Rural C C J u l y / A O u O g u s t

2 0 1 O O 7 P P E E R R G C A O A E N - O T T E R P I I A S V T V A O S R E E

S J O S S B 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 4 July/August 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. 10 p. 36 Rural Cooperatives, USDA/RBS, Stop 3254, Wash., DC 20250-3255. Job Generators Mention in Rural Cooperatives of company and brand 04 names does not signify endorsement over other Number of ag co-op workers continues to rise, despite dip in co-op numbers companies’ products and services. By James Wadsworth Unless otherwise stated, articles in this publication are not copyrighted and may be reprinted freely. Any From Rivals to Cooperators opinions expressed are those of the writers, and do not 14 necessarily reflect those of USDA or its employees. Cattle co-op gains market power by uniting once ‘fierce competitors’ By Dan Campbell In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, Top 10 Traits of a Successful Grazing Land Manager offices, and employees, and institutions participating in 18 or administering USDA programs are prohibited from By Jeff Goodwin discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital 20 Learning from Food Hub Closures, Pt. II status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal Kentucky food hub suffered when it emphasized social mission over financial viability or retaliation for prior civil rights activity, in any By Lilian Brislen, James Barham and Sasha Feldstein program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident. 24 Farmers using co-ops to handle ‘big data’ Persons with disabilities who require alternative By Alan Borst means of communication for program information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA's Priority voting system may offer advantages for TARGET Center at (202) 720-2600 (voice and TTY) or 26 contact USDA through the Federal Relay Service at changing co-op sector (800) 877-8339. Additionally, program information may be By Thomas W. Gray, Ph.D. 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 28 How do we foster a new generation of cooperators? Discrimination Complaint and at any USDA office or By Meegan Moriarty 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- 32 Understanding the role of values in traditional and 9992. Submit your completed form or letter to USDA by: hybrid cooperatives (1) mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence By Julie A. Hogeland Avenue, SW, Washington, D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: [email protected]. USDA is an equal opportunity provider, employer, and lender. Departments

08 IN THE SPOTLIGHT 10 UTILITY CO-OP CONNECTION Sonny Perdue, Secretary of Agriculture 36 NEWSLINE Anne Hazlett, Assistant to the Secretary for Rural Development ON THE COVER: U.S. agricultural cooperatives Dan Campbell, Editor are a major source of good jobs — 187,000 of Stephen Hall / KOTA, Design them — according to USDA’s latest survey of ag

Have a cooperative-related question? Call (202) 720- co-ops. These jobs are located all across rural 6483, or email: [email protected] America and in many cities. See page 4. This publication was printed with vegetable oil-based ink.

Rural Cooperatives / July/August 2017 3 Job Generators

Number of ag co-op workers continues to rise, despite dip in co-op numbers

By James Wadsworth, Ag Economist USDA Rural-Business Cooperative Service email: [email protected]

4 July/August 2017 / Rural Cooperatives They mix and deliver the livestock feeds that keep cattle herds and hogs thriving; they hover over computer monitors and cell phones to market their members’ crops around the nation and the globe; they run the grain elevators that store the bountiful harvest of the land, then load it onto trains and barges; they work in laboratories to develop new food products; they haul milk from farm to processing plant and deliver fuel from plant to farm — and they do it in every kind of weather on roads that others fear to tread; they provide the technical advice that helps farmers use high-tech tools to produce food and fiber while reducing the impact of farming on the land.

They do these and the 1,001 other annual 2.7-percent attrition rate. The jobs required to keep their members drop in co-op numbers is the result farms and co-op facilities humming. of business consolidations, mergers They are the men and women — and dissolutions. from the manager’s office to the During the same 10-year period, cashiers working the counter of a however, the number of full-time ag farm supply store — who provide the co-op employees grew by 10,885, to muscle, skills and brains to power the a high of 136,300 people in 2015. nation’s 2,000 agricultural The total number of employees (full- cooperatives, owned by nearly 2 and part-time) was 187,300 in 2015, million producer-members. They are down slightly from 2014, when co- the critical link who “fuel” our co- ops employed 191,300 people. The ops, which in turn are a major factor decline is attributable to a dip in in the health of the nation’s economy. part-time jobs; full-time jobs in 2015 Although not always well actually increased slightly from the publicized, agricultural cooperatives previous year. are major employers all across rural The fact that fewer co-ops are and urban America. The salaries co- employing more people implies that op workers earn and spend in their the remaining cooperatives have communities are especially important grown in scale and need more in rural communities, where co-ops employees to operate. Often, a are often one of the major sources of cooperative formed through a good jobs, and they generate tax merger will still continue to operate dollars needed to maintain civic all, or most, of the branches that the services. pre-merger co-ops operated. The average number of full-time Co-op employment employees per co-op was 46.5 in trending up 2006, but rose to 66.6 workers by There were 2,698 agriculture co- 2015. During the past 10 years, ag ops in USDA’s database in 2006 co-op employment has averaged (Table 1). By 2015, the number had 184,600 people, with the lowest year dropped to 2,047, a decrease of 651 of the period being 2008, when the co-ops, or 24 percent. That’s an co-op workforce was 178,300. While

The more than 187,000 people employed by agricultural cooperatives do virtually every type of work imaginable for the nation’s 2,000 ag co-ops. Despite a slight dip in employee numbers in 2015, the 10-year trend for co-op jobs is climbing.

Rural Cooperatives / July/August 2017 5 these numbers include both full-time $50,097 (real terms) in 2006 to $56,777 The larger commodity sectors and part-time workers, a large majority in 2015, an increase of 13.3 percent. obviously have the highest total payroll — 73 percent — of the jobs are full- The average growth rate for personnel expenses. Thus, grain/oilseed co-ops time positions. costs per FTE was 1.3 percent a year paid the most for employees ($1.7 The average annual growth rate in over the period. billion), followed by dairy co-ops ($1.4 all co-op jobs during the past 10 years (2006 to 2015) was 0.13 percent. Full- time employment grew by 0.84 percent a year while part-time jobs declined by Ag co-op job survey highlights (2015) 1.5 percent a year over that period. Part-time employment accounted for n Total ag co-op personnel costs: $9.2 billion about 30 percent of the co-op n Total number of jobs: 187,300, or 161,800 full-time equivalents (FTE) workforce during most of the past 10 n 73 percent of jobs are full-time positions; years but had declined to 27 percent of n Average cost (salary, benefits and taxes) per FTE: $56,777 co-op employees by 2015. n Worker expenses averaged 48 percent of total co-op operational costs Cooperatives employed 161,800 full- n The average U.S. ag co-op employs 79 FTEs time employee equivalents (or FTEs, a figure which combines full-time and part-time jobs; see Table 1 for further explanation) in 2015, compared to Personnel costs per cooperative grew billion), fruit/vegetable co-ops ($955 155,200 FTEs in 2006, an increase of from $2.9 million to $4.5 million million) and sugar co-ops ($489 billion). 6,700 FTEs and an overall increase of during the 10-year period, or by 56 The highest personnel costs on a per 4.3 percent. The average number of percent. This resulted in an average FTE basis, by commodity sector, FTEs per cooperative hit a high of 79 annual growth rate of 4.5 percent. belonged to rice co-ops, at $77,337. in 2015, an average increase of 21.5 Following were: grain/oilseed co-ops FTEs per co-op since 2006; during the Employee expenses, ($61,971); dairy ($60,792); cotton 10-year period, the average annual FTE by co-op type ($59,234); sugar ($56,467); growth rate was 3.2 percent. Personnel costs as a percent of total fruit/vegetable ($45,942); and livestock co-op operational expense was almost ($43,719). Personnel expenses 48 percent in 2015, but that figure In 2015, average personnel costs per top $9 billion in 2015 varied relative to co-op type (Table 3). FTE were $58,686 for farm supply co- Cooperatives had an all-time high of For marketing co-ops — those that ops, $55,541 for marketing co-ops and $9.2 billion in personnel expenses process and/or market members’ crops, $45,462 for service co-ops. The much (which includes salaries/wages, benefits dairy and livestock products — lower relative difference for service co- and employment taxes) in 2015, topping personnel costs averaged 43.4 percent ops is because they typically employ the previous record of $9.1 billion set in of all expenditures. For farm supply co- more part-time labor as a percentage of 2013 (Table 2). Personnel costs grew by ops, personnel costs averaged 54.4 their total labor, as compared to farm $2.6 billion (38.9 percent) from 2006 to percent of total operational expenses supply and marketing co-ops. 2015. However, in real terms (all years while service co-ops averaged 37 in 2015 dollars), personnel costs were percent. Workforce size varies by sector $7.8 billion in 2006 and grew by $1.4 Among marketing co-ops, Looking at total jobs in 2015, billion (an 18 percent increase) to $9.2 fruit/vegetable co-ops had the highest marketing co-ops employed 90,674 billion in 2015. Over the 10-year personnel costs, averaging 54 percent of FTEs, supply co-ops 69,935 and service period, personnel costs (in real terms) total operational expenses. Next were: co-ops 1,179 FTEs. Within the grew an average of 1.7 percent annually, livestock co-ops (52 percent) and dairy marketing co-op group, grain/oilseed averaging $8.6 billion a year in 2015 co-ops (49 percent). Nut co-ops had the co-ops had the largest workforce dollars. lowest employee costs (22 percent) (27,965), followed by fruit/vegetable Personnel costs per FTE grew from followed by poultry co-ops (24 percent). continued on page 43

Editor’s note: This article is based on analysis of the agricultural cooperative statistics collected annually by USDA’s Cooperative Programs staff. To receive the most recent statistics report, request Service Report 79, Agricultural Cooperative Statistics, 2015. Email: coopinfo@wdc. usda.gov, or call (202) 720-7395, or write to: USDA Co-op Programs Info., Stop 3254, 1400 Independence Ave. SW, Washington, D.C. 20250-3254.

6 July/August 2017 / Rural Cooperatives Table 1— Number of employees and cooperatives, 2006-2015

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Full-time Employees (1,000) 125.4 125.2 124.5 123.4 129.0 130.8 129.4 136.2 135.6 136.3 Part-time Employees (1,000) 59.5 56.2 53.8 57.6 54.1 52.4 55.8 54.5 55.7 51.0 Total Employees (1,000) 184.9 181.4 178.3 181.0 183.1 183.2 185.2 190.6 191.3 187.3 Percent full-time 67.8% 69.0% 69.8% 68.2% 70.5% 71.4% 69.9% 71.4% 70.9% 72.8% Percent part-time 32.2% 31.0% 30.2% 31.8% 29.5% 28.6% 30.1% 28.6% 29.1% 27.2% Full-time equivalents (FTE)* 155.2 153.3 151.4 152.2 156.1 157.0 157.3 163.4 163.4 161.8 Cooperatives (no.) 2,698 2,608 2,497 2,406 2,327 2,294 2,236 2,186 2,106 2,047 FTEs per cooperative (average) 57.5 58.8 60.6 63.3 67.1 68.4 70.4 74.8 77.6 79.0

*FTEs are calculated as an employee FTE proxy: FTEs = full-time employees plus ½ of part-time employees.

Table 2— Co-op personnel costs, in nominal and real terms (2015 dollars), 2006-2015

Nominal terms 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Personnel costs* ($1,000) 6,611,080 6,854,932 7,248,849 7,682,336 8,053,386 8,410,555 8,708,507 9,070,692 8,718,400 9,185,728 Personnel costs per FTE** 42,611 44,716 47,879 50,475 51,608 53,570 55,360 55,511 53,341 56,777 Personnel costs per total employees 35,755 37,789 40,655 42,444 43,984 45,909 47,023 47,579 45,579 49,046 Personnel costs per co-op ($1,000) 2,450 2,628 2,903 3,193 3,461 3,666 3,895 4,149 4,140 4,487

Real terms = 2015 dollars *** Personnel costs ($ thousands) 7,772,512 7,837,604 7,979,919 8,487,320 8,753,666 8,862,156 8,976,573 9,228,777 8,728,749 9,185,728 Personnel cost per FTE 50,097 51,126 52,708 55,764 56,095 56,447 57,064 56,479 53,405 56,777 Personnel costs per total employees 42,036 43,206 44,756 46,891 47,808 48,374 48,471 48,408 45,633 49,046 Personnel costs per co-op ($ thousands) 2,881 3,005 3,196 3,528 3,762 3,863 4,015 4,222 4,145 4,487 CPI 201.600 207.300 215.303 214.537 218.056 224.939 229.939 232.957 236.736 237.017

*Personnel costs = total employee salaries/wages and employee benefits (including payroll taxes, group insurance, commissions, and any related benefits). **For FTE calculation, see explanation in Table 1. ***Real terms in 2015 dollars using consumer price index (CPI). Real 2015 personnel costs = Z year personnel costs times (2015 CPI divided by Z year CPI).

Table 3— Co-ops, personnel costs, total operating expense, and employees, by co-op type, 2015

Co-ops No. Personnel costs * Total expense * Personnel cost Full-time Part-time FTEs ** to total expense employees employees Cotton 14 60.596 191.376 31.7% 946 154 1,023 Cotton ginning 107 57.533 179.534 32.0% 640 1,814 1,547 Dairy 112 1,350.441 2,727.917 49.5% 21,383 1,662 22,214 Fish 37 26.104 54.010 48.3% 685 208 789 Fruit & vegetable 125 954.550 1,759.232 54.3% 14,030 13,495 20,778 Grain & oilseed 448 1,733.016 4,033.240 43.0% 23,607 8,716 27,965 Livestock 86 46.167 89.266 51.7% 563 986 1,056 Rice 10 185.184 524.677 35.3% 2,249 291 2,395 Sugar 28 489.091 1,495.107 32.7% 6,462 4,399 8,662 Poultry 11 59.092 250.656 23.6% 1,801 295 1,949 Nuts 12 34.845 156.514 22.3% 1,474 91 1,520 Other marketing 89 31.310 114.343 27.4% 581 394 778 Total marketing 1,079 5,027.929 11,575.873 43.4% 74,421 32,505 90,674 Total supplies 874 4,104.199 7,541.658 54.4% 61,093 17,683 69,935 Total services 94 53.601 144.677 37.0% 771 816 1,179 Total 2,047 9,185.728 19,262.209 47.7% 136,285 51,004 161,787

*In millions of dollars. **For FTE calculation, see explanation in Table 1 .

Rural Cooperatives / July/August 2017 7 In the Spotlight Sheryl Meshke and Donn DeVelder co-CEOs of AMPI, New Ulm, Minn.

Associated Milk Producers Inc. (AMPI), one of the nation’s leading dairy cooperatives, marketed 5.5 billion pounds of milk and had $1.6 billion in sales in 2016. The co-op is owned by 2,100 farm families in Wisconsin, Minnesota, Iowa, Nebraska, South Dakota and North Dakota. AMPI and its 1,250 employees operate 10 Midwest manufacturing plants, which produce 10 percent of the nation’s American-type cheese, butter, dried whey and sliced American cheese. The New Ulm, Minn.-based cooperative’s award-winning cheese, butter and powdered dairy products are marketed to foodservice, retail and food ingredient customers. In 2014, AMPI opted to entrust the leadership of the cooperative to two individuals who would share the position of Co-President/CEO: Sheryl Meshke, who had previously been the co-op’s executive senior vice president for public affairs, and Donn DeVelder, who had been serving as AMPI’s executive senior vice president for fluid marketing and member relations. Below, they share some thoughts on how this co-leadership business model works, as well as what’s on the horizon for the co-op.

Question: After 2.5 years of serving as co-CEOs of AMPI, have you each staked out areas of expertise for which you have primary responsibility? If so, in broad terms, what are those?

Answer: Together, we have a combined half-century of service with AMPI. We have worked alongside three generations of AMPI member-owners and still work with many colleagues who were with AMPI when we started. That amount of time, along with the relationships and trust developed, provides a deep understanding of AMPI and the cooperative business model. There are certain areas of the business where we share equal responsibility in the decision-making process — the co-op’s finances are a prime example. In other areas, we trust in one another to make the right Sheryl Meshke and Donn Develder have been Co-President/CEOs of decision for the cooperative. Associated Milk Producers Inc. since 2014. Photo courtesy AMPI

8 July/August 2017 / Rural Cooperatives Q. Did it take a while to develop your system of shared- In many ways, a co-CEO structure is in keeping with the management? cooperative model of working together to achieve success. This management structure forces more dialog and Within days of being named interim co-CEOs, and then collaboration, achieving a greater knowledge of the business. — shortly thereafter — co-CEOs, AMPI experienced a fire at its largest consumer-packaged cheese plant in Portage, Wis. Q. Had you been aware of other co-ops, or even non-co-ops, The dairy market at the time was also in a downturn. The having had two CEOs? focus at that time was to work together as a team and tackle the tasks at hand. We kept doing what we had been doing, Yes, and we reached out to those we knew, following the with additional duties. appointment as co-CEOs, to gain their insight. Since that time, we have continued the team-oriented approach. We work to place the right people in the right Q. What happens when you two are locked-in on opposing positions to move the co-op forward. We operate with a flat- courses of action? Do you just present both recommendations to the board and let the directors decide? Has this happened yet?

“We operate with a flat-line management We haven’t had that situation and don’t see a circumstance where it would arise. If we are ever at a point of opposition, style, utilizing the skills and expertise of we bring in the whole management team, talk through the the collective management team.” situation and arrive at a decision. Q. What’s been the general reaction from members to this co- leadership model? line management style, utilizing the skills and expertise of the collective management team. We are in sync and in constant Because we’ve both been with AMPI more than 25 years, communication with one another. there aren’t many surprises with how we operate. AMPI We want employees to know how the business is members knew what they were getting when they asked us to performing. This “open book” style means there is a higher serve in this role. level of insight into the business. Neither of us operate with a personal agenda, but we are constantly driven to achieve the Q. What’s the biggest, or hardest, decision you’ve had to make best possible outcomes for AMPI’s member-owners and so far as CEO? The biggest current challenge to the co-op and/or employees. its producers?

Q. Did you both bring similar professional backgrounds to the Developing a strategic business plan that will provide the office — or were there substantial differences in your prior most internal growth in AMPI’s history. experiences and skill sets? Q. What’s on the drawing board at AMPI right now that you feel The philosophy of “two heads are better than one” is has the greatest potential to benefit the members and their co- certainly illustrated at AMPI. At the time of the appointment, op? Donn had more than 33 years of field service and milk procurement experience. Sheryl had worked for the co-op for The cooperative is investing in new cheese-making 23 years in communications, public affairs, policy and technology and expanding processing capacity. The initiatives strategic planning. are spurred by strong demand for AMPI-made cheese, just as milk produced on member farms is growing. Q. What are the main advantages to having two CEOs? Any disadvantages? Q. Based on your experiences working with co-ops, both as CEOs and in your previous jobs, why is the co-op business model Decisions are made at twice the speed, and with complete still so popular in agriculture today? trust in one another to make the right decision. We talk through situations and decisions, solidifying our confidence The seven principles cooperatives share are timeless and in the determined direction. In addition, we are constantly respected. Farmers coming together to help fellow farmers is accountable to one another — in our decisions and our a noble cause. In addition, a business structure concerned actions. about the community is appealing to potential employees. n

Rural Cooperatives / July/August 2017 9 Utility Co-op Connection Co-ops play vital role in extending broadband in rural Tennessee

By Anne Mayberry Legislative and Public Affairs Advisor USDA Rural Utilities Service Email: [email protected]

Broadband service delivers tremendous economic and educational value to people, with study after study demonstrating that areas with broadband have stronger economies, better access to jobs and higher median household income. Yet, a large portion of rural America lacks robust, affordable broadband service. “Distance, density and demographics combine to make it costly to build rural broadband infrastructure,” says Chris McLean, acting administrator for Fiber optic cable is being strung in many parts of rural Tennessee, as seen here, greatly USDA’s Rural Utilities Service (RUS). increasing the ability of these areas to attract new, broadband-dependent jobs. Photo courtesy of Bledsoe Telephone Cooperative “Rural broadband service territories often cover hundreds, or even thousands, of square miles. The expense infrastructure in rural areas due to low their customers. Both rural of building and supporting such a large population density. The federal telecommunications providers and rural service area — with far fewer customers government thus plays a necessary role electric cooperatives view the new law paying for that service — has in partnering with local institutions and as one more tool to deliver necessary historically been among the greatest communities to deliver broadband to broadband service to areas where it impediments to expanding rural rural areas. currently does not exist. broadband access.” Some state governments are “We need more support if we want Building broadband infrastructure in assuming a more active role in the to see full broadband coverage,” says rural areas is just as important today as expansion of rural broadband. In May, Mark Patterson, manager of Highland was providing electricity to rural Tennessee enacted the Tennessee Telephone Cooperative Inc. (HTC), Americans 80 years ago, McLean Broadband Accessibility Act, which which serves an area northwest of continues. “Broadband investments help directs that $45 million in grants and Knoxville, including a portion of rural communities attract new tax credits be used during the next three Kentucky. The area is very rural and businesses, allow schools to improve years to deliver broadband in rural areas economically depressed. educational opportunities through currently lacking internet connectivity. “Western Tennessee has a lot of flat distance learning and improve The law also allows rural electric farmland, but in our service area there healthcare by providing cost-effective cooperatives to provide broadband are hills, valleys and rocky remote diagnosis and care.” service. outcroppings, which makes broadband As is the case in several states, rural difficult and costly to build,” Patterson Co-ops, USDA support effort electric cooperative utilities in continues. “We have higher costs but In many cases, the private sector has Tennessee were previously prohibited fewer subscribers to pay for service and been reluctant to build broadband from providing broadband service for operations.”

10 July/August 2017 / Rural Cooperatives On average, the co-op serves just six “Medical facilities send x-rays out for a (NCTC) in Lafayette, Tenn. “We have customers per mile, although Patterson radiologist to review almost instantly,” been in the rural telecommunications says “that number can be misleading. In Patterson says. But most of rural business for 65 years, and we are still some areas, the density is as many as 25 Tennessee still lacks broadband, he building to serve customers.” customers per square mile, but in others notes. White says ARRA funding built the it’s one or two per mile.” Highland also provides internet co-op’s fiber network and helped To put the situation into perspective, access for local schools, which save connect rural communities to useful the Hudson Institute reported in its money through the use of online services, including healthcare, April 2016 study, The Economic Impact of textbooks. Through broadband, people education, business and social services. Rural Broadband , that “New Jersey is can attend colleges and technical Telemedicine service, made possible by the most densely populated state, with schools. “The need for broadband is broadband, is helping to improve local 1,195.5 residents per square mile. growing — we are still adding healthcare service. Rural healthcare Distance between customers accounts customers because people understand clinics can send x-rays to hospital for a substantial portion of the cost of they get more services, including radiologists and offer specialized providing telephone service.” entertainment, with broadband,” treatment, including for those who have Patterson says. suffered strokes or need psychiatric Broadband necessary care. for rural growth Broadband boosts education NCTC’s service territory, north of “We serve more than 1,500 business Tennessee telecommunications Nashville, is economically challenged, connections — many are mom-and-pop providers have been building broadband White says, as is the case with most retail [customers], but we also have infrastructure for many years, often rural Tennessee telecommunications businesses with dozens to hundreds of with the help of RUS service territories. She is concerned employees,” says Chris Townson, telecommunications infrastructure about what could happen to rural manager of Dekalb Telecom- loans, Distance Learning and communities here if they lose federal munications Cooperative (DTC), which Telemedicine grants and Community funding that supports broadband serves a rural region east of Nashville. Connect grants (awarded for rural areas service. “Broadband is vitally important lacking broadband service). “This would affect our future infrastructure. It provides a platform for Many of these service providers have direction and that of our customers,” economic development, education and also been awarded American Recovery White says. With broadband, she adds,

“Broadband is a tool that can help attract more jobs and decrease unemployment in rural areas.” healthcare improvements. Broadband and Reinvestment Act (ARRA) funds those who live in rural areas can do opens doors to unrealized from USDA Rural Utilities Service. telework and connect to online opportunities.” Economic growth slows These funds have been used to improve education and job training. the further away one gets from rural connectivity and strengthen rural Charles Boring, manager of Bledsoe Nashville, he notes. economies. Nationwide, nearly $3 Telephone Cooperative, southwest of Patterson agrees. “The Tennessee billion in ARRA funding provided Knoxville, agrees that broadband can economy is booming in rural broadband service for 250 projects in 44 help strengthen communities and communities close to metro areas. But states, as well as in American Samoa. improve rural economies. “People used businesses in rural areas need While Tennessee’s new law will help to leave small towns to find work and to broadband,” he says. “Broadband allows build broadband infrastructure needed make purchases,” Bledsoe says. “Now, more people to work at home. Small for rural growth, lack of population you can do all this with broadband, businesses can connect with larger density — customers needed to support which keeps people in our small rural companies.” the costs of broadband operations — communities. Broadband is a tool that Highland Telephone Cooperative still presents a challenge. can help attract more jobs and decrease provides round-the-clock service to the “We could not exist without RUS,” unemployment in rural areas.” local manufacturing industry, providing says Nancy White, manager of North On the other hand, Boring notes it with global market accessibility. Central Telephone Cooperative that broadband connectivity has not

Rural Cooperatives / July/August 2017 11 won over every resident, which can Many rural telecommunications to educate students about the expanding create challenges in areas where every providers hope to work with rural frontiers of new technology. possible subscriber is needed to help electric cooperatives to extend “It opens with a drone coming up on support operations. Yet, he suspects that broadband service to unserved areas. a big screen — kids love it! We have may change. Building this infrastructure can take five Wi-Fi basketball [a basketball with a “Broadband will continue to grow,” years or more, but if rural communities sensor that measures the arc of the shot, he says. “Look at all that can be done don’t offer better broadband access to connecting to an application with audio online now. [Much of] the older businesses, educational institutions and and video feedback], complete with tech generation prefers face-to-face contact. healthcare providers, their economies coaches. We show students virtual The younger generation, however, is will not grow. reality and 3D printers. In STEM driving increased broadband access in “To sustain and strengthen our [science, technology, engineering and rural communities. Broadband offers communities, we need to add jobs and math] classes, we bring in robots. All of the ability to work from anywhere. attract business,” White observes. She this raises awareness of the possibilities People come back to this area to start a points to the recent Community of a career in technology and the business.” Connect grant NCTC received that internet of things.” will help connect an area that otherwise Greater band capacity is needed to Broadband key to rural future would not have affordable broadband. accommodate the rapid expansion in Rural telecommunications providers “This means that we can now offer gig- use of “smart” TVs, online video are taking an active role in preparing [high] speed internet at reasonable viewing, electronic games, cell phones for the future. White notes that large rates, which supports IPTV [internet and computers. “About 94 percent of our customers now stream video, and 43 percent play online games,” White says. “The Tennessee legislation will make a difference, because the focus is on unserved areas.” Twin Lakes Telephone Cooperative in Gainesboro, Tenn., has worked to connect every school, hospital and

The last mile: extending fiber optic cable to a rural Tennessee home. Rural telecommunications providers in Tennessee can now work with electric co-ops to expand broadband service. Photos courtesy of Bledsoe Telephone Cooperative

telecommunications carriers abandoned protocol television, which rural communities years ago, which led provides television content to formation of telephone cooperatives over computer networks] and other independent service security systems and ‘cloud’ providers. Tennessee’s new legislation systems that provide internet can help address the broadband gap by access to data and services — providing financial assistance and all in a tornado-resistant facility.” medical facility in its service area to reducing state regulations that prevent Like other rural telecommunications broadband. Yet, Manager Jonathan rural electric cooperatives from using providers, NCTC does more than West echoes Patterson’s observation: their infrastructure to address the lack connect communities. For example, “High-cost buildout has not grown in of high-speed internet access. White says NCTC developed a video this area. The Tennessee legislation is

12 July/August 2017 / Rural Cooperatives an important initiative. This will allow more jobs to the area,” she says, adding of college, she notes. nontraditional businesses to grow. With that it does much to enrich rural lives. “We could not do this without reliable connectivity and tech support, “Children can do their homework at broadband,” Cope stresses, adding that we’ll see more rural businesses that home and submit it online, [rather the cooperative works with the high contribute to the economy.” than] families needing to drive to the school and community leaders to help West says call centers, medical nearest fast-food restaurant or library, provide students options for internships transcribers and accounting firms are searching for WiFi,” Cope says. Young and jobs after they graduate, including among those contributing to rural adults who want to stay close to home two students who are assisting in Ben economies by letting people work from and still enjoy meaningful careers have Lomand’s customer response center. home. “It is difficult to think of any that option more than ever before, “The work these students do, and the business today without at least a single thanks to current connectivity pay they receive, can contribute to the

“History shows us the importance of connectivity. Distance and poverty are barriers to adequate health care and a good education.” link to the internet; the outlook is grim availability, she notes. Families in household income, which is extremely for those who do not have internet remote areas have access to world-class helpful for parents – especially single access.” pediatricians with local tele-health parents, some of whom work two jobs.” Rural telecommunications providers programs. DeKalb Co-op’s Townson also notes must build the foundation, West “It’s not just business — it’s the value of rural broadband to the stresses. “Which is hard to do in places entertainment, too,” Cope notes. “We economy. “Surveys indicate that rural where it doesn’t exist.” Broadband has have blue grass music concerts here, telecommunications cooperatives bring practical applications that will drive and downtown WiFi helps facilitate in about $24 billion to the states that productivity, he believes. local tourism initiatives.” they serve. In many places today, you “With broadband connectivity to the Ten years ago, the area went through cannot buy gas for your car without internet, we will continue to see an economic slowdown, she says. Today, broadband service — an increasing tremendous change,” West says. “We jobs are returning, including number of purchases won’t work with need to make that commitment to grow manufacturing firms that hire blue- cash.” together — history shows us the collar employees who can earn middle- Broadband infrastructure can take as importance of connectivity. Distance income salaries. long as five years to build out in rural and poverty are barriers to adequate A local college provides areas, and it often takes longer to health care and a good education.” “mechatronics” classes that teach high- attract a substantial amount of tech engineering skills and will soon be subscribers to help support the systems. Helping rural business expand offering training in robotics — fields The new Tennessee broadband Ben Lomand Rural Telephone that offer ample, secure jobs. legislation may help address this by Cooperative, far west of Knoxville, “Manufacturers today want offering financial incentives and by serves a very rural, 3,200-square-mile employees with technical skills and opening the door to allow rural electric area. Yet its customers include knowledge, and our county school cooperatives to offer broadband service. businesses, small farms, universities, system has cultivated a feeder program Yet, the strongest element in medical facilities, banks and law offices. for the local college,” says Cope. Tennessee’s efforts to expand broadband The service territory encompasses “Students have exposure in middle in rural communities may come from valleys, mountains and waterways, along school and secure hands-on experience rural telecommunications providers and with four industrial parks and 21,000 while in high school. Now, employees electric cooperative utilities, which have rural subscribers. can use robots to operate machines and a history of building infrastructure in Lisa Cope, the co-op manager, says connect to satellite locations around the rural areas, pursuing partnership that as businesses consider expanding in country and world.” opportunities and collaborating. Says the area, the deciding factor is Demand is strong for the skilled Cope, “We see a difference in our broadband availability. “Broadband workforce being developed through communities because of the work we all keeps our communities in the running such courses. Entry-level jobs can pay do.” n for business opportunities and attracts $60,000 per year for graduates right out

Rural Cooperatives / July/August 2017 13 Photo courtesy Samuel Roberts Noble Foundation

From Rivals to Cooperators Cattle co-op gains market power by uniting once ‘fierce competitors’

By Dan Campbell, editor The operators needed to put their out a way to be more competitive, says [email protected] heads together to come up with a new John Butler, CEO of the Beef strategy, Borck felt. Marketing Group cooperative. “They Watching truckload Trouble was, the small beef had to make some sacrifices to do that after truckload of beef operations not only competed for — it meant giving up some of their cattle pass by the business with the big feedlots, located independence.” feedlot in central about 100 miles to the west, but were They agreed on a cooperative Kansas he was also competitors with each other — business structure for a couple of managing, Lee Borck knew something “fierce competitors,” Borck stresses. reasons, Butler continues. “It was a had to be done if his operation was And while competition is one of the natural business structure to put their going to survive. The feedlot was being pillars of our capitalistic economy, for vision into place. It also allowed some bypassed because packers in western producers of farm commodities it can protection under the Capper-Volstead Kansas could afford to pay an additional sometimes result in mutually assured Act [which provides cooperatives with 50 cents per hundredweight (cwt) for self-destruction. The agricultural limited antitrust protection] so that the cattle from the larger feeding cooperative business model was born as feedyards could work directly with operations. Those larger feeding a marketplace equalizer for producers in major beef processors.” operations not only had the advantages such straits. The agreement they forged at that of scale, but they were also located A meeting of the owners or meeting included developing their own closer to the major beef processing managers of 11 small feedlots in central price-reporting system which would use facilities, which gave them a substantial Kansas was convened in 1988 in Great cutting-edge technology of the day: the competitive edge. Bend, Kan. So high was the level of fax machine. “That way, we would get “Volume was the name of the game,” suspicion and distrust among the immediate price reporting much faster Borck recalls of those years in the late attendees that they hired a professional than from the news wires of the day,” 1980s. “The more cattle you had, the court reporter to keep a record of what Borck says. Eventually, the cooperative more attention [and better prices] you transpired. took on additional responsibility, got.” Other small feedlots in central Essentially, they said we have to including joint marketing of the cattle. Kansas were facing the same dilemma. “check our guns at the door” and figure Nine of the 11 feedyard owners at the

14 July/August 2017 / Rural Cooperatives meeting agreed to the proposal. By The partnership with Excel doing anything illegal. But we were still spring, they were working together to continued until the winter of 1993, newbies at that point, and we were arrange large-scale cattle sales. The when BMG switched to a supply scared as heck when we got taken to biggest deal involved offering 50,000 agreement with IBP (Iowa Beef court,” Borck recalls. “As one of my fed-Holsteins to Excel (now part of Processors, today part of Tyson Foods) partners said at the time ‘we have to be Cargile) in Dodge City, Kan. Not only — a business relationship that continues friends, because it seems like everybody did Excel agree to buy the 50,000 cattle, today. else is against us.’” they agreed to pay a 50-cent per cwt By about that time, BMG “had Things did indeed look bleak when premium in return for the large, matured and was better organized and IBP lost the case in court. IBP appealed assured beef supply. was handling a greater volume of the decision to the 8th Circuit U.S. “This was very exciting for us,” cattle,” Borck says. The long-term goal Court of Appeals in St. Louis, which Borck says, and was the beginning of an of the co-op was “to get our product reversed the lower court’s ruling. After ongoing business relationship that into the meat case — past the packer, that, some of those in the industry who lasted for many years between Excel directly to the consumer. It took a long had been opposing BMG started and the still informal co-op of small time to get there.” forming new business arrangements feedlot operators. As the co-op’s cattle capacity that borrowed some of the same continued to grow, BMG entered into practices the co-op was using, Borck Marketing effort further agreements with packers. The says. It became increasingly accepted to condemned by others co-op also added more services for its sell cattle on a quality grid, where There were others in the cattle members, including group purchases of prices are indexed against cattle sold on industry, however, who were “up in cattle feed and animal health products. a cash basis. arms” over what the group of central When the ethanol industry started to Indeed, selling on the grid became so Kansas feedlot operators was doing. “It expand, BMG arranged group popular that today the number of “cash just wasn’t considered kosher,” Borck purchases of wet distiller’s grains, a cattle” sales has declined to the point says. byproduct of ethanol production and a that more cash-basis sales are needed to Undaunted, the group decided to valuable source of starch in cattle feed. maintain an effective indexing system, formally incorporate as a cooperative Borck says. and, in 1990, the Beef Marketing Quality grid Group (BMG) was launched, qualifying revolutionizes industry Responding to new the business for antitrust protection By 1995, the co-op was selling cattle consumer demands under the Capper-Volstead Act. At that on a price grid, which rewarded BMG was also ahead of its time as an point, there were eight feedlot producers for meeting quality early proponent of taking action to members, one having dropped out due standards. “That was a relatively new bolster consumer confidence in beef. In

So high was the level of suspicion and distrust among the meeting attendees that they hired a professional court reporter to keep a record of what transpired.

to the extreme negativity being directed concept in 1995 –96, but it came to be the late 1990s, food safety and at the co-op by others in the industry. the standard,” Borck says. traceability issues for beef were on the Cattle ranchers, however, were The co-op still faced strong rise, exacerbated by cases of e-coli food generally quite supportive of what opposition from others in the industry, poisoning that were much in the news. BMG was doing, Borck says. At that and in 1998, the USDA Packers and Consumers were also increasingly ex- time, many ranchers retained ownership Stockyards Administration took legal pressing concerns about animal welfare. of their cattle after delivery to the action over the co-op’s business “We felt these consumer concerns feedlot. Thus, the ranchers were partnership with IBP, which it alleged were a trend, not a fad, and knew that directly benefiting from the stronger had entered into unlawful purchase of we needed to act accordingly,” Borck prices BMG was able to generate for cattle via the BMG supply agreement. says. their cattle when “finished.” “We couldn’t see where we were To better meet evolving consumer

Rural Cooperatives / July/August 2017 15 demands, in 2001 the co-op developed treated and the handling practices used Progressive Beef, a food safety and to move cattle. animal welfare program. The timing “We work closely with a vet on the was good, because food safety and use of antibiotics and medicines; we animal welfare issues continued to grow record all uses — it is all very in importance. “So I am glad BMG was transparent,” says Butler, whose hiring on the front end of industry efforts to 12 years ago as CEO of BMG is address these concerns,” Borck says. considered an important step forward Now in its 16th year, the Progressive for the co-op. Beef program entails 43 production The advisory board for Progressive standards to ensure that cattle are raised Beef includes Temple Grandin, sustainably and humanely. These professor of animal science at Colorado standards cover everything from the State University and a national quality of water provided to cattle to authority on animal behavior and their time on pasture and handling humane livestock-handling practices. As practices used for transporting animals. a person with Asperger’s Syndrome (or In addition to being CEO of the Beef Marketing To ensure adherence to these high-functioning autism) Grandin is Group (BMG), John Butler also chairs the U.S. standards, all BMG feedlots are subject also a frequent speaker at autism Roundtable for Sustainable Beef. Photos to three annual audits, including a conferences. courtesy BMG third-party audit by a USDA inspector. “Temple has led training sessions The auditors look at things such as where we bring her to one of our animals with minimal stress; she helps whether each animal has a sufficient facilities to spend a day looking at load- us better understand how animals think. supply of clean water, how illnesses are out facilities and the best way to move She is amazing.”

Progressive Beef reflects co-op’s commitment to sustainability

The way John Butler sees it, if a new rulebook is being multi-stakeholder, global effort to improve the sustainability of developed for your industry, you better be part of the rule-making beef production. “The roundtable includes everyone from The committee. The steady growth of consumer demand for Nature Conservancy to ranchers, feeders, packers and sustainable foods is creating a new set of rules for those who retailers,” Butler says. “The charge is to build a framework of wish to meet that demand, he believes. key indicators and metrics so we can measure, by sector, how “The beef industry cannot leave the job of developing a new we can reduce our environmental footprint.” rulebook to parties that do not really understand the beef supply USRSB asks: “Do you, as a rancher, have a grazing chain and how it works,” he stresses. management plan that shows how the ranch manages its That view dovetailed perfectly with the view of Beef resources? USRSB has established such metrics for use at the Marketing Group, a Manhattan, Kan.-based cooperative of cow-calf level, at the feeder level and the packer level,” Butler feedlot operators, which hired Butler in 2005 to lead the co-op explains. and its then-new Progressive Beef program, launched a few “USRSB is helping to show how beef production can become years earlier to help the co-op meet demand for sustainably more sustainable — that is, more responsible and more efficient produced beef. regarding the resources our cattle touch.” This involves reducing Progressive Beef is not a brand name, Butler says. Rather, by the carbon footprint of operations at each level of the beef building exclusive relationships with a customer’s existing brand, industry and improving the level of animal care all along the way, such as Performance Food Group’s Braveheart beef brand, he Butler says. says the co-op’s production methods and overall story enhance existing brands. Noble Foundation leads new project Butler has become a leading figure in the industry on issues The Samuel Roberts Noble Foundation (Noble) — the largest concerning sustainable beef, which includes serving as independent agricultural research organization in the United chairman of the U.S. Roundtable for Sustainable Beef (USRSB), a States — is also a member of the USRSB and has “done some

16 July/August 2017 / Rural Cooperatives food service sectors, and through them system and ability to trace beef back to to the end consumer? How do we help the feedyard that produced it. them make their meat cases or menus “They are willing to pay a premium more competitive — that is, more for process-verified beef,” Borck says. attractive to consumers? These are the Today, BMG has a total feeding questions we are answering.” capacity of 325,000 cattle. Borck’s own Before going to work for BMG, operation, Innovative Livestock (ILS), Butler managed another cattle now accounts for roughly 60 percent of cooperative, Ranchers Renaissance, the co-op’s cattle. which built a supply chain for a branded Past criticism arising from beef product that emphasizes competitors for BMG’s “rocking the tenderness. It is now sold in 2,600 boat” of the beef industry has largely The Beef Marketing Group had to overcome stores nationally. given way over the years to respect for many obstacles in its early years, says Lee BMG has also forged a partnership Borck’s role in bringing needed changes Borck, the driving force behind the co-op. with the Performance Food Group, the to the industry. For his achievements nation’s third-largest food distributor, and support of the cattle-feeding A new day for industry which is buying 230,000 head annually industry, Borck was inducted into the It is a new day for beef feeders, from the co-op for its Braveheart beef Cattle Feeders Hall of Fame in 2011. Butler says. “We no longer look at brand. Borck says Performance Food Looking back over the past 30 or so ourselves as just feeders — we play an Group was attracted to BMG by the co- years, Borck says: “There is a reason integral role in the beef value chain. op’s story and its history of windshields are larger than rear view How can we better meet consumer commitment to sustainable beef mirrors…Most all opportunities are in expectations, including the retail and production, including its auditing front of you.” n

found ways to increase production through more efficient practices and responsible land stewardship. This project translates this approach of continuous improvement into a real- world, systems-wide application that holds the potential to someday benefit producers and customers around the globe.” The Noble Foundation has a program called Integrity Beef, which Butler likens to BMG’s Progressive Beef. “It implements programs that cover everything from genetics to how calves are weaned and what resources are used,” Butler says. “It is already in place at the ranch level, and we want to link it to what we are doing at the feedyard level.” Likewise, he says, Tyson and McDonalds use their own indicators and metrics to ensure that they are accountable for the resources they use. tremendous work with a large number of ranches in developing “Our goal is to measure ourselves against all of these grazing management plans,” Butler says. indicators to show how we are raising beef, from a sustainability Now BMG, Noble Foundation, McDonald’s USA, Tyson Foods prospective,” Butler notes. “We hope to be able to determine and Golden State Foods are partnering in a two-year pilot things like how much water we use per cow at the ranch level. research project that seeks to identify methods to improve To do better, we have to understand where we are today.” sustainability across the entire beef value chain, using metrics Consumers will continue to demand more information about established by USRSB. The Noble Foundation is coordinating and their food and where it comes from, Butler believes. “We, as an providing project management services for the overall project. industry, have not always been as transparent as we could have “Our efforts will examine every step of beef production, from been. We want to build a sustainable business model by the ranch to the consumer’s plate,” Billy Cook, director of the producing a healthy, wholesome product that the marketplace Noble Foundation Agricultural Division, says in an announcement wants.” of the project. “For generations, agricultural producers have — By Dan Campbell

Rural Cooperatives / July/August 2017 17 Top 10 Traits of a Successful Grazing Land Manager

By Jeff Goodwin n o i t

Pasture and Range Consultant a d n u

Samuel Roberts Noble Foundation o F

e l b o N

According to recent data, the number of s t r e

people moving to the Southern Great Plains b o R

l

states, including Texas, is more than 1,400 per e u m

day. Private lands in the United States are a S

y

undergoing significant changes, with more s e t r

than one acre of farmland lost per minute. u o c

o

Most of these lands are privately owned and play an unseen, t o h yet critical, role in water and food sustainability, as well as in P national and energy security. Recent data from Texas A&M University suggests that of the 26.9 million residents in Texas, less than 10 percent live in professionals who have spent their entire careers assisting these rural areas, and less than 1 percent are private landowners. land stewards through the good and tough times. They are Data from USDA’s National Agricultural Statistics Service from respected institutions such as the Noble Research estimates the average age of today’s agricultural producer is 58. Institute, Texas Christian University Ranch Management It’s more important now than ever that we recognize and Program, the King Ranch Institute for Ranch Management, support successful land stewards, who provide the other 99 Caesar Kleberg Wildlife Research Institute, USDA Natural percent of the population with ecological benefits, such as Resources Conservation Service, Texas A&M AgriLife clean water, clean air, sustainable livestock products and Extension and several private consultants. Together, these wildlife habitat. professionals total more than 469 years of experience. A survey was recently conducted of 14 resource Their responses were used to compile the following.

Manage the ranch as a business Top 10 Traits 02 These managers make decisions based on the of Successful Grazing physiological needs of the vegetation, the nutritional and habitat requirements of the animals, and the financial Land Managers realities of the ranching business. They scrutinize every dollar spent, limiting unnecessary and nonprofitable inputs. They completely understand that profitability will Are flexible and adaptive often come down to how they control costs. 01 Most successful managers are continually updating plans based on new knowledge. Many times the reason for their success is that they are not rigidly managing. Stocking rates [cattle per acre] are the most critical decision a producer has to make, and this decision should be flexible with weather and markets. Understand ecological principles Many of the biggest ranch failures, ecologically and 03 Most successful managers have the ability to observe economically, resulted from having rigid stocking climate, animal and plant interactions; they make rates, despite changing forage conditions. Successful management decisions that capitalize on those conditions. grazing land managers understand there are no easy They understand the real purpose of roots vs. leaves and answers, no simple solutions, no “cookbook recipes” where the plant makes its food. They may not know the for success, no magic wonder grass, no magic breed name of the plant, but they understand plant selectivity and and no magic herbicide. They succeed because they production differences. They understand that soils are are flexible and adapt. building blocks, teeming with life — and that biology drives most systems such as nutrient cycles, water cycle, etc.

18 July/August 2017 / Rural Cooperatives Private lands in the United States are undergoing significant changes, with more than one acre of farmland lost per minute.

Have an inquisitive Have clear, measurable 04 and passionate mind 08 and attainable objectives Inevitably, if you ranch long enough, somebody’s going to Successful outcomes are very often a result of having say: “You’re doing it wrong.” Inquisitive and passionate carefully planned objectives. To achieve success, you ranchers often are the innovators, asking questions and must also know when you get there. It is often said that continually evaluating everything. Most are quick to disregard “You can't manage what you don’t measure.” From practices that do not work, then searching for new solutions. available forage to production costs, it’s hard to take This requires a creative and innovative mind that is always advantage of an opportunity if you don’t know you had an thinking. They are keen observers who often reject the “that opportunity in the first place. Monitoring and keeping good won’t work here” or “this is how we've always done it” para- records is a common practice among successful ranchers. digm. Many come from a non-traditional ranch background.

Lifelong learner Willingness to share knowledge 05 Successful managers stay up-to-date on new 09 George Bernard Shaw once wrote: “If you have an techniques and technologies, and they are not afraid to apple and I have an apple, and we exchange these cautiously try them. Often, they keep updated by staying apples, then you and I will still each have one apple. But active in professional development and associations. if you have an idea and I have an idea, and we exchange However, being involved is not enough. They have the these ideas, then each of us will have two ideas.” Most ability to not just hear, but to listen. They understand that successful producers often get great ideas from their they can learn something from anyone, often learning the peers. They talk and learn from each other, many times most valuable lessons from the most unlikely situations. gaining more satisfaction from seeing others succeed than themselves.

Big picture thinker Cautious risk taker 06 Big picture thinkers don’t get caught up in the weeds. 10 Cautious risk takers have an open mind and are Meaning, they focus on big picture outcomes and don't willing to consider more effective and efficient methods get derailed by minor setbacks. Where others tend to find of doing things. They often carefully consider new problems, they try to find opportunities and structure their technologies and might implement a test on a small business to decrease risk and be positioned to capitalize portion of their operation. Many times they are willing to on opportunities inherent in turbulent conditions. They try new ideas and concepts. They take risks based on understand how all the pieces of their operation are knowledge, experience and sometimes hunches, but on interrelated and find leverage to change the system for a limited basis. They rarely risk everything and always the better of the entire operation. operate within a safety margin.

Have a conservation ethic 07 In 1949, Aldo Leopold said “We abuse land because Concentrating on developing any single trait on this list is we regard it as a commodity belonging to us. When we a move in the right direction. However, the best grazing see land as a community to which we belong, we may land managers will possess some aspect of all begin to use it with love and respect.” Successful of these traits. n managers want to leave their properties for the next generation better than when they received it. This Editor’s note: This article is slightly abridged and adapted from requires an inner conviction to be a responsible caretaker one originally posted on the Samuel Roberts Noble Foundation of the land and all its parts. website. To read the original and to learn more about the foundation, visit: ttps://www.noble.org/news/ publications/ag- news-and-views/2017/ april/top-10-grazing-manager-traits/.

Rural Cooperatives / July/August 2017 19 Learning from Food Hub Closures PART 2 Kentucky food hub suffered when it emphasized social mission over financial viability

By Lilian Brislen, James Barham and Sasha Feldstein

Editor’s note: Brislen is the executive director of the Food Connection at the University of Kentucky; Barham is a food systems specialist with the USDA Rural Business-Cooperative Service; Feldstein is a former research fellow (USDA). The first article in this series was published in the May- June issue of this magazine. This article is excerpted from the upcoming report “Running a Food Hub, Volume 4: Learning from Food Hub Closures,” and incorporates portions of a case study, “Grasshoppers Distribution: Lessons Learned and Lasting Legacy” by Lilian Brislen, Timothy Woods, Lee Meyers and Nathan Routt. The full report can be accessed at: http://www2.ca.uky.edu/agcomm/pub s/SR/SR108/SR108.pdf

Another case study will be presented Food hubs are especially important in helping to meet the needs of small and “ag of in the next issue of Rural the middle” farmers. When a hub closes, it can be a serious setback for small Cooperatives. farmers. USDA photo by Lance Cheung

20 July/August 2017 / Rural Cooperatives It is often said that we learn as much, and Food hub leaders, as well as others who worked closely with sometimes more, from our failures as we do the food hub, provided much of the language and from our successes. In this spirit, USDA has information for the respective case studies. been reviewing case studies of recent food Most of these food hubs studied for this report were not hub closures to identify any general lessons incorporated as cooperatives. However, most of them can be that may help other food hubs avoid making the same viewed as “quasi-cooperatives,” in that they share similar mistakes. business structures with co-ops, including collective Six food hub case studies were conducted across the marketing and supply-chain transparency. Food hubs also United States to examine reasons for closure. In this article, share basic cooperative values, such as shared risk and the we look at the case of Grasshoppers Distribution in equitable distribution of benefits. Kentucky. There are about 360 active food hubs in the United States, Beginnings three-quarters of which were established during the past The main goal of Grasshoppers Distribution was to assist decade. USDA defines a food hub as a “business or small farmers during a time of significant change for organization that actively manages the aggregation, Kentucky’s agricultural economy. Due to a 1998 tobacco distribution and marketing of source-identified food master settlement agreement and the end of a guaranteed products, primarily [coming] from local and regional price program for tobacco in 2004, Kentucky farmers were producers…” The overall goal is to “strengthen their ability searching for new markets to fill the significant economic to satisfy wholesale, retail and institutional demand.” hole left by the “golden leaf” and ensure the future of their Food hubs are especially important in helping to meet the farms. needs of small and “ag-of-the-middle” farmers who often lack Grasshoppers Distribution sought to bridge the gap while the capacity to meet the specific volume, quality and also improving accessibility of fresh local products in the consistency requirements of larger scale buyers, such as underserved communities of West Louisville. retailers, wholesale distributors and institutions. Spurred by a feasibility study for a food-based enterprise While four of the six food hubs studied by USDA opened to serve West Louisville, Grasshoppers was started by a their doors during the 2008 recession, it is important to note group of four farmers who had significant experience in that external factors were rarely the main reason for closure. direct marketing, organic horticulture, community supported Instead, internal management and board governance issues agriculture (CSA), operating a mid-sized meat-processing were far greater determinants of food hub success or failure. facility and with integrated value chains. The farmer-owners were highly involved in the early organization and operations of the business. However, as operations grew, responsibility fell to Grasshoppers’ general managers (there were five GMs Grasshoppers Distribution LLC over the life of the business), and a later-installed board of Series A investors.

Location: Louisville, Ky. Challenges along the way Business structure: Initially a farmer-led LLC, The original business model sought to support then as an investor-led LLC transitioning farmers while simultaneously improving fresh food security for marginalized community members in Business model: Multiple business lines over time. Louisville and tapping the growing high-end market for local Wholesale, direct market subscription service, food through restaurants and other wholesale outlets. custom online ordering, value-added products, Grasshoppers Distribution was to “provide an income to institutional sales. family farmers and micro-enterprise owners while No. of producers served: ~70 experimenting with the pricing of products so that we can Financing: Farmer-owner investments and loans, feed a food access deprived community.” sweat equity, State and Federal loans and grants, Unfortunately, due in no small part to the onset of the U.S. economic recession in 2008, Grasshoppers’ nonprofit followed by Series A investments partners foundered, and so too did Grasshoppers’ ability to Sales growth: $40,000 in 2007 to almost $1 million engage in those efforts. in 2013 On the wholesale front, early roadblocks in increasing Established: May, 2007 farmer production capacity and limitations in Grasshoppers’ Closed: December, 2013 in-house logistic expertise and infrastructure led to an inability to adequately supply larger wholesale accounts, such

Rural Cooperatives / July/August 2017 21 as schools or institutions. Despite their professed interest and overhaul of the business model, which transformed intention to work with Grasshoppers, key wholesale buyers Grasshoppers into a subscription program marketed as a identified in the preliminary marketing plan found that community supported agriculture (CSA) program. Two years Grasshoppers was unable to provide an advantage over into the CSA program, and still unable to achieve financial working with individual growers for convenience, price, viability, a decision was made to switch the format to an quality, or selection. “online marketplace” that allowed customers to build custom Additionally, former employees identified a particular orders on a weekly basis, in lieu of the CSA’s pre-packaged, challenge in securing farmers who could consistently produce season-long share. wholesale quantities of high-quality products that could be handled and packed appropriately for institutions. Too much “churn” The difficulty faced in wholesale distribution led to the While this change in services did expand the customer base, it also increased weekly “churn” (i.e., there was a lack of consistent, week-to-week purchases by customers). Many customers opted in and out at will, thereby creating a lack of Lessons Learned

n Food hubs need to invest in expertise how the mission would be achieved. and sufficient infrastructure when getting started. Frequent — almost annual — changes to the business Finding and retaining qualified staff in key leadership structure in response to capital shortfalls and a changing roles was a significant challenge faced by Grasshoppers. market environment posed a serious obstacle to This was caused primarily by a lack of adequate working developing needed efficiencies and expertise. Lacking a capital to invest in such expertise and the strain placed thorough understanding of its local market — including on a series of managers tasked with developing the the available supply, the scope of existing demand, and enterprise. The complex business model that the infrastructure required to connect supply and Grasshoppers worked to develop required a high level of demand — Grasshoppers expended a great deal of time expertise in a number of specialized fields for tasks such and capital on frequent changes to its business model. as setting up protocols and logistic systems, inventory These issues were compounded by the logistic and warehouse management for highly perishable complexity of housing several different types of business products, and day-to-day operations of a subscription- lines without the capacity to evaluate and achieve delivery service. efficiencies within them. In essence, Grasshoppers never Rather than a learning-by-doing approach to develop knew exactly what business it was in or how to evaluate the business, an early investment should be made in a the specific activities it was engaged in. Thus, the hub staff person or consultant with intimate knowledge of was not able to make strategic decisions based on a clear fresh-produce wholesaling and supply-chain vision of where the business needed to go and the best management. This person can help the hub avoid way to get there. burning through capital in correcting for early missteps and mitigate “burn-out” of staff and management (a n The success of the enterprise needs to be significant concern that is not to be taken lightly). part of the mission. However, it is important to acknowledge that acquiring A consistent challenge during the life of expert staff or services comes with significant cost and Grasshoppers was how to translate the abstract, may present an early fundraising hurdle for new overarching goal of “helping small farmers” into the enterprises. concrete, day-to-day reality of running a wholesale food-distribution enterprise. For the leadership of n Clear plans and metrics should be used Grasshoppers, the price paid to farmers was a key to help guide development decisions. mechanism for realizing producer development. Many The initial, values-based mission of Grasshoppers was producers recognized that the prices Grasshoppers paid clear: to help small farmers and assist underserved were generous — indeed, that they were actually “too consumers in accessing local foods. But it was a high” and seemed at odds with a business model challenge to develop and implement a specific plan for dependent on tight margins.

22 July/August 2017 / Rural Cooperatives Many producers recognized that the offering, which led to the reorganization of Grasshoppers’ ownership into an investor board. prices Grasshoppers paid were generous This board consisted of five voting members, including a — indeed, that they were actually “too representative of the original farmer-owners, the general manager (whose title switched to president after the investor high” and at odds with a business model offering), as well as Series A investors and non-voting dependent on tight margins. members. In 2013, a consultant was brought on to take over management and restructure the enterprise. Again, stability and great uncertainty. Grasshoppers switched its business model to focus on Additional change occurred in 2010, when a major capital processing and manufacturing value-added products. But shortfall led to Grasshoppers very nearly shutting its doors. while these efforts were met with mixed success, To prevent the closure, a new general manager (its fourth) Grasshoppers was under such financial constraint that it still led a recapitalization effort through a Series A investor continued on page 43

Additionally, Grasshoppers’ leadership adopted a policy As a values-based enterprise, Grasshoppers’ mission of avoiding competition with farmers on any front within included a broad set of social and environmental goals that the local food market. For example, while the practice of motivated managers and staff to go “the extra mile” in targeting customers outside of the traditional “local food” providing technical assistance and general support for market — as well as encouraging customers to join farm- producers. The variability of growers in size, marketing based CSAs — may have seemed ideologically important, skills and production expertise required a very extensive it went against the needs of the enterprise. and costly level of support. The competing demands of Food hub leaders should identify a strategic, frugal set these goals on staff and management’s time diluted the of core services that address the highest needs within the effort on the core business needs of the food hub. context of the region’s existing agro-food system. As previous studies have shown, successful food hubs Recognizing the core competencies or value proposition thrive within an integrated system of support that includes of the food hub allows management to focus efforts on Cooperative Extension, public health agencies, nonprofits, innovation and efficacies while having the confidence that state services and national programs. While there were success as an enterprise, in and of itself, is the realization attempts on the part of Grasshoppers to partner with of the food hub’s mission. public, private and nonprofit organizations, partnerships The greatest opportunity Grasshoppers provided for fell well short of specific needs. Strategic and committed farmers was serving as a reliable, high-volume buyer, support, beyond financing, from partner agencies and which increased producer access to wholesale market organizations allows food hubs to focus on the core channels. Though the additional services were business and supports the broader development of a appreciated, it was Grasshoppers’ activities as a food vibrant regional food system. aggregator and distributor that were, in the end, the Acknowledging that not all regions have equal access to greatest help to farmers. the same level of agricultural support services and technical assistance, there will inevitably be instances n Food hubs need support from other organizations where a food hub must take on additional food-system to help develop producers, consumer demand and development activities to fulfill its goals and mission. In infrastructure. this case, it is recommended that these activities be While the enterprise was able to secure public and conceived of as a separate business line and managed private funds to pay for infrastructure and operations, it accordingly. Time spent on these activities should be needed more technical assistance. In a very real sense, the financially accounted for either through grants or other staff and owners of Grasshoppers had to build the food- outside investment in such activities, or by direct financial system foundations on which their business was expected subsidization by the other business lines. n to stand — the necessary preconditions to support such an enterprise were simply not there.

Rural Cooperatives / July/August 2017 23 Farmers using co-ops to handle ‘big data’

By Alan Borst, Ag Economist that traditional data processing applications are inadequate. USDA Rural Business-Cooperative Service Big data represents the information assets characterized by email: [email protected] such a high volume, velocity and variety as to require specific technology and analytical methods for its transformation into Precision agriculture, also called “smart value. farming,” is a farming management concept Big data, as a tool for revealing hidden patterns, requires based on observing, measuring and large mobilizations of technologies, infrastructure and responding to inter- and intra-field variability expertise, which are much too elaborate for an individual in crops. The goal of precision agriculture farmer to process. There are three classes of people in the research is to define a decision-support system for whole- realm of big data: farmers who generate the data, farm management; the ultimate goal is to optimize returns agribusinesses that have the means to collect it, and firms from inputs used for production while preserving resources. that have developed the expertise to analyze it. Precision agriculture seeks to use new information and There is quite an imbalance in market power between the communication technologies to increase crop yields and relatively numerous farmers creating the data and the few profitability while lowering the levels of traditional inputs huge agribusinesses that collect, store and transform the data (land, water, fertilizer, herbicides and insecticides) needed to into useful information. Mary Kay Thatcher, senior director grow crops. In other words, farmers using precision of congressional relations for the American Farm Bureau, agriculture are using less to grow more. Farmers are sums it up in a Southeast Farm Press article increasingly using sensing technology to make farms more (http://www.southeast farmpress.com/data/data-currency- “intelligent” and more connected. driving-everything-security-issue): “Ongoing mergers in the From the farmer’s point of view, smart farming should agricultural industry could result in just three or four provide producers with added value in the form of better seed/chemical companies controlling approximately 90 decisionmaking for more efficient operations and management. percent of the farm data in the United States.” Historically, there have been several major power shifts Big data and precision ag from farmers to agribusinesses due to the advent of railroads, One developing area of precision agriculture involves “big farm machinery, chemical inputs, patented seeds and now big data” applications: monitoring and analyzing data related to data. One way in which farmers have historically responded the weather, soil, pest or hydration conditions of a specific to these market power imbalances has been through the farm, field or even plant to make exact and predictive farming organization of cooperatives. In the case of big data, farmers decisions. Collecting and transmitting this data in meaningful have responded both by organizing new cooperatives and ways has been a barrier, but innovators are working to change integrating existing ones to provide smart farming services that. New technologies — such as the “internet of things” (a network of internet-connected objects that can collect and Producers want data control exchange data using embedded sensors) and “cloud The American Farm Bureau polled farmers and ranchers computing” — are expected to leverage this development and across the nation in 2014 regarding big data and found that introduce more robots and artificial intelligence in farming. producers want to control the information their equipment Big data is a term for data sets that are so large or complex collects during field operations. Survey respondents also liked

24 July/August 2017 / Rural Cooperatives Satellite technology can produce digital maps of farms, helping producers make precise applications of fertilizers and other soil amendendments, thus avoiding over-application and runoff problems. Photos courtesy John Deere

the ADC will enable us to continue working with our growers to manage and catalog their data while aligning with our goal to provide a seamless and transparent approach to big data for our customers.” During the same time period, thousands of farmers across America were joining the Grower Information Services Cooperative (GiSC). GiSC’s mission has been to free data from proprietary “silos” to bring the opportunity to benefit from the data to member-farmers across the United States. GiSC was formed to assist its members — U.S. agriculture producers — with the collection, retention and delivery of information. The guiding principle of GiSC is that growers produce the information related to their operations, and that growers should have ownership of that information and should have control over who may access the information and how the information may be used. GiSC is similar to many agriculture cooperatives established to assist the growers the idea of organizing a data cooperative that could serve as a in marketing products. GiSC will also assist in marketing a central repository for their data to enhance security and product: the grower’s information and data. maximize its value. Subsequently, the Ag Data Coalition (ADC) was organized Data a byproduct of farming with 14 founding members, including agricultural groups Agriculture production consists of many byproducts. One byproduct of agriculture production is the data necessary to operate the farm and ranch. Data include many points of Farmers using precision agriculture information: acreage reporting, crop loss from natural are using less to grow more. disasters, production reporting, etc. There is a growing consensus that this data is quite valuable. On March 3, 2017, ADC and GiSC agreed to combine such as Farm Bureau, universities and companies. One of the their technology platforms and create a neutral, secure and founding companies was Agri-AFC LLC. Agri-AFC was private data storage repository controlled by growers. The formed in 2003 as a joint venture between Alabama Farmers combined platforms will be known as AgXchange and Cooperative and WinField Solutions, a wholly owned entity available through the newly named Growers Ag Data of Land O’Lakes. Cooperative. “Understanding and managing the multitude of Growers have also had more control over their data technology offerings and the flood of data that is now through their existing cooperatives. The nation’s largest farm generated on-farm are the biggest challenges we encounter co-op, CHS, partnered with TerrAvion in 2016 to provide with our producers,” says Amy Winstead, Agri-AFC’s precision ag services for members. Along with Agri-AFC and director of ag technologies, as reported in Southeast Farm Land O’Lakes, as well as many other farmer cooperatives Press (http://www.southeast farmpress.com/peanuts/agri-afc- across the nation, these enterprises are keeping smart farming joins-ag-data-coalition-founding-member). “Partnering with services under member-grower control. n

Rural Cooperatives / July/August 2017 25 Priority voting system may offer advantages for changing co-op sector

By Thomas W. Gray, Ph.D. approaching the cusp of a new wave of representation in cooperative decision Rural Sociologist mergers, acquisitions and joint ventures making. USDA Rural Business-Cooperative Service as cooperatives deal with excess supplies The purpose of priority voting is to Email: [email protected] of grains and oilseeds, storage shortages encourage the democratic character of amid record inventories, resulting in cooperatives by creating an election Author’s note: An earlier version of this more pressure to achieve savings from procedure that ensures minority group paper was published by the author in 1986, economies of scale (Ehmke, 2016). representation. An example of a during a period of intense merger, Expansion of cooperative service balloting diagram used under such a consolidation and acquisition activity by areas across broader geographic system is presented in Figure 1. The cooperatives and other businesses. Similar territories, combined with co-ops steps detailed in a priority-voting organizational changes are occurring today becoming involved in a wider range of election are: and thus warrant revisiting the discussion activities, can create member-relations n In completing the ballot, each of how voting methods help preserve challenges. Once primarily local member must write the name of the democracy in co-ops. This article also businesses — serving one or two preferred candidate in the No. 1 spot. includes ideas from literature on European counties and farmer-members who The names of the rest of the candidates cooperatives — in particular, the produced one or two primary crops — are then prioritized on the ballot. development of priority voting systems in the membership of an “average” farmer Members may write as many names on Denmark. co-op may now extend across several the ballot as they wish, but each states. candidate must be ranked separately. Voting practices Further, farmers may now come n In tabulating election results, represent an important from a wider range of backgrounds ballot counters sort out candidates way to maintain regarding scale of operations, crops given first priority on members’ ballots. member representation produced and locations. This diversity The total number of votes cast for top- and control of can fragment farmers’ expectations and priority candidates, divided by the cooperatives, especially during periods place multiple, often competing, number of positions up for election, of rapid increase in the size and demands on the organization. Minority yields the minimum number of votes complexity of co-ops. The number of group members (as determined by needed to win a position. This number U.S. ag co-ops is declining by 2 to 3 commodity, volume produced, region is termed the “winning proportionate percent annually, according to USDA’s or size of farm) may feel vulnerable and vote.” annual survey of cooperatives, with fear subordination to the needs of n Second-choice votes are counted mergers being a major factor. larger sub-groups within the when first-priority candidates do not Paralleling that trend is steady growth cooperative. Under such pressures and receive enough votes to fill available in average sales by ag co-ops, resulting conflicting demands, member positions. Votes candidates receive from consolidation in the sector (see participation may decline. under this choice are added to votes page 4). received under the first priority. Mergers and consolidations have Minority member Winning candidates must have vote been a predominant pattern among representation totals (total of both first and second agricultural cooperatives in the United Some European cooperatives priority) equal to or exceeding the States and Canada for several years. (particularly Danish agricultural co-ops) winning proportionate number of votes, More recently, co-op mergers have have instituted priority-voting methods as calculated in the second step. occurred in Ohio, Indiana and Texas in elections to prevent larger groups of n If vacant positions still remain, (see Rural Cooperatives May/June 2016, members from gaining dominance over votes cast for third-priority candidates p. 35-37). Tanner Ehmke, an economist cooperative resources, and to help are counted. Votes each candidate with CoBank, suggests we may just be guarantee minority group receives for first, second and third

26 July/August 2017 / Rural Cooperatives choices are added. This process moves to second-priority votes. Campbell by virtue of having more continues until all positions are filled, Candidate Wadsworth places second first-place votes. or until all votes for all priorities are with 39 total votes, which includes 20 counted and added. first-place votes and 19 second-place No guarantee n If no candidate receives a winning votes. None of the other candidates This priority voting method doesn’t proportionate number of votes after a obtain the minimum total. guarantee minority groups a position. It count of all priorities, the candidate Moving to third-place votes, tends, however, to minimize the total with the most votes wins. candidates Hiwot, Campbell and votes needed to place a person in office. n In cases of ties, the candidate with Cesserich receive sufficient votes to win Typically, under a “most-votes-wins” the most first-priority votes wins. If the a position. Hiwot receives 10 first-place method, all votes are cast at once for tie continues, the second-priority votes votes, 22 second-place votes and 32 each position. Each member has one are counted. If there is still no winner, third-place votes, for a total of 64. vote for each open position. The lots must be drawn. In cases Campbell receives 9 majority could dominate balloting by where one person is being first-place votes, 24 selecting a favorite with each vote. elected, the winning second-place votes, Under a simple-majority voting proportionate number of and 31 third-place method, the three positions would have votes is half of all valid votes votes for a total of been filled by three separate ballots. plus one, or a simple majority. 64 votes. Cesserich The winning proportionate vote each n Candidates with the receives 9 first- time would have been a simple majority most votes above the winning place votes, 24 (half plus one). Again, the majority proportionate number within second-place votes could dominate the balloting and eliminate minorities from a position. Under the priority Figure1—Cooperative Priority Voting Method (100 total members) voting example, only 34 percent of the vote was Candidates Monroe Wadsworth Hiwot Campbell Cesserich Parker Members needed to place an individual in office. Had 1st Place Votes 35 20 10 9 9 17 100 four positions been up for 2nd Place Votes 0 19 22 24 24 0 89 35 39 32 33 33 17 election, only 25 percent of the vote would have 3rd Place Votes 0 8 32 31 2 0 73 been needed, making 35 47 64 64 35 17 positions more accessible to minority sub-groups. 4th Place Votes 0 0 0 0 0 0 0 As cooperatives expand across geographic lines into new markets and each priority win contested positions and two third-place votes for a total of activities, heterogeneity of membership until all positions are filled, or until 35. will also often increase. Priority voting vote counters move on to the next Only one position is left open. may be a method for cooperatives to priority. Parker is eliminated. Both Hiwot and consider for helping all members Campbell are tied with 64 votes while recognize opportunities to articulate Calculating the votes Cesserich has only 35. But Hiwot has their needs in their organization by In the example in Figure 1, 100 valid more first-priority votes and therefore electing members to voice their votes are cast. Three positions are open. wins. concerns. n Therefore, the proportionate winning The three contested positions are votes number is 34. filled. Monroe won first place, having References: When the first-priority votes are gained sufficient first-place votes to win • Ehmke, Tanner. 2016. Rural Cooperatives May/June 2016, p. 35-37. counted, candidate Monroe is the outright. Wadsworth was second, Gray, Thomas. 1986. “Member Control winner with 35 votes. None of the earning enough first-and second-place Mechanism from Western Europe,” Journal of other candidates receive sufficient votes votes. Hiwot fills the last position, Agricultural Cooperation , Vol 1. in the first-place balloting to fill the having enough first-, second- and third- • “Valg Efter Prioriteringsmetoden,” [“Selection by Priority Method”] Saretryk of Andelsbladet. No. remaining positions. So the count place votes, plus breaking the tie with 44. 1970.

Rural Cooperatives / July/August 2017 27 “Your biggest selling point is that you [co-ops] are the good guys. Tell your stories,” urges panelist Jessica Ross (far right), managing partner of the Finn Partners public relations firm. Other panelists, (from left) are: Gina Schaefer, founder/CEO of a chain of Washington, D.C.-area Ace hardware stores; Howard Brodsky, co-CEO of CCA Global Partners; and Wendy Scherer, social media manager for Cabot Creamery Cooperative. Photos by Sarah Crozier, courtesy NCBA CLUSA How do we foster a new generation

of cooperators?

By Meegan Moriarty cooperative awareness, particularly Partners, a marketing and Legal Policy Advisor among the next generation? communications firm with offices Rural Business-Cooperative Service Panelists — including the 2017 Hall worldwide. “Tell your stories,” she email: [email protected] of Fame inductees — told their implored. personal stories of how cooperatives With 30,000 cooperatives, 120 Co-ops are the answer, address income inequality, market million members and 2.1 million panelists agreed during inefficiencies, community economic cooperative employees in the United a cooperative issues development, capital access, wealth States, many Americans are already forum, held in May creation and ownership. benefiting from the services of prior to the “Your biggest selling point is that cooperatives, said keynote speaker Cooperative Hall of Fame induction you are the good guys,” declared Howard Brodsky, CEO of CCA Global ceremony. But the question remains: panelist Jessica Ross, a cooperative Partners, a cooperative that provides how can co-op advocates raise public relations expert with Finn group purchasing and other services to

28 July/August 2017 / Rural Cooperatives its members. However, only 11 percent farmers with meager resources bonded from each family involved in a baked of those surveyed really know what a together to market their agricultural goods cooperative. She collected money cooperative is, according to another of products and compete against major each week, sometimes as little as $2. Brodsky’s organizations, Cooperatives grain and oil companies. These farmers Eventually, the cooperative raised for a Better World. own a company that now stands with $25,000 and received a matching loan “We don’t have a problem with agribusiness giants such as Archer from the Small Business mission,” asserted Brodsky. “We have a Daniels Midland and Cargill, he said. Administration. Her mentors were the problem with messaging.” And “We are very proud,” added Johnson, adults who sacrificed and raised that millennials are a particularly hard, but who oversaw CHS’ growth from an $8- money for the cooperative business. important, group to reach, according to billion to a $40-billion, Fortune 100 “It was in the blood, in the spirit, in forum participants, who deliberated on company. the soul. Every other decision I made how to pass cooperative knowledge on Richard Larochelle, retired senior was based on my being an organizer in to the younger generation. vice president of the National Rural the cooperative community . . . It even The forum panel, held at the Utilities Cooperative Finance decided who I would marry,” she said. National Press Club in Washington, Corporation (CFC), started his co-op Her husband, John Zippert, became D.C., was introduced by Cooperative career at USDA’s Rural Electrification involved in the cooperative movement Development Foundation Chair Gap Administration (REA), now the Rural to help farmers market their sweet Kovach. It was sponsored by the Utilities Service. REA “took rural potatoes. He wrote to USDA’s

“We don’t have a problem with mission. We have a problem with messaging.”

Cooperative Development Foundation, America from darkness to light,” Cooperative Service to order the National Cooperative Business Larochelle said. His mentors there were cooperative educational materials and Association, the Ralph K. Morris people who had started working with began working with Father A. J. Foundation and Cooperatives for a REA in the days before electricity was McKnight, mentor to both Zipperts Better World. available in rural places. (and himself a Cooperative Hall of These people, who had been hired Fame member). The Zipperts were Power of stories during the Great Depression, had a married by McKnight after winning a The Hall of Fame inductees told powerful sense of cooperative mission, lawsuit to become the first interracial compelling stories of how cooperatives according to Larochelle. He later married couple in Louisiana. meet community needs. As a volunteer, worked for the National Rural Electric Shortly thereafter, the Federation of Rita Haynes, CEO Emeritus of Faith Cooperative Association (NRECA) Southern Cooperatives/Land Assistance Community United Credit Union, set where he was instrumental in getting Fund was started to promote up a credit union so people who lacked legislation passed that allowed cooperative development in the South. access to credit could get a loan, learn cooperatives to buy REA loans at a Both Zipperts have been involved with financial literacy skills and begin to discount. He also lobbied successfully the Federation, with John serving as build wealth. Under her leadership, the for legislation ensuring that rural director of programs for the credit union became certified as a Americans had cheaper access to Federation’s Rural Training and Community Development Financial satellite television. Research Center in Epes, Ala. Both Institution and an approved Small Carol and John Zippert, cooperative have been involved in cooperative Business Administration lender. and civil rights advocates, came to education as well as in developing credit Haynes was also chair of a 28- cooperative development for pragmatic unions and cooperative housing, as well member credit union association that reasons. “We did it for survival,” Carol as fostering land ownership for rural obtained a $200,000 revolving loan said, adding that cooperatives allowed people. fund to provide small businesses loans people with meager means to start a to minority contractors. business. Wake-up call for John D. Johnson, retired president She described working as a young co-op education and CEO of CHS Inc., described how woman for three years to raise $300 “Hello! Cooperatives should be

Rural Cooperatives / July/August 2017 29 taught in [business schools in] the Cooperative in Vermont, discussed a an effective tool to engage them with United States,” declared Larochelle, number of strategies for connecting the co-op. It can be hard for a credit who noted that other business sectors with millennials and others. She union to match the pay offered by for- have embedded their model in business suggested partnering with other profit banks, so she said it is important school curricula. “It is outrageous that cooperatives and conducting that workers are educated regarding the you can graduate with a degree in promotions as a group. She also credit union’s mission. business and never once hear the word advocated for connecting with Carol Zippert, who started a credit ‘cooperative,’” he added. cooperatives in other sectors. union in Alabama, has a Ph.D in “I studied economics at [City Cabot and other cooperatives share educational leadership, supervision and University of New York], and I never each other’s marketing and educational curriculum development. She works as

“Hello! Cooperatives should be taught in [business schools in] the United States.”

heard of co-ops,” agreed John Zippert. content and make extensive use of an adjunct research professor for Larochelle is trying to remedy the infographics and videos. Scherer noted Tuskegee University’s community-based situation. Since retiring from CFC, he that videos can provide a helpful youth partnerships and is a board is teaching a college class on medium for telling stories about member with the 21st Century Youth cooperatives at Mary Washington cooperatives. Leadership movement. University in Frederick, Va. and has Schaefer educates her employees She talked about cooperative started a food cooperative. about cooperative values, but education that she had conducted with Local colleges can be an avenue for acknowledges that co-op concepts can young people. Her students have raised spreading the word about cooperatives, be difficult to explain, especially since money to create a credit union and own Brodsky agreed, adding that he recently ACE is not a worker or consumer bank accounts. She has also taught judged a college business competition cooperative. However, Schaefer draws young people to do organic farming. involving cooperatives. Larochelle’s parallels between the company profit- While many of her students will not hope is to have cooperative business sharing plan and the patronage become farmers, by learning about classes taught in every state, and he payments co-ops make to members, as cooperative farming they have been pledged to share the curriculum he is well as sharing the co-op philosophy of exposed to cooperative principles. creating for his class at Mary commitment to community. Washington. If employees understand that ACE Importance of mentorship Panelists had a number of additional — as a group purchasing cooperative of and volunteerism suggestions about how to spread the small business owners — can compete Many of the panelists became word on cooperatives. Ross suggested with corporate-owned “big box” stores, engaged with cooperatives because they that cooperative advocates collect and Brodskey said they can help educate had co-op mentors. Haynes was share data supporting cooperative ACE customers about cooperatives. mentored by Carrie Caine, who became success stories. She noted that other a Cleveland, Ohio, city councilwoman. business organizations engage in public Remembering co-op roots In turn, Haynes mentored young relations activities and advertising to Johnson tried to educate everyone people. Like Zippert, she created a show how they benefit the community. who worked at, or even visited, CHS “junior credit union” where she taught In contrast, cooperatives’ mission and about the co-op’s history. He researched financial skills. function is to benefit the community. CHS and filled the company lobby with “It’s about ‘we,’ not ‘me,’” said Cooperatives need to “brag a little,” historical displays and memorabilia. Larochelle. “The work of cooperatives said Gina Schaefer, owner of 11 ACE These displays explained how the never gets done. . . It’s about hardware stores in the Washington, farmers who formed the cooperatives empowering others to get things done.” D.C. area. ACE is a buying co-op for that ultimately became CHS overcame He discussed his mentors — the owners of independent hardware stores. the challenges they faced. people who had brought electricity to Wendy Scherer, social media Haynes agreed that educating people rural America — and mentorship at manager with Cabot Creamery about the history of cooperatives can be NRECA, where junior staff members

30 July/August 2017 / Rural Cooperatives The Class of 2017: Cooperative Hall of Fame inductees are (from left): John D. Johnson, retired president/CEO of CHS Inc.; Rita L. Haynes, CEO emeritus of Faith Community United Credit Union; Carol and John Zippert of the Federation of Southern Cooperatives; Richard Larochelle, former senior vice president of the National Rural Utilities Cooperative Finance Corporation.

were given key roles to foster their each other, Scherer stressed. Carol Zippert, so it is important to find a way growth. Zippert suggested that larger credit to celebrate community and Haynes volunteered her services to unions deposit money in smaller credit cooperation. create the Faith Community United unions, while Johnson advocated “With my background, it’s all about Credit Union. All of the Cooperative reaching out to competitors to food,” Johnson said. He advocated Hall of Fame inductees gave generously accomplish goals. using cooperatives to collect food and of their time to promote cooperatives. Brodsky’s website, CooperativesForA address childhood malnutrition. Haynes and Carol Zippert both said BetterWorld.coop, provides cooperative John Zippert lamented that he had it is a major challenge to instill a training materials, describes cooperative not reached his goal of ending poverty commitment to cooperative principles sectors and contains a list of in the South through cooperatives. The in younger people. “We were young, cooperatives, as well as a cooperative next task for cooperatives, he added, is passionate, struggling to survive,” locator. It also provides a cooperative tackling poverty, income inequality and Zippert said, adding that a similar exchange area where cooperatives can economic and social justice. passion is too often lacking today. post offers. Cooperatives can provide patient Scherer has a pragmatic approach to capital so groups with limited wealth engaging volunteers. Cabot Creamery What’s next? can own their job, store and credit has created a volunteer tracking system Brodsky opened the forum with a union, he said. “There’s a lot more to help volunteers track their hours. startling statistic: eight people have the work to do,” he added. Fifty years after Cabot rewards volunteers with cash, same amount of wealth as 3.6 billion the Federation was created, 20 to 30 vacations, gift cards, gift baskets and people in the world. percent of people in his community live even chocolate. Judy Ziewacz, president and CEO of in poverty and the core leaders of the NCBA CLUSA, asked the Hall of Federation have retired. “We hope Cooperatives cooperating Fame inductees about the “next big young people will carry things Cooperatives need to share resources thing for cooperatives.” The struggle forward.” n across sectors and show allegiance to will always be with us, answered Carol

Rural Cooperatives / July/August 2017 31 Understanding

the role of values in traditional and hybrid cooperatives

By Julie A. Hogeland, Ag Economist Alliance (ICA) identifies cooperative members truly “own and control” the USDA Rural Business-Cooperative values as: self-help, self-responsibility, cooperative is not necessarily clear Service democracy, equality, equity and and, indeed, may not be an issue for Email: [email protected] solidarity. American co-op history members. Most attention to hybrid adds the role of co-ops as a vehicle co-ops seems to be prompted by Many studies on for greater producer control. This interest in how their unique cooperatives are can encompass producers’ control structural design (or “organizational rooted in economic over their own destiny (“being their architecture”) remedies perceived concepts and own boss”) or more control over weaknesses in the traditional assumptions. One markets by developing grades and cooperative model. such assumption is that cooperatives standards for new products, such as “The traditional [cooperative] are either traditional (user-owned, organics (Hogeland, 2006). ICA does structure consists of open user-controlled and user-benefiting) not distinguish values according to membership, non-appreciable, non- or hybrid (more corporate in outlook whether a co-op is a traditional or transferable and (partly) redeemable and practices) businesses. This article hybrid business. shares, and capital accumulation via is intended to further understanding Jeremie Forney and Isabel Haberli retained earnings” (Plunkett, et al of how values emerge and change (2017) note that hybrid co-ops 2010: 263). Hybrids are generally within all cooperatives, particularly contradict the definition of associated with a closed membership, hybrids, by proposing three cooperatives used by the ICA: “As a market allowing share transfer and hypotheses influenced by disciplines businesses driven by values, not just appreciation and capital management other than economics: anthropology, profit, cooperatives share plans, such as a base capital plan organizational behavior and political internationally agreed principles and (which keeps patrons’ equity economy. Values enter the act together to build a better world investment proportional to their use cooperative sphere through their through cooperation.” Little is of the co-op) [see Cook and potential to spark internal friction or known about how hybrid co-ops Chaddad, 2004:1250]. tensions in the organization. manage to exclusively focus on profit Hybridity can be a springboard to We begin with a brief overview of and investment while (reputedly) other forms of organization. For a cooperative crisis which brought keeping other co-op values at bay. example, U.S. Premium Beef (Kansas hybridity to prominence. A pressing Hybrid cooperatives rely on both City, Mo.) started out as a marketing need to ensure profitability in light markets and “hierarchy.” Market cooperative but reorganized as a of this crisis likely contributed to the prices provide so-called “high level” limited liability company (LLC) to belief that hybrids were — and price incentives to members while facilitate outside investment. should be — driven by profit, top-down management replicates Cooperatives are owned and irrespective of other co-op values. corporate managerial hierarchy. controlled by producer-members. The International Co-operative Therefore, whether producer- External investors dilute that control,

32 July/August 2017 / Rural Cooperatives We may be seeing the emergence of a new and viable business form: the publically listed cooperative hybrid.

necessitating a greater role for top- experiencing a capital shortage. In through the democratic process — down management. fact, capital shortages spread across are funneled into an expression of the co-op sector as the pace of the [class] interests of members with Financial crisis market consolidation and larger sized farms. The concept of hybridity first centralization began accelerating late Some see an advantage to such came to prominence around 2004 in in the 20th century (Cook, 1997). To focus and streamlining. In the aftermath of the bankruptcies of compete effectively, co-ops needed to comparison with multi-focused three of the nation’s largest ag “up their game” through an infusion traditional co-ops, the hybrid’s cooperatives: Farmland Industries, of capital. singular emphasis on financial gain Agway and Tri Valley Growers. At By the turn of the millennium, appears less complicated, more that time, USDA’s Cooperative capital shortages had become the focused, purer. (In economic terms, Programs office received numerous biggest problem for cooperatives. the variance of member interests press inquiries asking if these failures Accordingly, Cook and Chaddad decreases, which in turn increases heralded the end of the nation’s ag (2004) began examining how efficiency). cooperative sector. cooperatives could foster equity In the same vein, Cook (1997) To economists Michael Cook and accumulation and use capital more argues that multiple values foster Fabio Chaddad (2004), these events efficiently. They considered cross- inefficiency because it’s not clear how signaled a structural weakness in the subsidization inefficient because it they should — or even could — be way equity investments were diverted investment from its original prioritized. A blurry commitment to managed by multi-commodity, purpose. Efficiency could be restored multiple values makes it harder to traditional cooperatives. A particular if equity contributions were properly identify a clear rationale for existence vulnerability was the tendency to use aligned so that that those who made and, therefore, a realistic mission cross-subsidization — applying the the investment would also benefit statement. investment from one group of from it. These insights arguably However, recent research by commodity producers to benefit allowed profit (a concept which Sophie Wynne-Jones (2017) found another group. encompasses the least-cost concept of that it is better to present potential Left unsaid was the incentive for efficiency) to override other co-op benefits as linked or interwoven (all cross-subsidization: the co-op value values. of a piece), rather than as stand-alone of solidarity based on the belief that goals, e.g., economic or “we’re in this together, all for one Values and hybridity environmental or social goals). From and one for all.” Solidarity among How might the movement toward her observations about farmer producers expressed in this manner profitability and increased investment cooperation in Wales, she found a allowed co-ops to shift resources to subsume other co-op values? more comprehensive approach producers whose survival was at risk Proportional voting (in which a supported and buffered farmer- because of down markets (or poor member’s vote is amplified based on members when some desired production choices). To some degree, volume of delivery or purchases outcomes were not realized. cross-subsidization conceivably made) is an example of hybridity, Forney and Haberli (2017) offered late 20th century co-ops since it overrides the democratic ‘one challenge the notion of cooperative benefits comparable to being a member, one vote’ principle of duality by proposing that all conglomerate: gains in marketing traditional cooperatives. According to enterprises — traditional and hybrid one commodity offset losses in Patrick Mooney (2004), proportional co-ops, as well as investor-owned another. voting implies that competing [class] firms — draw on the same pool of Ultimately, however, cross- interests within the membership — values. This leads to: subsidization signals that the co-op is ordinarily expressed and reconciled

Rural Cooperatives / July/August 2017 33 HYPOTHESIS 1 HYPOTHESIS 2 Hybrids draw on more values than the dichotomy Organizational values mirror their “traditional cooperative-hybrid” implies environment (Scott, 1987)

Forney and Haberli point to the diversity of logics — the wide “Context” can also mean fully developing an variation in rationales or approaches — that enterprises actually argument to account for the meanings and deploy. Drawing on research by J.K. Gibson-Graham, they note implications of variables. In this respect also, that diversity occurs in “transaction types (market, alternative Scott’s argument is consistent with the Forney- market and nonmarket), labor (wage, alternative paid, unpaid) Haberli framework: and enterprise (capitalist, alternative capitalist, non-capitalist). “Self-interest does not oppose other This implies, they say, that “the concept of hybridity unduly motivations, like feeling of belonging, solidarity polarizes cooperatives and corporates in a way that does not and collective economic empowerment. None of acknowledge the implicit plurality of motivations and behaviors in these motivations are purely economic or non- all forms of business structure” economic…they are “more-than-economic” or In short, enterprises do not operate according to a pre- “economic and more.” determined template; they choose the attributes or qualities that “As an example, profit seeking is usually reflect the kind of cooperative they want to be. And, the pool they related to other goals that people strive for. In choose from is very large. farming, these goals might be farm succession, Indeed, the binary opposition, “traditional cooperative-hybrid,” an idea of what a good farmer is (or is not), a is itself misleading and limited, according to Forney, an socially constructed desire for pride in anthropologist. Unlike economics, anthropology has a rich history production, an attempt to establish more of using pairs of binary oppositions — such as hot-cold, male- autonomy on the farm, etc.” (Forney, female, culture-nature, cooked-raw — to capture how the mind communication with author, April, 2017). is believed to perceive differences. This approach has largely fallen into disfavor, however. Rather than opposing two ends of a How values change cooperative spectrum, Forney and Haberli suggest that these two As described, co-op hybridity is a fairly sets of literature [on traditional and hybrid co-ops] in fact recent development. It can be considered a new illustrate diverse enactments of values among cooperative movement or, alternatively, a refinement of the structures. cooperative model that contributes to co-op The bottom line: some co-ops embrace many values; others evolution. Mooney (2004) notes that new social choose less. movements involve the “emergence of new or formerly weak dimensions of identity . . . They Self-interest are associated with a set of beliefs, symbols, Economists usually justify profit-seeking as an entirely rational values and meanings related to sentiments of goal, based on pure self-interest. What happens to rationality and belonging to a differentiated social group” [e.g., self-interest in the Forney-Haberli framework? large producers] (2004: 94). From an organizational behavior perspective, Richard Scott In particular, Mooney anticipates that (1987:509) suggests that “institutional arguments need not be internal tension (which he calls “a site of formulated in opposition to rational efficiency, [rather] such contradiction”) will emerge between “old,” or arguments are better seen as complementing and contexualizing traditional, forms of cooperation and newer them.” forms of cooperation, e.g., a hybrid co-op or “Context” often implies putting events in their historical conversion to another business model. setting. During the late 20th century, starting from about the The third hypothesis is influenced by political 1970s, business scholars touted the advantages of economy, specifically, the notion of change conglomerates. This may have influenced cooperatives’ adopted by Marx and Hegel, as interpreted by readiness to implement cross-subsidization. Mooney. This intriguing hypothesis suggests More generally, since individual co-ops will have a largely that, as hybrids evolve, profit could be unique history, it may be useful to think about the influences of subordinated to other co-op values. the external environment on hybrids, i.e., what economists call “exogenous change.” The second hypothesis draws on Richard Scott’s proposition based on the field of organizational behavior.

34 July/August 2017 / Rural Cooperatives HYPOTHESIS 3 CONCLUSIONS Contradictory tensions representing competing cooperative values are resolved in a back-and- forth, dialectical process (Mooney, 2004)

A dialectical, back-and-forth process from one extreme to Organizational scholars Albert, Ashforth and another is illustrated by the relative importance of profit Dutton (2000) interpret the dismantling of within co-ops. Historically, cooperatives have been conventional organizations as a sign that an ambivalent about earning profits because members have organization’s core being increasingly belongs in been inclined to view profits as “coming off the backs of the heads and hearts of its members. Under these farmers” (Hogeland, 2004: 23). Co-ops instead emphasized circumstances, it becomes more important to have altruism. To co-op managers, the surface meaning of altruism a mental image (or cognitive structure) of what the was, “don’t exploit the business for profit.” The tacit meaning organization [i.e., cooperative] stands for and where was, “don’t take advantage of farmers.” What happens to this strong sentiment when co-ops begin it intends to go — in short, a clear sense of the to embrace profit? Is it realistic to think that it could organization’s identity. disappear? Maintaining co-op identity and identification Similarly, how does the nature of solidarity change as co- despite hybridity may be a new way for farmers and ops evolve from traditional to hybrid? Cook and Chaddad ranchers to gain greater power in the marketplace. (2004:1252) suggest that [traditional] co-op members are bonded by a common commodity or user interest. Over time, References as the co-op model evolves to include outside investors as • Albert, Stuart, Ashforth, Blake E., and Dutton, Jane E. (2000). members, these authors anticipate that a shared interest in “Organizational Identity and Identification: Charting New maximizing return on investment will become the basis of Waters and Building New Bridges.” Academy of Management Review , 25(1): 13 –17. solidarity. • Chaddad, Fabio (2009). “Both Market and Hierarchy: This proposition is nonetheless rooted in an “either-or” Understanding the Hybrid Nature of Cooperatives,” Presented binary. Where is the middle ground, the transitional case? at “Rural Cooperation in the 21st Century: Lessons from the Past, Pathways to the Future,” Rehovot, Israel, June 15 –17. Perhaps O.F. van Bekkum and J. Bijman (2007) were • Cook, Michael L. and Fabrio R. Chaddad, (2004) “Redesigning prompted by the Cook-Chaddad proposition to ask whether Cooperative Boundaries: The Emergence of New Models,” hybridity foreshadows the end of the cooperative business American Journal of Agricultural Economics 36: 1249 –1253. • Cook, M. L. (1997) "Organizational Structure and form. However, their research suggested that some hybrids Globalization: The Case of User Oriented Firms," in Strategies deliberately avoided converting into limited company and Structures in the Agro-Food Industries, ed. J. Nilsson and structures so that they could retain their cooperative identity. G. von Dijk, Van Gorcum & Company B.V., Assen, The (The functional changes associated with hybridity — such as Netherlands. • Forney, Jeremie and Isabel Haberli (2017). “Co-operative establishing a market for shares or a capital management values beyond hybridity: The case of farmers’ organizations in plan — are not necessarily at odds with maintaining a co-op the Swiss (we should still cap it) dairy sector,” Journal of Rural identity, a point not anticipated by scholars when hybrids Studies : 1 –11. • Hogeland, Julie A. (2004). “How Culture Drives Economic were first introduced.) Behavior in Cooperatives,” Journal of Rural Cooperation 34: “The majority of all major marketing cooperatives in the 19 –36. Netherlands have ‘lowered’ their commercial activities into • Hogeland, Julie A. (2006). “The Economic Culture of U.S. Agricultural Cooperatives,” Culture and Agriculture : 28: 67 –79. limited company structures, but have retained 100 percent • Mooney, Patrick H. (2004). “Democratizing Rural Economy: cooperative ownership” (van Bekkum and Bijman, 2014:6). A Institutional Friction, Sustainable Struggle and the Cooperative shift from a member-owned form into an investor-owned Movement,” Rural Sociology : 69: 76 –98. • Plunkett, Bradley, Chaddad, Fabio R., and Cook, Michael L. form, while remaining farmer-owned, can enhance flexibility (2010). “Ownership structure and incentives to invest: dual- of decision-making, attract external capital or impact tax structured irrigation cooperatives in Australia,” Journal of issues. Indeed, van Bekkum and Bijman foresee that Institutional Economics , 6(2): 261 –280. evolution of the co-op business model may signal the • Scott, W. Richard, (1987). “The Adolescence of Institutional Theory.” Administrative Science Quarterly , 32(4): 493 –511. emergence of a new and viable business form: the publically • Van Bekkum, O.F. and J. Bijman (2007). “Innovations in listed cooperative hybrid. Cooperative Ownership: Converted and Hybrid Listed Cooperatives” in S. Rajagopalan (ed.), Cooperatives in 21st Century . The Road Ahead . Hyderabad, India: Ifcai University Press: 34 –56. • Wynne-Jones, Sophie (2017). “Understanding farmer co- operation: Exploring practices of social relatedness and emergent affects.” Journal of Rural Studies (2017): 1 –10.

Rural Cooperatives / July/August 2017 35 Newsline Co-op developments, coast to coast

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

Jay Debertin new CEO at CHS in new capital expenditures and nearly Sires “will acquire all Accelerated CHS Inc. has elected Jay Debertin as doubled the size of its balance sheet, Genetics assets, integrating the president and chief executive officer, from $8.7 billion in 2010 to $17.3 employees and independent sales succeeding Carl billion at the end of fiscal 2016. representatives in each of their Casale. Debertin Debertin assumes the helm of the geographic member organizations.” previously served co-op following a rough year in 2016, The decision to merge furthers an as executive vice which the co-op has called its most existing, collaborative business president and challenging year of the past decade. relationship between the two chief operating CHS’ net income declined by 46 cooperatives that began in 2001. Each officer for the percent last year during a period co-op shares ownership of World Wide company’s diverse marked by large worldwide grain Sires Ltd., the international marketing energy operations supplies. CHS was also among the arm for both companies in Europe, and food largest creditors of a Brazilian Africa, Asia, the Middle East and ingredients business. commodities trader, Seara Ind e Com Oceania. “As we take our cooperative into its de Produtos Agropecuários Ltda, which “By working together, we will be next chapter, we are confident that Jay recently declared bankruptcy. CHS stronger,” says David Thorbahn, Select is the right leader,” says Dan Schurr, holds credits of about $200 million in Sires president and CEO. “The value CHS board chairman. “Jay’s experience the Brazilian firm, Reuters reported. and expertise gained by joining the in achieving operational excellence and Originally from East Grand Forks, people from both organizations allows driving results fits squarely with our Minn., Debertin holds a bachelor's us to offer our customers a broader unwavering goal to deliver returns to degree in economics from the genetics program in addition to an our member-owners now and for the University of North Dakota and an outstanding animal health product long term.” MBA from the University of line.” The merged co-op will be better Debertin joined CHS in 1984 and Wisconsin. able to expand genetic research, has since held a variety of leadership technical support, service and programs positions in energy, trading, risk Breeding co-ops to merge “with people who are passionate about management, transportation and Accelerated Genetics, Baraboo, Wis., the dairy and beef industries,” he adds. agricultural processing. He is also and Select Sires Inc., Plain City, Ohio, The two co-ops are built upon the chairman of the co-op’s Ventura Foods are joining forces as a unified same cooperative business principles division. cooperative, effective July 1, 2017. At a and share similar operating structures. “CHS is strong today because we special delegate meeting June 22, “Each organization stems from a root of drive the business with a central Accelerated Genetics officials voted to innovative breeders who had a common purpose in mind: to help our unite with Select Sires, finalizing the vision to move the dairy and beef cooperatives and farmers grow,” agreement recommended by the boards industries forward. Both cultures value Debertin says. “I look forward to of both co-ops. the input of their member-owners and working with our talented group of “Accelerated Genetics has been recognize the importance of their employees as we concentrate on world- searching for a partner that could guidance in driving the need to produce class execution across our system. I see enhance the business and move it superior genetics and outstanding growth and strength ahead for our forward,” says Scott Dahlk, board chair reproductive programs.” business.” of Accelerated Genetics. “Joining forces Casale leaves after seven years with Select Sires is a positive move for Calif. co-op buys leading the nation’s largest cooperative, both member-owners and producers Oregon Cherry Growers during which time CHS returned $3 worldwide.” Pacific Coast Producers (PCP), Lodi, billion to its owners, invested $9 billion The agreement specifies that Select Calif., is buying the processing

36 July/August 2017 / Rural Cooperatives DFA unveils new headquarters

Dairy Farmers of America (DFA), a national farmer-owned dairy cooperative, recently celebrated the opening of its new headquarters in Kansas City, Kan. The three-story, 110,000-square-foot building, designed by HOK, honors the cooperative’s dairy farmer members. “This building is a testament to our family farmers and the sustainable practices they employ on their dairies each and every day,” says Rick Smith, DFA A sculpture of milk pouring down from president/CEO. “We intentionally above greets visitors at the new head- designed it to use more natural quarters of Dairy Farms of America (DFA) materials, like reclaimed woods, in Kansas City, Kan. Photos courtesy DFA concretes and metals — so there’s a welcoming feel, while still being very sustainable design practices, modern and fully equipped for how including panels of glass framing the the world works today. It’s not a building’s exterior which not only typical corporate office space, but it bring in an abundance of natural absolutely functions like one.” light, but also help reduce energy Other unique design touches and use. Another sustainable building furnishings pay homage to life on feature is the use of under-floor air, the farm and the production of milk, which allows A/C vents to deliver including the use of plaid and cow cool air from the floor up, which is hide upholsteries for various seating far more efficient than blowing cool areas. Wall art showcases aspects of air down. DFA’s business, from a barn board Other sustainable elements and milk bottle caps to steel pipes include: representing the cooperative’s • 100-percent LED lighting, with numerous milk processing plants. DFA: producing nutritious, delicious automatic energy-saving mode; As visitors enter the building’s milk and dairy products. • Composting trash and recycling lobby, they are greeted by a 25-foot Qualifying for Silver LEED throughout the building; sculpture of pouring milk, there to (Leadership in Energy and • Two electric car charging stations; represent and remind employees and Environmental Design) certification, • Several reserved fuel-efficiency visitors about what’s at the core of the building includes a number of parking spots. n

operations of Oregon Cherry Growers according to a report in the Statesman our growers,” Oregon Cherry President of Salem, Ore. The deal was expected Journal newspaper. The Oregon Tim Ramsey said in announcing the to close by the end of June 2017. company’s fresh cherry business is not sale. Oregon Cherry Growers consists PCP, a co-op owned by 160 farm included in the sale; it will carry on as of about 60 farmers along the Columbia families in Northern California, says it Cascade Fruit Growers. River Gorge and in the Willamette will continue to operate Oregon Cherry “We believe this acquisition will be Valley. Growers production in Salem and The positive for the future of Oregon “Our company values and strengths Dalles and that no layoffs are planned, Cherry Growers, for our employees and align well with those of Oregon Cherry

Rural Cooperatives / July/August 2017 37 Growers, and will further allow us to remaining barriers to trade that were discussed how rural communities are serve the needs of our customers,” PCP not adequately addressed in the original different and the importance of President and CEO Dan Vincent said agreement.” addressing their energy needs. in the sale announcement. “We fully Last year, the U.S. dairy industry Perry remarked that investor-owned expect this new venture to be a platform exported $1.2 billion worth of dairy Rural Electric Cooperatives can access for the continued growth of our products to Mexico, a dramatic increase low-interest loans from USDA’s Rural cooperative.” from $124 million in 1995. Mexico is Utilities Service and are an excellent the largest U.S. dairy export market by example of how to make federal Dairy groups working with far, roughly double the size of the resources accessible to rural Trump Administration on NAFTA industry’s second-largest market, communities. “Promoting agriculture modernization Canada. and rural prosperity is something that is Two leading dairy groups are A modernized NAFTA would very important to me, since I know working with the Trump increase U.S. dairy exports, create jobs first-hand how vital energy and Administration to modernize the North and build business partnerships between electricity are to our rural areas,” said American Free Trade Agreement the three countries, according to the Perry. (NAFTA) to ensure it safeguards open submitted comments. On the other The task force is charged to examine, trade with Mexico and confronts what hand, withdrawing from NAFTA could among other issues, current barriers to they call “increasingly protectionist devastate the U.S. dairy industry. economic prosperity in rural America dairy policies by Canada.” The document’s top request of the and how innovation, infrastructure and Joint comments sent to the U.S. Trump Administration is for a “decisive technology may play a role in long- Trade Representative, the U.S. Dairy confrontation and resolution” of term, sustainable rural prosperity, while Export Council (USDEC) and the nontariff concerns, including the also emphasizing regulatory flexibility National Milk Producers Federation removal of Canadian milk pricing for farms and small businesses. A report (NMPF) describe the existing North classes 6 and 7, and the inclusion of with recommendations for legislative or American dairy landscape as one in Canadian dairy tariffs. Their main administrative actions is required within which U.S. dairy products flow concern for Mexico is protecting the 180 days. relatively unhindered to Mexico, but ability to sell cheeses with common which are curtailed by Canada’s names, like “parmesan,” “gorgonzola,” Farmer Co-op Conf. increasing use of policy tools, which it “asiago” and “provolone.” The slated in St. Paul says go against international trade European Union is attempting to Farmer cooperative leaders and obligations. restrict their use to European producers. professionals who work with co-ops will “NAFTA has accomplished a great gather Nov. 1-3 in Minnesota for the deal over the past two-plus decades, but Rural Prosperity 20th annual Farmer Cooperative it has also been overtaken by new, Task Force formed Conference. The event, organized by unanticipated forms of trade and trade Agriculture Secretary Sonny Perdue the University of Wisconsin Center for problems,” says Tom Vilsack, USDEC hosted an inaugural meeting in June of Cooperatives, will be held at the newly president/CEO and former U.S. the Interagency Task Force on renovated Intercontinental St. Paul secretary of agriculture. Since NAFTA’s Agriculture and Rural Prosperity. Riverfront hotel in St. Paul. implementation, the United States has Participants, including cabinet members Co-op directors, managers and those shifted from being a consistent net and officials from more than 20 doing business with ag cooperatives are importer of dairy products to being a executive agencies, met at USDA among those who will gather to significant net exporter. Over the past headquarters. An executive order, exchange ideas with policy, research and five years, cumulative U.S. dairy exports signed by President Donald Trump, legal experts about issues affecting the are more than double the import total, established the task force, chaired by agricultural cooperative community. he notes. Perdue, “to ensure the informed Speakers will address today’s most “The relationship between the dairy exercise of federal authority that pressing competitive challenges and sectors of the U.S., Mexico and Canada impacts agriculture and rural issues facing co-ops, presenting ideas on is of such great importance to all of our communities.” the latest strategic thinking. Co-op nations that we need to devote the time Participants affirmed their leaders will leave the conference with and effort to make it better,” adds Jim commitment to working collaboratively new strategies and techniques to Mulhern, president/CEO of NMPF. “A in support of rural Americans. Energy improve their farmer-owned modernized NAFTA agreement must Secretary Rick Perry and Mick cooperative. preserve the open and dependable trade Mulvaney, director of the Office of For more information, visit: relationship with Mexico, and remove Management and Budget (OMB), https://farmercoops.uwcc.wisc.edu/.

38 July/August 2017 / Rural Cooperatives Anne Hazlett to lead USDA Rural Development

Agriculture Secretary Sonny Perdue has named Anne Governor Mitch Daniels on agriculture and rural issues. Hazlett to lead the Rural Development agencies at the She also served as chief of staff to Indiana Lt. U.S. Department of Agriculture (USDA). Hazlett most Governor Becky Skillman, assisting in the creation of the recently served as chief counsel to the majority on the state’s first Office of Community and Rural Affairs, an U.S. Senate Committee on Agriculture, Nutrition, and agency devoted to providing financial and technical Forestry. Hazlett, whose title will be Assistant to the Secretary for Rural Development, will oversee the Rural Utilities Service, the Rural Business- Cooperative Service and the Rural Housing Service and report directly to Secretary Perdue. The announcement is in keeping with a realignment of USDA announced by Perdue in May. He says it represents an elevation of Rural Development, which had previously been in the portfolio of an undersecretary who, in turn, reported to the deputy secretary of agriculture. “With this addition to USDA Rural Development, rural America will have a seat at the main table and have walk-in privileges with the secretary on day Anne Hazlett is now leading USDA Rural Development, which includes the Rural one,” Perdue says. “With her Business-Cooperative Service, Rural Utilities Service and the Rural Housing Service. background of advising the Senate committee overseeing agricultural and rural development assistance to rural communities. She also supervised issues, Anne Hazlett comes with a depth of knowledge management of the state’s housing finance, energy and and experience perfectly suited to her role in helping to tourism agencies. Hazlett has also worked in private law restore prosperity to rural America. We are excited to practice, advising clients on agriculture and have her aboard.” environmental regulatory matters. “Small towns and the people who call them home Hazlett is a graduate of Kansas State University, have been my life’s passion,” Hazlett says. “It is with graduating Magna Cum Laude with a bachelor’s degree great enthusiasm and a deep commitment to rural in agricultural communications. In addition, she holds a America that I am eager to get to work at USDA and be law degree from Indiana University and a master’s degree a partner in crafting solutions to the significant in agricultural law from the University of Arkansas. challenges these communities face from economic The increased emphasis on Rural Development at opportunity to infrastructure, quality housing, and USDA is in recognition of the economic difficulties addiction.” facing rural communities, which have lagged behind An Indiana native, Hazlett has worked on agriculture other parts of the country in prosperity. Fighting poverty and rural issues for more than 15 years. In her recent wherever it exists is a challenge facing this country, as work with the Senate Agriculture Committee, Hazlett nearly 85 percent of America’s persistently impoverished was an advisor on many issues impacting rural America, counties are in rural areas. Rural childhood poverty rates from Farm Bill programs to broadband and child are at their highest point since 1986, affecting one in nutrition. In addition to her public service in four rural children, with deep poverty among children Washington, Hazlett has managed the Indiana State being more prevalent in rural areas (12.2 percent) than in Department of Agriculture and was an advisor to Indiana urban areas (9.2 percent). n

Rural Cooperatives / July/August 2017 39 CRI leader to retire prices, combined with more price focuses on manure management as one Doug Wilson, CEO of Cooperative stability, is driving the transition,” says of the key areas for continuous Resources International (CRI), Ben Laine, CoBank senior dairy improvement on dairy farms. The effort Shawano, Wis., will retire from the economist. “We are seeing increasing also encompasses improving yield agricultural holding cooperative in herd sizes for many existing organic potential and farm efficiency, as well as August. Wilson spent 49 years in the dairies looking to take advantage of size reducing enteric emissions associated artificial insemination (A.I.) industry, 39 efficiencies and price premiums.” with ruminant digestion. of them with CRI. In another report, CoBank sees The FARM Environmental Early in his strong profitability and rising global Stewardship tool estimates greenhouse career, Wilson demand creating a strong incentive for gas emissions and energy intensity by worked in cattle U.S. pork processors to expand using the results from a dairy life-cycle genetics and came to capacity. The impending increase in assessment conducted by the Applied GENEX, part of demand for hog supplies will create Sustainability Center at the University CRI, as the vice favorable terms for producers, while of Arkansas. president of genetic intensified competition among programs. By 1993 processors could lead to a short-term Heritage Ridge he was chief operating officer of compression in packer margins, Creamery brand launched GENEX, and in 2002 was named CEO CoBank’s study found. The Michigan Milk Producers of CRI. “U.S. pork packing capacity will Association (MMPA) has launched the Under Wilson’s leadership, CRI increase 8 to 10 percent by mid-2019, Heritage Ridge Creamery brand for grew by revenue and employees. CRI when five processing facility cheese produced at its Middlebury, Ind., reported $189 million in revenue in construction projects are complete and dairy plant. The new brand reflects 2016 and now employs more than 1,350 fully operational,” says Trevor Amen, a both the heritage of the plant and the people across the globe. CoBank economist who specializes in Amish community farmers who help “Throughout my career, the changes animal protein. “Hog production is supply it, as well as the robust, 100-year at CRI and within the agricultural expected to increase 2 to 4 percent in industry have been many and exciting,” both 2017 and 2018 to meet the says Wilson. “One of the greatest demand for more supplies, with the rewards has been to navigate those bulk of increased production coming changes with an outstanding group of from small to mid-size pork producers people — members, delegates, directors in the Midwest." and employees included. Because of this dedicated team, I’m certain the best Dairy co-ops work with decade for this cooperative and its Walmart on sustainability member owners is yet to come.” Dairy Farmers of America and Land The CRI board has begun the search O’Lakes Inc. are participating in Project Gigaton, an initiative to reduce for a new CEO. Heritage Ridge Creamery brand cheeses are greenhouse gas emissions from key now being produced in Middlebury, Ind. CoBank sees growth in Walmart vendor operations and supply organic dairy, pork production chains by one gigaton by 2030. Both Despite current excess supplies, cooperatives will use the new FARM history of MMPA as a farmer-owned rising demand points to a bright future (Farmers Assuring Responsible cooperative. for the U.S. organic milk industry, Management) Environmental “With our acquisition of the Indiana which is leading a record number of Stewardship module, developed by the cheese plant last fall, we were enthused dairies to transition to organic milk National Milk Producers Federation, to by the opportunity to diversify our production, according to a new report help track and communicate reductions product portfolio and develop a brand from CoBank. Organic milk generates in greenhouse gas emissions on dairy owned by our dairy farmer members,” the highest sales of any certified organic farms. says Joe Diglio, MMPA general commodity, and steady demand growth Project Gigaton identifies energy, manager. “Our new, Heritage Ridge will lift organic fluid milk market share agriculture, waste, packaging, Creamery brand demonstrates our and further stimulate product deforestation and product use and commitment in expanding our presence innovation. design as areas in which to focus within the dairy industry while “The substantial gap between emissions-reduction efforts. The embracing the legacy of the organic and conventional on-farm milk commitment of DFA and Land O’Lakes community.”

40 July/August 2017 / Rural Cooperatives In addition to the launch of the new approval with implementation will delve deeply into emerging issues cheese brand, acquisition of the anticipated in the next fiscal year. A for purchasing co-ops, international Middlebury plant positions MMPA to variety of multi-million-dollar projects cooperative development professionals, explore further expansion opportunities are expected to be implemented co-op economists and emerging there in the future. Internal through fiscal year 2020 including: cooperative leaders. improvements are being at the plant, automating grain assets and agronomy NCBA is also planning the inaugural which currently processes about hubs; building greenfield Co-op Festival, Sept. 30 –Oct. 1, on the 400,000 pounds of milk per day into grain/agronomy hubs in currently National Mall in Washington, D.C., to longhorn and deli horn cheeses. underserved markets; standardizing spotlight the economic impact, diversity The plant is operated by MMPA’s processes and procedures. and sustainability of the co-op business wholly owned subsidiary, Middlebury model, which 70 percent of consumers Cheese Company LLC. It produces Co-op Impact Conference, say they already trust. Designed to kick Colby cheese and a softer, mild-flavored Co-op Festival slated off Co-op Month, this two-day public cheddar cheese, as well as Colby-Jack, The National Cooperative Business awareness event will feature live music, Cheddar, Pepper-Jack and other cheese Association CLUSA International high-profile speakers, games, giveaways flavors. and interactive booths to engage a potential audience of 65,000+ people on Landus Co-op plans the National Mall. consolidation and growth The event will also serve as a visual Landus Cooperative is implementing reminder of the success and diversity of Project 2020: Consolidate Then Grow, the co-op business model to elected a multi-year initiative to enhance officials in the nation’s capital. For profitability and re-invest in more more information about both events, efficient assets on behalf of the co-op’s visit: www.ncba.coop. 7,000 members. “We are reducing costs and consolidating to be more profitable Clinton Shick honored and, in turn, re-investing profits to (NCBA) is planning the inaugural Co- by Ag Council more efficiently handle smart volume op Impact Conference, Oct. 4-6 in Clinton Shick, past board chairman through strategic assets,” says Milan Alexandria, Va., just outside of Blue Diamond Growers, was Kucerak, CEO of the Ames, Iowa-based Washington, D.C. This event will bring honored with the California Cultivator farmer-owned cooperative. together a broad spectrum of award during the 98th annual meeting Implementation of the consolidation cooperative sectors to build on, and of the Agriculture phase includes: amplify, the economic impact co-ops Council of • Full closure of four locations in have in the United States and California, Leland, Parkersburg, Bristow and internationally. recognizing his Coon Rapids; The keynote address will be made by many contributions • Closing or “seasonalizing” several Vern Dosch, president and CEO of the to agriculture and grain facilities; nearly 50-year-old technology business long leadership of • Shifting agronomy product lines to National Information Solutions the almond growers’ regional hubs, with central dispatch; Cooperative (NISC), an industry leader cooperative. • A 5-percent reduction in part-time in providing advanced, integrated IT Shick is a third-generation farmer and full-time employees in the 26 solutions for its member-owners, from McFarland, Calif., and served on counties in which the cooperative has helping them compete in the changing the co-op’s board for more than 30 locations. utility and telecommunications years, including 16 years as chairman, “We know these changes deeply industries. during which time he helped lead the impact our work family, and the Impact 2017 will replace the sector- cooperative through unprecedented decisions have been difficult,” Kucerak specific conferences NCBA has growth. says. “While never easy, we need to traditionally hosted. He helped “lead the cooperative into make changes in order to move our It will focus on the significant role an era where it handled more almonds business forward on behalf of our that cooperatives play in the national than ever before,” says Ag Council farmer-owners.” and international economy, as well as President Emily Rooney. “That growth Implementation of the growth phase how the cooperative business model was fueled by the development of is underway as capital expenditure values and benefits individuals, several innovative marketing initiatives, proposals are being finalized for board businesses and communities. Sessions including the development of a new

Rural Cooperatives / July/August 2017 41 plant in Turlock and the expansion of years and throughout its evolution into public-private partnership between the the Almond Innovation Center in the complex and successful financial U.S. government and the cooperative Sacramento.” institution it is today. He is credited for sector has on global stability,” says Paul “I know many of the prior recipients helping NCB maintain its commitment Hazen, OCDC executive director. “Our of this award, and to become part of to socially responsible banking and has members’ current cooperative this group is a high honor,” Shick says. been instrumental in other leadership development programs focus on food “Serving on the Blue Diamond board roles for the cooperative sector. security, savings and loans, democratic was a significant, challenging and “I have been very fortunate to have organizations, health, telecommunica- rewarding experience all by itself. I found the consumer and cooperative tions and electrification, which link always considered it a privilege and movement, and that has given me a U.S. cooperatives to those in the honor to serve.” sense of purpose, of doing the right developing world.” Dan Cummings, the co-op’s current thing, and it has greatly enriched my OCDC brings together organiza- board chairman, also paid homage to life,” Snyder said. tions committed to building a more his predecessor. “Clinton had a Esther Peterson “was a tireless and prosperous world through cooperatives. thoughtful way of drawing out others’ effective champion of the rights of input on the board while also sharing women, workers, and consumers, and New president his sage insights.” her advocacy as the highest ranking for CHS Foundation Shick grows several hundred acres of woman official in the Kennedy and The CHS Foundation, funded by almonds and also operates a farm Johnson administrations changed the lives charitable contributions from CHS management business devoted to of every American,” according to CFA. Inc., has appointment Nanci Lilja as its almonds, walnuts and cherries. He is new president. Lilga will lead the past president of the Kern County Congress increases funds Foundation’s work to develop the next Farm Bureau and a current member of for international co-op generation of the Central Valley Almond Association, development agricultural leaders, a cooperative huller/sheller. The omnibus appropriations bill for champion national fiscal 2017 increases funds for ag safety and Snyder wins consumer cooperative development by $1 million, advance rural vitality service award which Congress added to the in hometown Charles E. Snyder, president and international Cooperative Development communities. CEO of National Cooperative Bank, Program (CDP) grants, bringing the An experienced was awarded the 2017 Esther Peterson total available in fiscal 2017 to $12 leader at CHS, Lilja Consumer Service Award during the million. dedicated the past 37 years of her career Consumer Federation of America’s CDP supports public-private to key roles within the co-op’s legal and (CFA) 47th annual awards dinner in partnerships between U.S. cooperatives compliance organization. She will June. The award recognizes individuals and cooperative development initiatives continue in her current role as director who are strong advocates for consumer in the developing world. The program, of legal compliance operations. rights and make a positive impact in which started in the early 1960s, has Lilja will lead the Foundation’s communities. created thousands of jobs, leveraged continued implementation of two of the “Chuck has devoted himself to hundreds of millions of dollars in largest gifts in foundation history. Last building a relevant, sophisticated and private funding and positively affected year, the Foundation announced a $3.4- thriving financial institution that the lives of hundreds of millions of million grant to transform ag education focuses on the cooperative principles cooperative and credit union members. with the University of Minnesota. It and values,” said award presenter Through CDP, the U.S. Agency for also received a $2.5-million grant to Martin Lowery, executive vice president International Development (USAID) create the CHS chair in risk for external affairs at the National Rural supports international cooperative and management trading at North Dakota Electric Cooperative Association and credit union development programs and State University. NCB board chair. “Those values are projects implemented by 10 U.S. Lilja currently serves as the board demonstrated by Chuck and his staff cooperative development organizations. chair of the Heartland Credit Union every single day in their lending “The members of the U.S. Overseas and is the incoming chair of the practices: self-help, self-responsibility, Cooperative Development Council Certifying Board of the National democracy, equity, equality and solidarity.” (OCDC) are pleased that Congress Association of Legal Assistants. She has Since joining NCB in 1983, Snyder understands the importance of a BA in business from St. Mary’s has played a transformational role in cooperatives in international economic University of Minn. n navigating the bank through its early development and the impact this

42 July/August 2017 / Rural Cooperatives Job Generators For part-time workers, sugar co-ops had the most (157), continued from page 6 followed by fruit/vegetable (108). For part-time workers in the three basic co-op groupings, marketing co-ops ranked first (30 part-time employees) followed by farm supply co-ops (20) and service co-ops (9). (20,778) and dairy (22,214). Those three commodity sectors accounted for 78 percent of all marketing co-op FTEs. Committed to members For full-time employees by commodity sector, and communities grain/oilseed co-ops had the most full-time workers in 2015 Agricultural cooperatives exist to deliver economic (23,607), followed by dairy co-ops (21,383) and benefits to their producer-members. In doing so, they also fruit/vegetable (14,030). Fruit/vegetable co-ops by far had the benefit the towns, cities and rural areas in which their most part-time employees (13,495), followed by grain/oilseed members and employees live and work. An important benefit co-ops (8,716) and sugar (4,399). — not always understood outside the co-op world — is the Among the three basic co-op groupings, marketing co-ops number of jobs ag cooperatives create: an aggregate average led the way for full-time jobs (74,421), followed by supply of 157,100 full-time equivalent jobs from 2006-2015, and an co-ops (61,023). Service co-ops had 771 full-time workers. average 129,578 full-time employees. These are mostly The numbers for part-time employees were: marketing co- quality jobs that pay good wages and benefits. ops (32,505), supply co-ops (17,683) and service co-ops (816). Ag co-ops paid $9.2 billion of personnel costs in 2015, However, when examining FTEs per co-op on a dollars which turn over many times in the economy — commodity basis, we find that the average sugar co-op especially in rural areas — and help to support tens of employed the most FTEs (309), followed by rice (239); dairy thousands of other jobs that are tied to the ag economy. (198); poultry (177); fruit/vegetable (166); and nut (127), Many large ag cooperatives have their headquarters or other grain/oilseed (62). offices in cities, thus also benefiting urban economies. The average U.S. farmer co-op in 2015 had a workforce of The structure of ag co-ops continues to evolve. Mergers, 79 FTEs. For the three basic co-op groups, averages were: acquisitions and some dissolutions are occurring, resulting in marketing (84 FTEs), supply (80) and service (13). fewer ag cooperatives. Mergers sometimes result in short- By commodity sector, sugar co-ops led the way for full- term layoffs, but long-term these jobs and more are often time jobs per co-op (231), followed by rice co-ops (225), recovered if the larger business continues to thrive. Statistics dairy (191), poultry (164), nut (123), fruit/vegetable (112) and show that co-ops continue to be major employers in the grain/oilseed (53). nation’s ag sector, paying wages and benefits to their The average farm supply co-op had one more full-time employees and taxes to their communities that help fuel the employee (70) than did the average marketing co-op (69). nation’s economy. n

Learning from Food Hub Closures Distribution made a significant, positive impact on the continued from page 23 regional food system in Kentucky and food hub development in the United States, the enterprise faced significant challenges that ultimately resulted in its closure. Annual overhauls of its business model and the frequent change of top management were central challenges to developing expertise and efficiencies. At the start of was unable to reach viability. operations, there were few ready examples of successful food Gross sales for Grasshoppers grew from $40,000 in 2007 hubs to emulate, and a general state of undercapitalization to almost $1 million in 2013. But the venture never was able restricted up-front investments in adequate infrastructure and to generate a profit. Grasshoppers was finally compelled to expert personnel. This was compounded by the absence of a discontinue business at the end of 2013. plan based on sound knowledge of existing supply and demand; reasonable benchmarks for growth and evaluative Decision to close metrics. The business was also hampered by a lack of capacity By providing an all-in-one enterprise serving both buyers (technical knowledge and built infrastructure), both within and producers of regionally produced food, Grasshoppers the organization and the regional food system as a whole, as was envisioned by the four initial farmer-owners as a key first well as by an inclination to place the social mission ahead of step in building a vibrant regional food market in the the best interests of the enterprise itself. These Louisville metro area. Although the work of Grasshoppers interconnected factors served to exacerbate each other. n

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