenges Mention in Rural COOPERATIVES of company and brand names does not signify endorsement over eyed at dairy conference other companies’ products and services. By Dan Campbell Unless otherwise stated, contents of this publication are not copyrighted and may be reprinted freely. For noncopyrighted articles, mention of source will be 20 Foreign Affairs appreciated but is not required. p. 16 Co-op leaders share strategies for pursuing global markets The U.S. Department of Agriculture (USDA) prohibits By Stephen Thompson discrimination in all its programs and activities on the basis of race, color, national origin, age, disabili- ty, and where applicable, sex, marital status, familial 25 Largest 100 ag co-ops status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or post strong margins in ‘04 because all or part of an individual’s income is derived from any public assistance program. (Not By David Chesnick all prohibited bases apply to all programs.) Persons p. 20 with disabilities who require alternative means for communication of program information (Braille, 32 An Art & Science large print, audiotape, etc.) should contact USDA’s Revised co-op curriculum gets test drive in Madison TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, By Jane Livingston Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, or call (800) 795-3272 (voice), or (202) 720-6382 (TDD). USDA DEPARTMENTS is an equal opportunity provider and employer. Mike Johanns, Secretary of Agriculture 24 LEGAL CORNER Thomas C. Dorr, Under Secretary, 30 VALUE-ADDED CORNER USDA Rural Development, 35 MANAGEMENT TIP Jack Gleason, Acting Administrator, Rural Business-Cooperative Programs 37 NEWSLINE 47 INSIDE RURAL DEVELOPMENT Roberta D. Purcell, Deputy Administrator, USDA Rural Business-Cooperative Programs Dan Campbell, Editor On the Cover: Vision Integrated Marketing/KOTA, Design A vine laden with Chardonnay grapes awaits harvest. See page Have a cooperative-related question? 9 for a look at how wine grape growing is making a comeback in Call (202) 720-6483, or North Carolina. Photo contributed by Rodney Lough, a prize-win- Fax (202) 720-4641, Information Director, ning photographer who specializes in outdoor photography. This publication was printed with vegetable oil-based ink. See more of his work at: www.theloughroad.com. Rural Cooperatives / January/February 2006 3 Making the Grade Off-grade potatoes now have a home thanks to Keystone dehydrator plant By Dan Campbell, Editor provides fuel for the steam Keystone needs to process fresh spuds into 40-pound bags of tanding in a steady drizzle under a dehydrated potato flakes. steel-gray October sky, Cory The culprit for the power interruption ulti- S Schlegel and several other men are mately proves to be a defective switch that shut peering at the gauges on a control down one of the blowers that drive methane panel, trying to find the kink that has inter- gas into and through the underground pipeline rupted the flow of gas under the road to the that leads to the plant, located near the town of new Keystone Potato Products plant. The hud- Hegins in the Appalachian Mountains of east- dle takes place on a giant landfill, the final rest- ern Pennsylvania. ing place for trash from all over the Northeast. Decomposing garbage is the source for the methane gas that 4 January/February 2006 / Rural Cooperatives When the methane gas system shuts able marketing advantage, Masser says. ning the driers, peelers and blanchers. down, the plant’s back-up propane He’s long been convinced of the need “We pursued that idea aggressively, but burners kick on, so the potatoes keep for a plant like Keystone in the East — the logistics just didn’t work out.” rolling. “But we hate to have to use the ever since returning to the family farm- Part of the problem was that to propane because of the higher cost,” ing operation in the late 1970s after maintain the steam pressure required, explains Schlegel, the plant’s general several years working in the paper the potato processing plant would have manager. Indeed, it was the availability industry for Proctor & Gamble. had to be located virtually next door to and economics of a low-cost, waste-to- Buyers in the East typically have to the co-generation plant — not exactly energy power source that was the pay about 12 cents per pound more for an appetizing prospect for a food facto- lynchpin for getting this $12 million fresh potatoes than do their counter- ry. Further, there was concern about project built. parts in the West, he notes. To offset how long the coal supply at any one of There’s a lot riding on the outcome that differential, a cheap source of ener- these plants would last. of the effort. This plant could play a gy was needed for a processing plant. With methane gas, the supply will major role in determining whether Attention was first focused on one of last as long as the landfill is in opera- Pennsylvania’s fresh-market potato tion, and probably even long industry stabilizes and grows or afterwards. So, the co-op found 83 continues to contract. The acres of land adjacent to a landfill Keystone plant — the only one of where a methane-collection sys- its kind east of the Mississippi tem was already in place, but the River and outside Maine — was gas was just being flared off. A built so that growers here could contract was negotiated with the stop dumping their off-grade CES (Commonwealth Environ- potatoes or giving them away for mental Systems), the private com- cattle feed. pany that operates the landfill, and “For our industry to be viable the county agreed to sell the adja- in fresh markets, we need to have cent land. Project backers then a market for our off-grade pota- went to work to form the LLC toes as well,” says Keith Masser, and line up financing. president of Pennsylvania Cooperative Potato Growers Inc., Stimulating a stagnant economy one of the nation’s oldest co-ops, Local government agencies and and the largest of 42 stockholders the state have backed the Keystone in the LLC that was formed to project both as a way of shoring- build and operate the plant. up the state’s potato industry and Masser is also president of the Potatoes are steamed during the dehydration process at to create industrial jobs in a region Keystone board and runs his fami- the new Keystone Potato plant near Hegins, Pa., which where the coal industry has long ly potato farm and a large packing uses power from methane gas piped in from a nearby been fading and the garment house (Sterman-Masser) in nearby landfill. USDA photo by Dan Campbell; Facing page: photo cour- industry has almost entirely Sacramento, Pa. Masser is the sec- tesy U.S. Potato Board migrated overseas. ond biggest stockholder in the But it took several unsuccessful LLC. the half dozen or so small co-generation attempts before a strong enough appli- In the early 1950s, about 100,000 power plants located in the region that cation and business plan were devel- acres of potatoes were planted in burn waste coal to produce electricity. oped to win a Value-Added Producer Pennsylvania. “Today we grow less than “The coal industry wasn’t as efficient Grant (VAPG) from USDA Rural 12,000 acres,” says Masser, whose fami- in the past, so a lot of good coal went Development. The VAPG grant was ly grows about 600 acres of spuds. “Our out with the rock deposited in waste considered essential to making the proj- decline has gone out West.” piles that built up over the past century. ect fly. There’s still a lot of energy in it,” “The second time we failed to get Competing with the NW Masser explains. These co-generation the USDA grant, our then-state agri- Producers in the Pacific Northwest plants use steam turbines to generate culture secretary asked me what kind of dominate America’s potato industry, and electricity, but just blow off the excess help the state could supply to make it growers there have long had the advan- steam as a useless byproduct. happen,” Masser recalls. “I told him we tage of access to processing plants The original idea was to build the needed about $50,000 to hire someone where they can sell their off-grade pota- plant next to one of these co-generation who could work for a year to develop a toes. This has given them a consider- plants and use that waste steam for run- really strong application.” The state Rural Cooperatives / January/February 2006 5 department of agriculture came through into higher-profit-margin foods, such as food-maker’s specifications.
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