R ur al COOPER COOPER May /June2014 Building Success on Service Page 4 ATIVES ATIVES Commentary Farm Credit partners with USDA to strengthen rural America

By Doug O’Brien businesses working in bio-manufacturing, advanced energy Acting Under Secretary production, local and regional food systems, improved USDA Rural Development farming technologies and other cutting-edge fields.” The fund is being formed under USDA’s Rural Business The Farm Credit System — a financial Investment Program (RBIP). USDA utilizes RBIP to license cooperative owned by the farmers and funds to invest in enterprises that will create growth and job ranchers who use its services — has long opportunities in rural areas, with an emphasis on smaller been a prime source of financial services that enterprises. Working through the USDA program enables support food and fiber production. It also licensed funds to raise capital from Farm Credit System often works in tandem with USDA to build a stronger rural banks and associations. America. In this column, I would like to cite two recent This new partnership between Farm Credit institutions examples of this cooperation between Farm Credit and and Advantage Capital, a leading growth capital and small- USDA. business finance firm, brings together resources and people One example is Farm Credit’s support for the Obama that are focused on providing more private capital, small administration’s “Made in Rural America” effort. This business investment and quality jobs to rural America. This initiative is designed to help innovative small businesses, public-private partnership will have a tangible positive impact including cooperatives, throughout rural America access the on our rural economy and is a model of how government can capital they need to grow and create jobs. The other example serve as a catalyst for private investment in rural America. involves Farm Credit System institutions working with Eight Farm Credit institutions providing initial USDA to support expansion of a rural hospital that delivers investments in the RBIC fund are: AgStar Financial Services critical healthcare services in Minnesota. (Mankato, Minn.); AgriBank (St. Paul, Minn.); Capital Farm Credit (Bryan, Texas); CoBank (Denver, Colo.); Farm Credit Equity investments in rural business Bank of Texas (Austin, Texas); Farm Credit Services of “Made in Rural America” is an export and investment America (Omaha, Neb.); Farm Credit Mid-America initiative that will help propel the growth of small businesses (Louisville, Ky.); and United Farm Credit Service (Willmar, across rural America. The new Rural Business Investment Minn.). Company (RBIC) will now allow USDA to facilitate private- USDA will be accepting applications for other new Rural equity investments in agriculture-related businesses and Business Investment Companies. Interested applicants have cooperatives. Currently, USDA programs exist to help until July 29 to submit their applications for review in fiscal provide loans or loan guarantees to help rural businesses 2014. Any application accepted after this deadline will be grow, but many small cutting-edge businesses also need held for consideration next year. USDA intends to accept equity support in addition to, or instead of, borrowed funds. RBIC applications through 2016. Detailed information Advantage Capital Partners, which will manage the new including application materials and instructions can be found fund, and its partners from eight Farm Credit institutions at: www.rurdev.usda.gov/BCP_RBIP.html. have pledged to invest nearly $150 million into the new In addition, the White House Rural Council, as part of effort. The Farm Credit System’s nationwide network of the Made in Rural America initiative, will convene the Rural banks and lending associations is specifically chartered to Opportunity Investment Conference later this year to attract serve agriculture and the U.S. rural economy. additional investments to rural America by connecting major “One of USDA’s top priorities is to help reenergize the investors with rural business leaders, government officials, rural economy, and we now have a powerful new tool economic development experts and other partners. To learn available to help achieve that goal,” Agriculture Secretary more about the conference, visit: Tom Vilsack said in announcing the fund. “This new partnership will allow us to facilitate private investment in continued on page 44

2 May/June 2014 / Rural Cooperatives Features

Volume 81, Number 3 May/June 2014

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

The Secretary of Agriculture has determined that publication of this p. 4 p. 12 p. 24 periodical is necessary in the transaction of public business required by law of the Department. Periodicals postage paid at Washington, DC. and additional mailing offices. Copies may be obtained from the Superintendent of Documents, 04 Building Success on Service Government Printing Office, Washington, Expanded agronomy service enhances value of Texas co-op for cotton and grain producers DC, 20402, at $23 per year. Postmaster: send address change to: Rural By Dan Campbell Cooperatives, USDA/RBS, Stop 3255, Wash., DC 20250-3255. 12 The Right Blend Mention in Rural Cooperatives of Fifth Season’s vegetable mixes help scale-up Wisconsin farm-to-school marketing program company and brand names does not signify endorsement over other By: Lihlani Skipper and Alfonso Morales companies’ products and services. 18 The Long Run Unless otherwise stated, articles in this publication are not copyrighted and may Number of ag co-ops celebrating 100th anniversaries on the rise be reprinted freely. Any opinions express- By E. Eldon Eversull ed are those of the writers, and do not necessarily reflect those of USDA or its employees. 24 A ‘Human Soul on Fire with Great Cause’ William Hirth’s iron-forged will and vision were essential to the formation of MFA The U.S. Department of Agriculture (USDA) prohibits discrimination in all its By Chuck Lay programs and activities on the basis of race, color, national origin, age, disabili- ty, and where applicable, sex, marital 30 Remembering the ‘Badlands’ Report status, familial status, parental status, By Bill Patrie religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual’s 35 Your Guide to the New Farm Bill income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, Departments 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, or call (800) 795-3272 (voice), or (202) 720-6382 (TDD). 02 COMMENTARY USDA is an equal opportunity provider CO-OPS & COMMUNITY and employer. 28 36 NEWSLINE

Tom Vilsack, Secretary of Agriculture

Doug O’Brien, Acting Under Secretary, USDA Rural Development ON THE COVER: “The thing I value most about my membership Dan Campbell, Editor in United Ag Cooperative is the knowledge and service the co-op Stephen A. Thompson, Assitant Editor provides in the areas of marketing, agronomy and the handling of Stephen Hall / KOTA, Design our crops,” says Texas cotton grower Michael Popp, seen here

Have a cooperative-related question? with son Hayden. “Because of the co-op and the people who Call (202) 720-6483, or email: work there, the farmers and the community benefit [email protected] tremendously.” For more about the members and employees of This publication was printed with vegetable oil-based ink. United Ag, see page 4. USDA photo by Lance Cheung

Rural Cooperatives / May/June 2014 3 Building Success on Service By Dan Campbell, Editor

Expanded agronomy service enhances value of Texas co-op for cotton and grain producers

Looking out over a field of cotton prior to harvest, one can picture those puffy white balls being spun into sturdy blue jeans, billowy blouses and soft pillowcases. But there is nothing soft or easy about growing cotton. It is, in a word, “temperamental,” according to Lisa Morcom, an agronomist with United Agricultural Cooperative Inc., in El Campo, Texas, about 90 miles west of Houston. “There are many crops where you plant them, they

Editor’s note: This article is based on interviews conducted by USDA photographer Lance Cheung, who also took the photos.

4 May/June 2014 / Rural Cooperatives United Ag Co-op agronomist Lisa Morcom (far left) says that in just four years, United’s cotton agronomy program has climbed from 5,000 to 35,000 acres of cotton enrolled. Welder James McKeon (middle photo) at work in the co-op’s shop in El Campo. “Our advantage is in service,” says Manager Jimmy Roppolo (left), seen in a warehouse filled with bales of cotton. Below: Philip Merek says a USDA loan program that helps beginning farmers enabled him to buy farm equipment, such as this combine, which he needed to start his own farm. USDA Photos by Lance Cheung

Rural Cooperatives / May/June 2014 5 grow happily, you harvest them at the end of season and are done,” Morcom says. Cotton is not one of those crops. “Cotton is of a more indeterminate nature; when a cotton plant is born, it wants to grow into a tree,” she says. “My job is to help members manage their crop – to nurture it, slow it down and speed it up to get the balance needed to maximize the yield,” she continues. “Cotton always keeps you guessing – no two seasons are ever alike. But I love working with cotton.” Morcom grew up in the farming town of Dubbo,Australia, 260 miles northwest of Sydney. It was during a trip to her grandmother’s house when she was about 12 years old that she decided on an ag career. There was an agronomist from Texas who lived next door to her grandmother for about six months each year while doing cotton consulting work. “One day, she asked me if I wanted to go out into the fields with her and catch some bugs.” “Floor manager” is Joe Vasquez’s (left) job title, but “problem solver” would be just as apt a title for a man who loves helping customers find parts and solutions for needed repairs. Opposite Eager for something to do, Morcom page: Manager Jimmy Roppolo (lower right) is nearly lost in the enormity of one of the co-op’s agreed to tag along. Turns out she had a empty grain silos, one of the largest in southeast Texas. blast while sweeping for bugs and doing related tests. The inner plant scientist in her had awoken! that United Ag wanted to become more following year,” she says. This summer, “That experience triggered my than a source of quality farm supplies the co-op will have about 35,000 acres interest — from that moment, I knew I and ginning services for its cotton signed up, which will be overseen by a wanted to be an agronomist.” As an farmers, and was thus launching a crop staff of seven agronomists working out agronomist, Morcom says, “you help consulting service and was looking to of El Campo and two other locations. farmers decide what they are going to hire agronomists; he offered her a job. In addition to cotton, the plant, when they will plant and how “Within a month, I had packed up agronomists also advise the co-op’s they will plant.” everything and moved to America.” She grain/oilseed farmers, whose primary Morcom earned a BA in agronomy hit the ground running and is now crops are corn, milo and soybeans, from the University of New England in starting her fifth growing season with although wheat acreage is starting to Armidale, Australia. Like her early United Ag. expand. mentor, she was soon following an The first year, just 5,000 acres of “What differentiated our program “endless summer” work routine, cotton were signed up for the new was our constant presence in the field splitting each year between the cotton agronomy program. “A few farmers — farmers put us on speed dial; they fields of Texas and Australia, which have tentatively held up their hands and knew that what they asked us to do opposite growing seasons. agreed to be the guinea pigs,” Morcom would get done,” Morcom says. She recalls with a smile. They were glad recalls getting a call from a farmer who Texas calling they did, because they soon learned that was having a problem with his crop. It was about five years ago, while the co-op was quite serious about After showing her the situation, he back home working in Australia, that having expert agronomists in the field simply told her: “fix it,” and left the rest Morcom got a call from Jimmy to help them, 24/7. up to her. Roppolo, general manager of United “By the end of that first season, we “That really hit me — the fact that Agricultural Cooperative. He told her had 20,000 acres signed up for the he was putting this incredible amount

6 May/June 2014 / Rural Cooperatives Rural Cooperatives / May/June 2014 7 of trust in me. The decisions we make the actual needs of their soil. By not “to help keep disaster away,” he notes. have such a huge impact on their over-applying expensive crop inputs, it livelihood. These farmers really are like saves the farmer money and reduces Manager as talent scout family to us, so we do everything we problems with chemical runoff into Whether recruiting a worker from can to keep the relationship strong.” streams or ground water supplies. the opposite side of the world, as was The co-op’s Agronomy Division is “Our job is to help members the case with Morcom, or just the other also promoting greater use of precision succeed, and this includes putting the side of the street, Roppolo says United agriculture practices to help farmers right amount of crop inputs on the Ag Co-op’s success is based on the more accurately tailor applications of right acres,” Roppolo says. The co-op is ability to hire the best and brightest fertilizer, crop protectants and seeds to also heavily involved in pest monitoring staff members.

Rain or shine, farmers depend on co-op

Make hay while the sun shines. Few know the wisdom of that Canyon] is “some of the best farmland in Texas,” he says. old farming adage better than do producers in Southeast Texas. Wharton County, he adds, is the state’s top corn-producing Farming relatively close to the Gulf Coast means they are often county. subject to drastic, sudden changes in weather. “This area has traditionally been primarily cotton and rice “You never know when a hurricane could come your way, country; but now we have corn varieties that can withstand the packing the power to turn something very pretty into something heat,” says Josh. very ugly in a hurry,” says Josh Marek. Severe storms blowing The advent of smart phones that enable a farmer to monitor up from the Gulf can turn a field of grain or cotton into a field of the approach of a storm front while driving a combine or cotton mud, all in a snap. harvester is also a big help. “Broadband wireless has become Terence Marek, Josh’s uncle, recalls a few years ago having very important to us,” says Josh, who credits the Wharton to salvage what he could of a field of milo while contending with County Electric Cooperative in El Campo for offering the kind of foot-and-a-half deep mud. “Terrible weather — raining every telecommunications services he needs. single day,” he says. “It [broadband service] is vital in the field for updates on the When severe weather is approaching, a farmer may only have weather,” adds Philip Marek, Terence’s son, who operates his a few precious hours to finish harvesting a field. That is when it own farm. His smart phone also helps him keep up on commodity is most crucial that farm equipment be mechanically sound and markets. “This morning, I looked at my phone and could see the ready to roll. price of corn going down 5 to 10 cents,” Philip says. “So, I called Most farmers with many years in the business have my broker and sold 5,000 bushels.” experienced a critical breakdown at the worst possible time. To Philip says United Ag is helping him with the technical support reduce the odds of that happening, the Marek family works he needs to adopt a precision farming strategy. “In the past, we closely with United Agricultural Cooperative. would plant 25,000 corn seeds per acre across an entire field. “I’m really glad we live near a town with a strong ag co-op,” Now we apply it based on the yield potential of the area. We do Josh says. “A good co-op can help a farmer in so many ways.” the same with nitrogen and lime. It’s all about improved efficiency.” “We average about 50 inches of rainfall per year, maybe two “We have two or three years of yield maps, which we use in or three freezes annually and snow maybe once every five years planning application rates,” adds Terence. “The goal is to invest or so,” says Terence. The red silt soil of his land near the more money for inputs on your best land, with the greatest yield Colorado River [not the same river that runs through the Grand potential.”

8 May/June 2014 / Rural Cooperatives You can find talent all around. For quicker. He suggested she apply for an couldn’t let that kind of determination example, Roppolo recalls the time he open job at the co-op, which she did and work ethic slip through his fingers, was impressed by the superior customer and where she has continued to excel. so he told one of his managers to “put service of a woman working at his local Other workers come knocking at the him on the payroll. He’s been one of dry cleaners. She asked him how long co-op. Like welder Juan Arranda, who our best workers ever since.” he had been waiting in line, and — came in looking for work, but was told Then there’s Joe Vasquez, a floor feeling that he had been delayed too there were no jobs at that time. He manager in the large hardware/farm long — she insisted that he return to nonetheless insisted on hanging around supply store in El Campo. He had been his truck, then brought his dry cleaning the shop, offering his help for nearly working on a ranch, where, Ropollo was out to him to get him on his way two weeks without pay. Roppolo told, “Joe tended to start a job like a hot

how we can be more productive.” “When the co-op sponsors an agronomy field day, it is more about helping producers learn than about selling more products,” adds Josh. He appreciates that the co-op is not bent on promoting a certain brand of inputs. Terence recalls the hard work of “chopping cotton as a kid — I always said I’d never be “United Ag is an innovator, not just for farmers with row crops, but for a cotton farmer when I grew up. So what did I wind up as? A cattle producers as well,” says Terrence Merek (left). His nephew, Josh cotton farmer!” he says with a laugh. But farming has been a Merek, says “A good co-op can help a farmer in so many ways.” good life, and he was happy to help Josh and Philip get started with their own farms, mostly by sharing his experience and knowledge with them. “I think that is so important for a young There are expenses, of course, for new gear needed to get farmer — to learn from experienced farmers.” started in precision farming. Josh says he started the process six Josh, who grows 700 acres of corn and cotton, agrees with years ago with the installation of a yield monitor on his cotton his uncle, and says that advice has helped him avoid making harvester, and has been “slowly moving forward from there.” He mistakes. After seven years running his own farm, he has no made his first variable-rate fertilizer application several years regrets. “It is exciting and fun — every day is something new. ago. Ever since I was a kid, I never wanted any other job but this.” These are just a few examples of how the co-op helps Philip and Josh both say USDA loan programs for beginning producer-members. farmers were a big help in starting their own farms. “Our co-op is progressive in everything it does,” Terence “USDA’s Beginning Farmer Loan Program helped Josh and me says. “It is putting in a natural gas pump for cars, which will be get started,” says Philip. “It is a guaranteed loan program, the only one between Houston and Corpus Christi. United is an offered through the USDA Farm Service Agency. We used it to innovator, not just for farmers with row crops, but for cattle buy equipment and for the other financing necessary to get producers as well.” started. It was crucial because it is hard for guys our age to find Grower field days sponsored by United Ag are another big the financing to get started.” help to members, says Philip. “The research the co-op supports is geared to address the conditions we grow in here, showing —By Dan Campbell; Interviews conducted by Lance Cheung

Rural Cooperatives / May/June 2014 9 spur, but would then fizzle out.” The predecessors of today’s United current crop and plan for future crops,” Roppolo, however, got the Agricultural Cooperative were the Bowers says. “Through our marketing impression that “maybe Joe wasn’t Farmers Cooperative of El Campo and purchasing pool program, we are being treated right. So I told one of our (FCEC) (founded in 1929) and Modern able to market large volumes of grain managers to give him a try and to make Farmers Cooperative Society (founded for a good average price. This is sure we treated him with the respect we give to all of our employees.” This strategy worked. “Joe is one of our best and most “What differentiated our program was our constant presence in the outgoing employees. He searches for field — farmers put us on speed dial; they knew what they asked us things he can do and does them right. I like to think that this co-op helps to do would get done.” workers develop hidden skills. The most important factor is that they have the right attitude toward work.” “I have learned so much on this job,” in 1928), which merged 1982. There important for our growers, because Vasquez says. He sees his most valuable was another merger in 2012, with many of them do not have large grain trait as “being a problem solver for Danevang Farmers Cooperative Society acreage — a 5,000-bushel contract customers.” One minute he will be Inc., Danevang, Texas, after which the could be the majority of their crop.” helping a customer find the correct name was changed to United Pooling gives them guaranteed fittings for a plumbing job, and then he Agricultural Cooperative Inc. storage, allowing their grain to be is off locating a hydraulic hose or a ball Roppolo says the two co-ops had marketed throughout the year, she says. bearing needed for a farm machine repair. been fighting for market share for many “They can get a loan through the co-op “I was born and raised in El Campo, years prior to the merger, but at times at harvest to generate cash flow, but and I love helping the people I’ve they had also worked together. Many they can then hold grain for later sale to known all my life,” Vasquez says. producers belonged to both co-ops, “so get a better price and realize a basis A successful co-op manager needs to we were offering duplicate services.” appreciation. We are the only co-op in possess a wide skill set. Being a talent The two boards eventually got together this area that still operates a grain scout is one skill that doesn’t always get and hammered out a merger plan that marketing pool like this.” adequate notice. “As a manager, you are was adopted by both memberships. The “Our large volume gives us market only as successful as the people you new name was picked to better reflect leverage, and by marketing for the have working around you,” Roppolo the co-op’s larger, more regional members, it is one less thing on a stresses. footprint. farmer’s always full plate.” “It is hard to imagine how much this “I love working here,” adds Bowers, Co-op’s rapid growth co-op has grown in just the last three who is married to a catfish and crops As a rapidly growing, highly years,” Roppolo says. But there is still farmer. “Most of us here are tied to ag diversified co-op with $121 million in plenty of competition. in some way, through our own families sales in 2013, United Ag needs a lot of “Our competitors also have good or by marriage. To work here, you have talent to keep all the wheels turning products and prices; our advantage is in to be passionate about agriculture and smoothly. The co-op has 88 full-time service,” Roppolo says. “We will do the co-op — and to always keep the workers, 15 part-time workers and from things others won’t — like opening a farmers’ best interest at heart.” 30 to 60 seasonal workers (mostly at its store early to help out a good customer In the tight-knit rural communities elevators). who is in a jam. Any time staff can’t around El Campo, people pull together The co-op operates: two cotton gins, answer a question, they know they can when facing challenges, she says. “It is four farm supply/feed/hardware stores, call me.” also a great place to raise a family, says one of the largest capacity grain this mother of “two little boys proudly elevators in southeast Texas, a retail and Grain leverage means being brought up in agriculture.” bulk fuel delivery business, a loading market clout for growers facility and railcar switching yard at the United Co-op works closely with Cotton gins set record Port of Victoria, a major liquid fertilizer Texas A&M University and has a Cotton is United Ag’s biggest mixing plant, a full-service agronomy number of its graduates on staff, such as division, and last year was the busiest department and a cotton warehouse Lindsey Bowers, a grain merchandiser. season ever for the two gins it operates. division. “We work with producers to market The co-op processed 150,000 bales,

10 May/June 2014 / Rural Cooperatives commodity and pay a $50 membership fee. Board members are elected on a one-member, one-vote basis. “We’ve undergone a lot of growth in recent years, and that has required the use of capital assets,” she says. “It is always a balancing act for our 12- member board as to how the working capital will be allocated.”

Leadership makes the difference Graves says the co-op’s biggest ace is “tremendous leadership,” both in the general manager’s office and in the board room. “We wouldn’t be in this strong position without excellent leadership,” she stresses. United Ag’s directors all bring lifetimes of diverse farming experience to the board room, Gaves says. One common trait they share is that “they always make decisions based on what is best for the overall co-op,” even if sometimes another decision would be best for their own operation. Tommy Engelke, executive vice Clockwise from top: Philip Merek checks on his corn crop; co-op grain merchandiser Lindsey president of the Texas Agricultural Bowers says marketing jointly through the co-op’s grain pool gives producers added leverage; a Cooperative Assoc., says Roppolo is the water tower in El Campo, the location of United Ag’s headquarters. personification of a “multi-tasker.” United Ag Co-op is to be saluted, he says, for its support of Texas A&M ag says April Graves, United Ag’s grain crop can be offset by an awesome programs that play a crucial role in controller. The average “turnout” was cotton crop, or vice versa. A drought keeping Texas agriculture strong. 41 percent — “a tremendous average.” year will hurt crops, but we will sell United Ag helped start a cotton It means that for every pound of trash, more cattle feed. engineering chair in the ag engineering seed or moisture, the gin produced 41 A couple of years ago, she says the department at Texas A&M, and percent lint — well above the standard co-op “got upside down on fertilizer Roppolo is past chairman of the for Texas, based on USDA data, she says. inventory, but other divisions helped university’s Agriculture Leadership Thanks to a warehouse it purchased offset that. Diversification helps ensure Development Council, he notes. in 1992, United Ag can store more than cash flow,” she says. If that’s not enough, Roppolo is also 30,000 bales. This gives it increased The co-op is further diversified by past chairman of the state agency that marketing flexibility and allows it to trading with “town people” (i.e., non- regulates the feed and fertilizer ship directly to the port of Houston. farmers) through its stores. They come businesses in the state, and he was on Being diversified is critical to the co- in to buy pet food and supplies, lawn the executive committees of the Texas op’s success, Graves says. Not only does and garden items, hardware and many Ag Co-op Council, Texas Grain and the co-op offer a wide variety of goods other types of items for home and yard. Feed Association and the Texas Cotton and services to members and the This trade has room to grow, because Ginners Association. general public, but diversification also “some people still don’t realize we are Roppolo, Engelke continues, is a co- gives the co-op economic resiliency. open to the general public,” Graves op manager who respects the traditions “If one division has a hard year, it says. of the past, but is always open to trying can be offset by another division having To be a voting co-op member, one new things. “More often than not, the a strong year,” Graves says. “A small must produce some type of ag new things he tries work.” ■

Rural Cooperatives / May/June 2014 11 Partners in Health Co-ops have role to play in improving student nutrition

In 2011, about 25 percent of Wisconsin high school crops to bring higher quality vegetables to students were overweight or obese (according to the schools. For Wisconsin vegetables growers, Centers for Disease Control and Prevention’s (CDC) the increased demand for carrots, sweet 2011 Youth Risk Behavior Surveillance System findings). potatoes, squash and other red/orange Furthermore, 22.6 percent of Wisconsin children are vegetables presents an opportunity to considered food insecure, meaning there is uncertainty of increase production and to access new access to adequate amounts and varieties of healthful foods. markets. One approach to addressing these growing nutritional The new requirements to serve more and diet related concerns involves increasing access to vegetables pose other challenges besides healthy fruits and vegetables in schools. Nascent supply and shipping. The costs of fresh and partnerships between federal, state and local public local fruits and vegetables, the skilled labor health officials and agriculturalists address these issues by required for on-site processing and stimulating the development of local food systems that preparation, and student food preferences all increase the production of, and access to, fresh and raise concerns in school districts that are nutritious foods. seeking to comply with these new nutritional Farm-to-school programs are built on such guidelines. partnerships and have the potential to bring fresh, local When purchasing directly from farmers, produce into the lunchroom while providing a new schools face challenges involving distribution, market, or the ability to expand markets, for farmers. coordination and consistency of product. Pairing local food system efforts with current work on According to the 2013 Wisconsin Farm to farm-to-school programs is not only needed, but timely. School Food Service Director Survey, of In 2010, the federal Child Nutrition Reauthorization Act those not currently purchasing local produce, (also called the Healthy, Hunger-Free Kids Act) passed, 77 percent said that they would prefer to issuing the strictest nutritional guidelines in U.S. history. purchase local foods through either a Schools had to comply with this new law by produce distributor or their prime vendor. September 2012. Key provisions in the law include As school nutrition directors are faced requirements that school lunch programs ensure a with tighter budgets and more restrictions, significant increase in students’ access to fresh fruits and the need for affordable, healthful and locally vegetables. It requires that schools offer at least 3 ¾ cups grown produce available through existing of vegetables each week and ¾ cup per day for grades K- distribution networks is evident. 8, and 5 cups of vegetables per week and 1 cup per day Small and mid-sized vegetable growers are for grades 9-12. Specifically for the “red/orange interested in diversifying their markets to vegetable” subgroup, schools must offer ¾ cup per week include schools and other institutions, but the for grades K-8 and 1¼ cup for grades 9-12. typical industrial supply chain infrastructure Nationally and in Wisconsin, this impacts the need does not currently provide that connection. and potential to produce more of these vegetable crops, The article on the following pages describes how staff as Wisconsin schools involved in the National School at the Center for Integrated Agricultural Systems at the Lunch Program feed about 500,000 children every day. University of Wisconsin–Madison worked with the Fifth Using global supply chains with low prices is one Season Cooperative to address this missing connection. approach to increasing such food access. But The article describes how partners coordinated and transportation and storage can affect nutritional qualities cooperated to create new supply chain opportunities. (Edwards-Jones et al., 2008). From the moment of Together, they created markets for cosmetically imperfect harvest, nutritional loss can occur without proper seconds to create affordable, healthful and locally grown transportation and storage (Goldberg, 2003; Hinsch, school food options. Slaughter, Craig & Thompson, 1993). The story of this multi-stakeholder cooperative in Wisconsin achieving these goals illustrates the potential Local/regional solutions of cooperatives to play a significant role in successful Local and regional production and enhanced supply supply chain partnerships. chains are needed to produce and procure more of these — By Lihlani Skipper and Alfonso Morales

12 May/June 2014 / Rural Cooperatives The Right Blend By Lihlani Skipper and Alfonso Morales USDA Photos by Lance Cheung

Fifth Season’s vegetable mixes help scale-up Wisconsin farm-to-school marketing program

The Fifth Season has members who represent all of the southwest Wisconsin, southeast Cooperative in Viroqua, key players in the food system at the Minnesota and northwest Iowa. Wis., provides crucial local level. Co-op members include The co-op requires that its produce connections across the farmers, processors, distributors, be grown within the Fifth Season food supply chain as it producer groups, buyers and workers. region. Many of the producer-members strives to help build a stronger Fifth Season operates regionally employ conservation growing practices local/regional food system. As a multi- within a 150-mile radius of Viroqua, that emphasize preservation of land, stakeholder cooperative, Fifth Season Wis., which includes south-central and water and air, and that follow bio-

Editor’s note: Skipper was a staff member with the University of Wisconsin-Madison Department of Urban and Regional Planning and the Center for Integrated Agricultural Systems; Morales is associate professor of urban and regional planning at the university. Morales gratefully acknowledges the U.S. Department of Agriculture, National Institute of Food and Agriculture, for its support of this study. Also see Sept./Oct. 2013 Rural Cooperatives, page 21, for more on Fifth Season Co-op.

Rural Cooperatives / May/June 2014 13 diverse production models, with businesses and organizations to provide supply chain entities. Such positive minimal, or no, use of chemical education on, and increased exposure working relationships are hard to find pesticides. to, locally produced foods for their in mainstream supply chains that are The co-op produces and distributes customers. This helps to build often marked by the volatility of locally grown produce, meats, dairy and knowledge of the farmers and their contracts and aggressive competition. value-added food products to practices, as well as the greater value of In contrast, the co-op brings institutional and foodservice buyers a regional and community food system. everyone to the table to make decisions through its distribution member, Fifth Season provides services that together for the benefit of all. In so Reinhart FoodService. The relationship significantly benefit its growers. The doing, it redistributes power across the with Reinhart is at the core of the Fifth large volumes that are demanded by supply chain. The mission to create a Season’s success because it has allowed institutional markets are often more sustainable local and regional food the co-op to use existing distribution than single farmers can supply. The co- system, with fair pricing to farmers, is

infrastructure, rather than investing in op aggregates crops from multiple prioritized in their decisionmaking, its own. farms, allowing small producers to meet which contrasts starkly with the market- This innovative model of a multi- the needed volume. It also provides driven, mainstream food supply chain. stakeholder cooperative, working with a third-party GAP (good agricultural For example, independent small- and broad-line food distributor (which is practices) auditing, liability insurance, medium-sized local growers selling to represented on the co-op board of fair pricing and food safety education institutional markets might not receive directors) provides producers another and training for the co-op’s growers. fair pricing because the processor and critical set of services: warehousing, These services make it possible for the distributor have higher margins for transportation, sales representatives and small- and mid-sized growers to sell to their customers and are not willing to a developed customer base, while larger markers that are typically out of compromise, since they may procure simultaneously providing hundreds of reach for them. cheaper product elsewhere. However, foodservice buyers access to locally and Fifth Season’s multi-stakeholder producer-members of Fifth Season sustainably grown products. cooperative structure ensures that Cooperative have negotiating power The co-op also works with working relationships exist between key and the ability to receive fair pricing

14 May/June 2014 / Rural Cooperatives Sweet potatoes (below) and yellow squash and zucchini (facing page) are in demand by many school districts that are seeking to expand their lunchroom offerings of fresh produce.

due, in large part, to a model in which producers sit at the same table as the processors, distributors and buyers.

New market for ‘cosmetic seconds’ Many producers and producer groups are looking for markets for cosmetically imperfect seconds — good, healthy food that otherwise usually goes to waste due to slight blemishes. Schools and other institutions are also looking for affordable, minimally processed vegetable products that are locally grown. Recent reports from Minnesota indicate that crop loss can be as high as 40 percent for carrots and 30 percent for hard squash (Berkenkamp, 2014) due to cosmetic appearance. Thus, the Schools across the nation are offering more fresh vegetables and fruit to students, trying to potential benefit to farmers who can encourage them to adopt a healthier diet, a demand which producer co-ops can help meet. market these products is significant

Rural Cooperatives / May/June 2014 15 (Berkenkamp, 2014). Using these Farnsworth and Morales, 2011, for a processors and distributors — to move “seconds” in minimally processed more general discussion of product from the farm to the consumer. vegetable blends could provide profit local/regional food supply chains). The While the profit for the farmer from potential to small- and mid-sized typical broadline distributors that direct-to-consumer sales is not shared farmers, while also providing an usually source from large-scale with these other supply chain actors, affordable healthful product to schools. conventional farms are often unfamiliar the farmer is often faced with extra Such an effort may seem relatively with how to source from, and labor for direct marketing. As supply straightforward at first — i.e., take the coordinate with, small- and mid-sized chains include more players that each seconds that are being wasted in the local farms. Smaller producers differ in require a piece of the pie, fair pricing field and use them to make fresh-cut scale and transportation capabilities. for the farmer becomes more difficult vegetable products for schools. In Small- and mid-sized producers who to reach. reality, however, the task is challenging sell to commodity or institutional For example, the supply chain for when working in the mainstream food markets are typically “price-takers,” in raw, whole sweet potatoes consists only supply chain. that they end up being forced to submit of the farmer, while for fresh-cut, diced Cosmetically imperfect seconds are to terminal market pricing. This is true sweet potatoes, the supply chain not currently available through most even if those prices do not cover their involves two or three intermediaries. A existing school supply chains, as USDA cost of production (Day-Farnsworth & farmer can sell whole sweet potatoes by grading standards largely dictate the Morales, 2011). Thus, they may have the pound at a farmers’ market. But for decisions of the produce industry; difficulty in earning profits that help diced sweet potatoes, the farmer must product that is not Grade A is often them remain viable, especially in the sell and deliver the raw product to a disregarded entirely (Berkenkamp, case of a minimally processed product processor, who then sells it in the diced 2014). In addition, the unpredictability that involves the additional cost of form to a distributor, who in turn sells of the price and supply of seconds processing. it to foodservice buyers. makes it difficult for large distributors Direct-to-consumer sales only In the second supply chain, the and processors, who typically involve the farmer, while institutional farmer, processor and distributor are all coordinate with brokers instead of sales often involve other supply chain looking to make a profit, while in the directly with producers. actors — such as aggregators, first supply chain, only the farmer is To provide the enormous volume of trying to turn a profit. Thus, it is product demanded by large-scale important when creating value-added processors in the form of seconds, supply chains to be aware of the supply chain partners would need to position of the farmer relative to the actively coordinate to identify and larger, and often more powerful, market cosmetically imperfect seconds. processors and distributors. Seconds that are over-sized or oddly shaped can create compatibility issues Extending the season with existing processing equipment, and with vegetable blends thus they have the potential to pose In 2012, Fifth Season Cooperative significant challenges to processors. It began working with staff at the Center may not be economically viable for for Integrated Agricultural Systems at those who do not see the potential UW-Madison on a project funded by a benefit of using seconds to attempt this. Specialty Crop Block Grant Existing contracts and relationships (Wisconsin’s Harvest Medley: Healthy can limit the potential for using Blends for Wisconsin Schools) to cosmetically imperfect seconds for develop and promote locally grown, minimally processed vegetable products root vegetable blends for schools across sold to schools and other institutions. Wisconsin. The goals included creating Generally, the supply chain process two frozen vegetable blends that utilize works like this: the raw product, in this cosmetically imperfect seconds for sale case seconds, is transported from the Purchasing directly from farmers can pose to schools and other institutions. farm (or first aggregated from multiple challenges for schools in the areas of Distribution was to be conducted smaller farms) to a processing facility distribution, coordination and product through Reinhart Food Service. and is then stored for later distribution consistency. Co-ops and food hubs can make Some 40,000 pounds of each of these to the school buyers (see Day these tasks easier. blends were processed in November

16 May/June 2014 / Rural Cooperatives 2013 and sold to institutional buyers, three, skin-on potato varieties, all of After the recipe trials, Fifth Season many of which were schools, from which are seconds from Coloma Farms Cooperative approached Sno Pac Foods December 2013-March 2014. The root in Coloma, Wis. The Winter Moon and contracted for the first product vegetable blends were created using 90 Blend contains carrots, butternut runs. Sno Pac Foods is a family-owned percent cosmetically imperfect seconds. squash, gold potatoes and red and business that uses an IQF (Individual The products were a success for the co-op. golden beets. Quick Frozen) freezing process for Diane Chapeta, operations manager The beets and butternut squash were certified organic, frozen vegetables. Sno of Fifth Season Cooperative, sourced through co-op member Pac, like many mid- to large-size

Producer-members of Fifth Season Co-op have negotiating power and the ability to receive fair pricing due to a model in which producers sit at the same table as the processors, distributors and buyers. Photo courtesy Fifth Season Co-op

successfully led this project by working Organic Valley/CROPP Cooperative. processors, requires minimum product with existing co-op member farmers, Coloma Farms provided the gold runs to ensure profitable operations. In processors, distributors and institutional potatoes, and Sno Pac Foods in this case, a 40,000-pound minimum of buyers. She previously served as the Caledonia, Minn., provided the carrots raw product is the smallest viable run school nutrition director for Chilton for the Winter Moon Blend. for the facility. Public Schools in Wisconsin, where she Organic Valley Cooperative has been However, the co-op needed proof of increased breakfast and lunch program working since 1988 to offer sustainable the viability of sales for the two 40,000- participation and founded and managed markets to family-sized organic farms. pound-minimum runs. An online pre- the Northeast Wisconsin Farm to It is a farmer-owned cooperative and order system was set up to quantify School Initiative. currently involves 140 produce farmers demand for the product. Fifth Seasons’ Chapeta’s experience as a school in the Driftless area of Wisconsin. For unique multi-stakeholder structure nutrition director made it easy for her Organic Valley, a family farm is defined encourages checks and balances across to understand the position of schools as one where the family members the supply chain, thus the pre-order and their unique concerns. Her provide the primary workforce and the process was the obvious next step. experience helped her develop two farm is their livelihood. The chief difficulty here was successful blends of minimally Organic Valley aggregates crops convincing school personnel to modify processed produce seconds and create from farmers to provide large volumes existing organizational habits. For recipes that other schools could use in of product to the Fifth Season example, school nutrition directors were preparing and serving them. Cooperative. familiar with existing supply chain Starting from scratch, Chapeta relationships, the existing economic developed the two vegetable blends, Cooperation among co-ops structures and the standard ordering testing different combinations of For many years, Organic Valley has system. The pre-ordering process was potatoes, beets, turnips, squash, carrots been looking for markets for produce entirely unfamiliar to them, but it was and parsnips. The trial batches were considered cosmetically imperfect, such needed by Fifth Season to prove that created at a small, shared-use incubator as butternut squash with scarring on the the demand for the products existed. kitchen (Sharing Spaces Kitchen) in skin. Fifth Season Co-op provided Once schools and other institutional Prairie du Chien, Wis., paving the way Organic Valley with a new market for buyers realized how convenient these for that kitchen to delve into frozen these products by using them in the locally grown and affordable products processing of local vegetables. value-added frozen vegetable blends. would be to order through Reinhart, After trials and taste tests were This cooperative relationship they were eager to pre-order the frozen completed in two schools, the blends exemplifies Cooperative Principal No. blends. were approved for production and the 6: Cooperation among cooperatives, Because pre-orders exposed a high Wisconsin Potato Fusion and Winter and shows the power of cooperatives level of interest, the co-op moved Moon Blend became a reality. The working together to achieve mutually forward with the processing of both Wisconsin Potato Fusion consists of beneficial goals. continued on page 45

Rural Cooperatives / May/June 2014 17 By E. Eldon Eversull, The Senior Agricultural Economist Long Run USDA Cooperative Programs For a cooperative — or any business, for that matter NUMBER OF — to operate for a century is an amazing AG CO-OPS accomplishment. Given the intense levels of competition in a capitalistic economy such as CELEBRATING ours, only a small percentage of businesses reach their 100th birthday. But the number of cooperatives reaching the important “century milestone” is steadily increasing and currently stands at 134. By comparison, Standard and Poor’s “Capital IQ” lists 488 publicly traded companies that are 100 years old, as of 2009. Vicki TenHaken, a professor at Hope College in Michigan, maintains a list of 540 U.S. firms more than 100 years old. There were nearly 5.7 million firms listed by the 2011 U.S. census. So, if there were even 1,000 companies that are 100 years old, that would be only about two one-hundredths percent (0.02 percent) of all U.S. firms. It thus appears that the longevity of so many agricultural cooperatives is something of an anomaly in the business world. Starting a cooperative 100 years ago required — as it still does today — the convergence of a committed group of producers who were willing to work together and pool resources to achieve a critical mission. This most often was to market, store and/or process ANNIVERSARIES their crops and livestock or to attain quality farm production supplies and related services at a ON THE RISE reasonable cost.

18 May/June 2014 / Rural Cooperatives Clockwise from upper left: Horsepower still prevailed for milk deliveries during the early days of the Nelson Creamery Co-op in Minnesota; a vintage ad for Dairylea milk (now part of DFA); employees of Forbes Equity Union gather in Forbes, N.D.; nice wheels: an Elmdale Creamery (Minnesota) co-op delivery truck; board members of Fruit Growers Supply in California tour forest land the co-op purchased to supply wood for crates; on the citrus packing line at Sunkist in California; celebrating the first delivery of phosphate fertilizer from a Wisconsin plant at Aurora Cooperative in Nebraska. Photos courtesy pictured cooperatives.

Rural Cooperatives / May/June 2014 19 Staying in business for clientele tastes and Cooperative Programs of question. Based on that data, 100 years requires that a co- preferences and adapt to new USDA Rural Development the largest number of op: challenges. in 1999 asked what year a cooperatives in USDA’s • Offers members quality As part of its annual co-op had been organized in. database (205 cooperatives) products or services; survey of U.S. farmer, About 33 percent of the that are still in operation • Has members who are rancher and fishery 3,466 co-ops surveyed that were organized between committed to doing cooperatives, the year responded to the 1931 and 1940 (figure 1). business with the co-op and who participate in its democratic governance by voting in elections and by Table 1 — U.S. Century Cooperatives, by state, type, and date organized serving on the board and co-op committees; Cooperative name, city, and state Type Organized • Hires skilled management to run the business and has Sunkist Growers Inc., Sherman Oaks, CA Fruit and vegetable 1893 knowledgeable directors to Fillmore-Piru Citrus Association, Piru, CA Fruit and vegetable 1897 govern the co-op; Fruit Growers Supply Company, Sherman Oaks, CA Supply 1907 Blue Diamond Growers, Sacramento, CA Nut 1910 • Is committed to delivering Butte County Rice Growers Association, Richvale, CA Supply 1914 superior customer service; Agfinity, Inc., Eaton, CO Supply 1905 • Operates with a strategic Haines City Citrus Growers Association, Haines City, FL Fruit and vegetable 1909 business plan based on Lake Region Packing Association, Tavares, FL Supply 1909 present and future needs Winter Haven Citrus Growers Association, Dundee, FL Fruit and vegetable 1909 Waverly Growers Cooperative, Waverly, FL Fruit and vegetable 1914 and goals; First Cooperative Association, Cherokee, IA Grain and oilseed 1887 • Has a viable leadership Calhoun Cooperative Creamery Company, Lansing, IA Dairy 1896 succession plan in place; Farmers Lumber Company, Rock Valley, IA Supply 1904 • Has a solid financial plan River Valley Cooperative, Eldridge, IA Grain and oilseed 1906 Cooperative Elevator Association, Ocheyedan, IA Grain and oilseed 1906 that includes sufficient Archer Cooperative Grain Company, Archer, IA Grain and oilseed 1907 investments in the future North Central Cooperative, Clarion, IA Grain and oilseed 1907 of the co-op and its Farmers Coop Elevator Company, Kingsley, IA Grain and oilseed 1907 facilities while returning Farmers Cooperative Society, Sioux Center, IA Grain and oilseed 1907 fair levels of equity to Hull Cooperative Association, Hull, IA Supply 1908 Farmers Cooperative Company, Remsen, IA Grain and oilseed 1910 members; Farmers Cooperative Company, Hinton, IA Supply 1912 • Hires skilled, motivated Pacific Northwest Farmers Cooperative, Inc., Genesee, ID Grain and oilseed 1909 employees and rewards Goodwine Cooperative Grain Company, Goodwine, IL Grain and oilseed 1889 them with competitive pay Stanford Grain Company, Stanford, IL Grain and oilseed 1895 and benefits; Farmers' Grain & Coal Company, Mason City, IL Grain and oilseed 1899 Grainland Cooperative, Eureka, IL Grain and oilseed 1903 • Is an active supporter of Graymont Cooperative Association, Graymont, IL Grain and oilseed 1903 the communities where it Ludlow Cooperative Elevator Company, Ludlow, IL Grain and oilseed 1904 does business and where its Danvers Farmers Elevator Company, Danvers, IL Grain and oilseed 1904 members and employees Earlville Farmers Cooperative Elevator Co., Earlville, IL Grain and oilseed 1905 live and work. Minier Cooperative Grain Company, Minier, IL Grain and oilseed 1907 Cissna Park Cooperative Inc., Cissna Park, IL Grain and oilseed 1908 While there are also many Donovan Farmers Co-operative Elevator, Inc., Donovan, IL Grain and oilseed 1908 other factors that have an Northern Partners Cooperative, Mendota, IL Grain and oilseed 1908 impact on the longevity of a Chapin Farmers Elevator Company, Chapin, IL Grain and oilseed 1908 co-op, one over-riding factor Burtonview Cooperative, Lincoln, IL Grain and oilseed 1909 is this: to remain in business Milledgeville Farmers Elevator Company, Milledgeville, IL Grain and oilseed 1911 for 100 years, a co-op needs to evolve with changing

20 May/June 2014 / Rural Cooperatives There were also waves of ops formed from 1921-1930, cooperatives has evolved over current one reveals that 49 ag co-op formations in other 171 are still in business; of ag time as new co-ops are cooperatives that provided decades, with many of those co-ops formed from 1941 to launched, go out of business their organization date in co-ops still in business today. 1950, 177 are still serving or combine with other USDA’s 1999 survey are no Of the ag co-ops formed members. cooperatives or investor- longer on the list, due either from 1911 to 1920, 123 USDA Cooperative owned firms. Comparing the to merger, consolidation or remain in business; of ag co- Programs’ list of 1999 database with the business failure. Looking at the entire 1999 co-op list, however, we can see many more changes; 1,191 other cooperatives are no longer in the 2013 Cooperative name, city, and state Type Organized database, due to the same three reasons listed above. Tremont Cooperative Grain Company, Tremont, IL Grain and oilseed 1911 Kasbeer Farmers Elevator Company Cooperative, Kasbeer, IL Grain and oilseed 1912 “Century Co-ops” McNabb Grain Company Inc., Mc Nabb, IL Grain and oilseed 1913 Century Cooperatives in Andres & Wilton Farmers Grain & Supply Co., Peotone, IL Grain and oilseed 1913 Rees Farmers Elevator, Franklin, IL Grain and oilseed 1913 USDA’s database are Ag Plus Inc., South Whitley, IN Grain and oilseed 1912 comprised of co-ops that Delphos Cooperative Association, Delphos, KS Supply 1901 were started between 1887 Southern Plains Coop, Lewis, KS Grain and oilseed 1902 and 1914. The vast majority Golden Belt Cooperative Association Inc., Ellis, KS Grain and oilseed 1903 (77 percent) of these 134 Midway Co-op Association, Osborne, KS Grain and oilseed 1908 Central Plains Co-op, Smith Center, KS Grain and oilseed 1908 cooperatives were started Offerle Co-op Grain & Supply Company, Offerle, KS Grain and oilseed 1910 between 1905 and 1914. Farmway Co-op Inc., Beloit, KS Supply 1911 From a historical Farmers Cooperative Elevator Company, Nickerson, KS Supply 1911 perspective, consider that the Farmers Union Mercantile & Shipping Association, Stockton, KS Grain and oilseed 1911 majority of these Minneola Coop, Inc., Minneola, KS Grain and oilseed 1912 Saint Francis Mercantile Equity Exchange, Saint Francis, KS Grain and oilseed 1913 cooperatives were formed Fowler Equity Exchange, Fowler, KS Grain and oilseed 1914 just after the Wright Beardsley Equity Co-op Association, Inc., Atwood, KS Grain and oilseed 1914 brother’s first powered air Thornwell Warehouse Association, Lake Arthur, LA Supply 1913 flight and before World War Hardwick Farmers Cooperative Exchange, Hardwick, MA Supply 1914 1. Farmers Cooperative Grain Company, Kinde, MI Supply 1914 Rock Dell Cooperative Creamery Company, Byron, MN Dairy 1889 These 100-year-old River Region Cooperative, Sleepy Eye, MN Grain and oilseed 1890 cooperatives first catered to Dassel Cooperative Dairy Association, Dassel, MN Supply 1894 farmers, ranchers and Nelson Creamery Association, Nelson, MN Dairy 1894 fishermen whose main form Nelson & Albin Co-op Mercantile Association, Saint James, MN Supply 1894 of transportation was via Nassau Farmers Elevator Company, Nassau, MN Grain and oilseed 1899 Plainview Milk Products Cooperative, Plainview, MN Dairy 1899 horse and sailboat. Co-op Elba Cooperative Creamery Association, Elba, MN Dairy 1902 product lines and services Farmers Cooperative Elevator Company, Rushford, MN Supply 1903 evolved from those horse- Harvest Land Cooperative, Morgan, MN Grain and oilseed 1904 and mule-powered days Rose Cooperative Creamery Association, Eagle Bend, MN Supply 1905 through the industrialization Farmers Cooperative Ag Service, Greenbush, MN Supply 1905 Farmers Elevator Company, Pelican Rapids, MN Supply 1905 of farming and the Meadowland Farmers Cooperative, Lamberton, MN Grain and oilseed 1905 changeover to tractor- Rothsay Farmers Cooperative, Rothsay, MN Grain and oilseed 1905 powered farming; these co- Wheaton-Dumont Cooperative Elevator, Wheaton, MN Grain and oilseed 1905 ops then evolved again to Table continued on page 22 embrace the technology revolution, with more

Rural Cooperatives / May/June 2014 21 producers increasingly using Global Positioning System Table 1 — continued (GPS) gear to guide their seed and fertilizer Cooperative name, city, and state Type Organized applications and who track market trends and Valley Creamery Association, Garfield, MN Dairy 1905 threatening weather fronts Hadley Farmers Elevator, Hadley, MN Grain and oilseed 1906 Swanville Cooperative Creamery Association, Swanville, MN Dairy 1907 with their smart phones. Fosston Cooperative Association, Fosston, MN Supply 1907 Century Cooperatives are Bongards Creameries, Bongards, MN Dairy 1908 still fairly rare, accounting Elm Dale Creamery Association, Bowlus, MN Dairy 1908 for about 6 percent of Farmers Cooperative Creamery Association, Goodridge, MN Supply 1908 USDA’s entire list of ag Farmers Cooperative Creamery, Foreston, MN Dairy 1908 Farmers Elevator of Fergus Falls, Fergus Falls, MN Grain and oilseed 1909 cooperatives. Four types of FCA Co-op, Jackson, MN Grain and oilseed 1909 cooperatives make up over Osakis Creamery Association, Osakis, MN Dairy 1909 97 percent of all Century Kragnes Farmers Elevator Company, Glyndon, MN Grain and oilseed 1911 Cooperatives. Grain/oilseed Co-op Service Inc. of New York Mills, New York Mills, MN Supply 1911 and farm supply cooperatives Farmers Cooperative Elevator Company, Hanley Falls, MN Grain and oilseed 1912 Newfolden Cooperative Elevator Association, Newfolden, MN Grain and oilseed 1912 comprise more than 78 Lakes Area Cooperative, Perham, MN Dairy 1912 percent of the Century Equity Elevator & Trading Company, Wood Lake, MN Grain and oilseed 1912 Cooperatives; they comprise Hastings Cooperative Creamery Company, Hastings, MN Dairy 1913 62 percent of the list of all Sobieski Cooperative Creamery Association, Little Falls, MN Dairy 1913 ag co-ops. Dairy Farmers Cooperative Company, Windsor, MO Supply 1914 MFA Incorporated, Columbia, MO Supply 1914 cooperatives make up about Edinburg Farmers Elevator Company, Edinburg, ND Grain and oilseed 1909 13 percent of Century Co- Brocket Equity Elevator Company, Brocket, ND Grain and oilseed 1911 ops, while fruit and vegetable Max Farmers Elevator, Max, ND Grain and oilseed 1911 cooperatives comprise 7 Forbes Equity Exchange, Forbes, ND Grain and oilseed 1913 Scranton Equity Exchange, Scranton, ND Grain and oilseed 1914 percent. Farmers Cooperative, Dorchester, NE Grain and oilseed 1903 By state, the nation’s 134 Farmers Cooperative Association, Eustis, NE Grain and oilseed 1903 oldest cooperatives are most Cooperative Producers, Inc., Hastings, NE Grain and oilseed 1906 likely to be located in Aurora Cooperative Elevator Company, Aurora, NE Grain and oilseed 1908 Minnesota (35), Illinois (20) Farmers Cooperative Company, Tallmadge, NE Grain and oilseed 1914 Landisville Produce Cooperative Association Inc., Landisville, NJ Fruit and vegetable 1913 or Iowa and Kansas (both Jewell Grain Company, Jewell, OH Grain and oilseed 1911 with 13). Gerald Grain Center Inc., Napoleon, OH Grain and oilseed 1912 An old business adage is: Farmers Elevator Grain & Supply Association, New Bavaria, OH Grain and oilseed 1912 “you have to grow to The Hicksville Grain Company, Hicksville, OH Grain and oilseed 1914 survive.” But growth is not Carrier Mill and Elevator Company, Carrier, OK Grain and oilseed 1907 Farmers Exchange of Goltry, Goltry, OK Grain and oilseed 1913 an all-determining factor for Tillamook County Creamery Association, Tillamook, OR Dairy 1909 Century Cooperatives. Diamond Fruit Growers Inc., Odell, OR Fruit and vegetable 1913 Fourteen percent of these Lawrence County Co-op Wool Growers Association, Pulaski, PA Wool 1891 cooperatives have less than Clark County Farmers Elevator, Clark, SD Grain and oilseed 1904 $5 million in sales (Figure 2). Menno Lumber Company, Menno, SD Supply 1905 Colton Farmers Elevator, Colton, SD Grain and oilseed 1910 Eight percent have from Fulton Farmers Elevator Company, Fulton, SD Grain and oilseed 1912 $500 million to more than a AgFirst Farmers Cooperative, Brookings, SD Grain and oilseed 1913 $1 billion in sales. But the Farmers Cooperative Elevator Company, Rosholt, SD Grain and oilseed 1914 largest group of Century Rule Co-op Gin & Elevator Company, Rule, TX Cotton ginning 1913 Cooperatives has from $25 Blue Star Growers Inc., Cashmere, WA Fruit and vegetable 1907 Davenport Union Warehouse Company, Davenport, WA Grain and oilseed 1909 million to less than $50 Odessa Union Warehouse Cooperative, Odessa, WA Grain and oilseed 1909 million in sales (19 percent, Blue Bird Inc., Peshastin, WA Fruit 1913 or 26 cooperatives). Westby Cooperative Creamery, Westby, WI Dairy 1903 Garden Valley Cooperative, Waumandee, WI Supply 1904 The Century List Ellsworth Cooperative Creamery, Ellsworth, WI Dairy 1910 Medford Cooperative Inc., Medford, WI Supply 1911 All 134 Century Cooperatives were asked for their agreement to be listed in Table 1. (USDA gathers

22 May/June 2014 / Rural Cooperatives The growing list of ag co-ops that have been in business for at least 100 years includes, from left: the Alta Grain Co-op in Iowa, now called First Cooperative Assoc.; Westby Cooperative Creamery in Wisconsin and Sun Maid Raisins in California. Photos courtesy pictured co-ops

co-op data on condition that Cooperatives chose not to be In the next six years, this cooperative should have been it be used only for composite included on table 1 (more list will almost certainly included, or would like to be numbers for all co-ops or co- information on these double, as it appears likely included on this list in the op sectors; we do not reveal Century Cooperatives can be that 125 more cooperatives future, please e-mail the author survey data about a specific found in the Directory of will be added to it, although with your basic co-op co-op unless the co-op Rural-Farmer, Rancher, and some will doubtless “fall information at: eldon.eversull@ provides its permission — as Fishery Cooperatives on our from the ranks” due to wdc.usda.gov, and/or at occurs with our annual Top website, www.rurdev.usda. mergers, acquisitions and coopinfo@ wdc.usda.gov. Please 100 Co-op list each fall). gov/BCP_Coop_DirectoryA business failures. include the year your co-op was Two of the Century ndData.html). Author’s note: If your formally organized. ■

Figure 1 — U.S. cooperatives that are still in operation, organizational dates

Number 300

250

200

150

100

50

0

1900 & Before 1901-1910 1911-1920 1921-1930 1931-1940 1941-1950 1951-1960 1961-1970 1971-1980 1981-1990 1991-2000 2001-2013 Years

Figure 2 — U.S. Century Cooperatives, number by sales size 300 Number 50

40

30

20

10

0

Less than 5 5 – 9.9 10 – 14.9 15 – 24.9 25 – 49.9 50 – 99.9 100 – 199.9 200 – 499.9 500 – 999.9 1 Billion + Million $ in Sales

Rural Cooperatives / May/June 2014 23 A ‘HUMAN SOUL ON FIRE WITH GREAT CAUSE’

William Hirth’s iron-forged will and vision were essential to the formation of MFA

24 May/June 2014 / Rural Cooperatives In the century since the MFA Inc. cooperative was formed, much about agriculture has changed. Those 100 years represent great technological progress. That timespan has literally brought us from horse power to computer-driven machines and satellites as common tools. Even with such technological advances, the initial reasons for forming MFA remain as the underpinning for the business today. MFA Incorporated is a regional farm supply and grain marketing cooperative serving 45,000 members. MFA has about $1.5 billion in annual sales. When farmers joined to start MFA, they did so because they needed a presence in the market — both in buying and selling. They needed ways to finance their operations. They needed bargaining power. MFA remains, as it began, a conduit to help farmers succeed. William Hirth is considered the founder of MFA and was a major player in the cooperative movement in the United States. The following article about Hirth is excerpted from a new book, Proud Past, Bright Future: MFA’s First 100 Years. Written by Chuck Lay, the book recounts stories of MFA’s leadership, its business ventures and the failures and successes that have shaped this business.

By Chuck Lay farmers for the better. Hirth’s vision? life was acquired firsthand. He left Director of Communications The creation of the farm organization college after several years, nearly MFA Incorporated which became MFA — a battle he penniless, to sell insurance. He refused to lose. prospered. By 1900, he and his new Hirth the organizer Hirth created the Missouri Farmers wife, Lillian Vincent, moved to William Hirth burned brightly. A Association, one of the 20th century’s Columbia, Mo., where he read law and first-class orator, a genius of most successful and dynamic was admitted to the bar. organization and a national political cooperatives and one still thriving in In 1906, he purchased the Columbia leader, Hirth bent the world to his will. the 21st century. Seven farmers from Statesman newspaper. But agriculture It was a capacity that brought him the Newcomer Schoolhouse Farm Club continued to hold his interest. By 1908, acolytes as well as critics, both in his near Brunswick, Mo., are rightly praised he realized his dream of developing a time and since. Alternately, he was as the genesis of the organization. But statewide agricultural publication when vilified as domineering, utterly without make no mistake, they followed the he purchased The Missouri Farmer and humility and bellicose by his critics, template Hirth forged. Hirth wrought Breeder, now Today’s Farmer. The first especially those in academia. that template (even to the extent of issue was published Oct. 15, 1908. In Yet to his supporters, Hirth — the conceiving the famous shield logo February 1912, he shortened the name farm boy who rose from obscurity on a himself) through passion, persuasion, to The Missouri Farmer. Rush Hill farm in central Missouri to skill and no small amount of luck. By 1914, The Missouri Farmer, widely become a national farm leader who Born March 23, 1875, Hirth was popular in state agricultural circles, was dined with presidents and senators — raised on the family farm in Audrain the official publication for the Missouri was a dynamo of leadership, a man County, Mo. His experience of the Farm Management Association, the obsessed with changing the lives of soul-dampening drudgery of 1800s farm Missouri Cattle Feeders Association,

Rural Cooperatives / May/June 2014 25 the Missouri Corn Growers $100 million. Association, the Missouri Draft Horse The farm club Bachtel would serve as president of Breeders Association, the Missouri idea swept the MFA’s first farm club and become the Dairy Association and the Missouri first farmer to sign MFA’s unique, but Sheep Breeders Association. Hirth countryside, doomed to fail, producer contract. owned the tabloid magazine until his according to Bachtel would log 20 years of death in 1940. distinguished service on MFA’s The Missouri Farmer provided Hirth historians, like a corporate board of directors. with a platform to evangelize. Print was prairie fire. Through the pages of The Missouri king. The first commercial radio Farmer, Hirth chronicled farmer efforts broadcast was eight years in the future. and savings of farm clubs, urging Telephones were nonexistent. continued development of more clubs Electricity was enjoyed only by select where farmers could organize and urban elite. MFA awarded the Home Guard Medal to socialize in much the same way town The Missouri Farmer hit a rural nerve members of the Women’s Progressive businesspeople joined business, political and drew instant response. Hirth’s Farmers Assoc. for enlisting new members and benevolent organizations. Self- passion was organization, which he saw and organizing clubs. interest, said Hirth, should be a natural as key to improving farm life. Hirth draw for historically independent preached organized cooperation Farmers Association. It marked the farmers. repeatedly in its pages. Aaron Bachtel, a beginning of what grew into a Yet organizing often isolated farm farmer and stockman just north of cooperative devoted to pooling orders families was a steep hill. Hirth, Brunswick, was a subscriber who took and distributing accumulated savings. nevertheless, was wildly successful in Hirth’s ideas seriously. The farm club idea swept the convincing farmers of the benefits of “In the February 1914 issue,” countryside, according to historians, cooperation, due in main to the force of Bachtel said, “there was a short article like a prairie fire. Subsequent to that his personality and his frenetic, but wherein it stated that farmers should first order, Hirth contracted with the strategic, schedule. organize into school district Farm West Virginia Coal Co. at a set price Farm clubs structured meetings, Clubs and how they could be benefited for coal. Bachtel and his neighbors were printed songbooks, formed a women’s by such organizations. It looked so on board. auxiliary organization (Women’s simple and at the same time so far Soon after the order, coal prices Progressive Farmers Association or reaching, that it appealed to me very jumped, but the fledgling MFA had a WPFA in 1921) and scheduled debates. forcibly.” contract at the cheaper price. Bachtel Hundreds of clubs held debates every Bachtel wrote Hirth, asking for a received several carloads and proceeded two weeks, organized fishing trips, held bundle of the papers to distribute to his to instruct area farmers in the value of parades several miles long and hosted neighbors. He asked those same the farm clubs. More members quickly barbecues. The spirit of a camp revival neighbors to meet at the Newcomer flocked to the club. Throughout the was in the air. Schoolhouse the following Tuesday state, the scene was repeated, time and At those meetings, Hirth encouraged night. again. farmers to spread the gospel, noting A prominent farmer, Bachtel lent his that although many farmers were name and reputation to the cause. He 1,000 MFA farm clubs formed uncomfortable in the speaker’s role, it asked his neighbors to unite in the For perspective on the “prairie-fire” was a mission worth the effort. True purchase of farm supplies and inputs. metaphor, consider: within five years, oratory, he intoned, was not faultless By seizing the initiative, Bachtel about 1,000 MFA farm clubs were diction or learned phrases. True oratory overcame local doubt and skepticism to created, representing every corner of “is a human soul on fire with a great convince others that Hirth’s idea to the state. Just over 10 years later, Hirth cause.” organize farmers around a cooperative could announce the existence of concept was sound. The group pooled hundreds of exchanges, elevators, Hirth leverages an order for 1,150 pounds of central produce plants, creameries, farmers’ new power penitentiary binder twine and sent it to livestock shipping associations, livestock Demonstrating the effectiveness of Hirth in Columbia. The Newcomer commission companies, a grain the power of centralized buying, offers Schoolhouse Farm Club volume buy commission company, a purchasing poured in from flour mills, Ford and netted the men $400 in savings. department and produce sales agencies. Dodge motor companies, tire That Newcomer Schoolhouse Farm All told, these fledgling creations manufacturers, seed merchants and new Club order, the first Hirth received, dedicating themselves to MFA were animal health businesses like Anchor counted as the creation of the Missouri generating gross sales of more than Serum Company of St. Joseph.

26 May/June 2014 / Rural Cooperatives In 1919, Hirth listed the farm club representing MFA. More importantly, Farmer, he chronicled his efforts and accomplishments to date. Farm clubs, on the national scene in 1925, the Corn urged the membership to lobby he wrote, have: (1) placed members in Belt Committee was organized with a alongside. position to buy farm needs at lowest membership drawing together the “Many times during recent years, the wholesale price; (2) financed and taken largest group of influential farm leaders farmers of North Missouri were hardly over 60 local elevators with plans for in the country. able to bury their loved ones because of 150 before 1920; (3) been first to The Corn Belt Committee bad roads,” intoned Hirth in a speech at introduce a Livestock Shipping represented 24 farm groups, including the MFA convention, “while their Association in Missouri; (4) financed a Farm Bureau, Farmers Unions, the children are forced to wade ankle deep flour mill costing $300,000; (5) secured Equity, the Grange and multiple Corn through mud in going back and forth to regulation changes regarding the Growers Association groups, as well as school, and so bad roads often keep our handling of meat under the Food many others. The group’s purpose was few remaining rural churches closed for Administration; (6) met with J. Ogden to speak on agricultural legislation as weeks at a time.” Armour as the first organized effort to one, make agriculture’s positions known He convinced the organization and work out a solution to packing interest; to legislators and the public and its board to get behind legislation and (7) organized farmers to influence pronounce “upon all matters pulling farmers out of the mud. legislation. concerning agriculture.” Road legislation soon passed at the By way of explanation of those Hirth was selected president of the state level. In the long term, the accomplishments, Hirth, with the newly formed Corn Belt Committee legislation failed to achieve all Hirth executive committee and the full board and retained that position for several demanded because of what Hirth of directors of the nascent MFA, had years. In his capacity as chairman, Hirth described as a politically controlled lobbied newspaper editors and helped make agriculture a national Highway Administration. The Missouri lawmakers for passage of an agricultural concern. His speeches and activities also Farmer, he said in 1928, “is unalterably cooperative law allowing patronage attracted the attention of national opposed to any more bond issues for refunds and streamlining cooperative leaders, including one who would soon cross-state highways until something practices. They also fought for and won be mulling a presidential bid — substantial has been done for the government standardization of weights Franklin Delano Roosevelt, then neglected dirt roads.” and measures for business scales that governor of New York. Hirth carried on his farm-to-market had been a bit haphazard before. Hirth held that national attention road campaign until his death in 1940. MFA sponsored a legislative dinner until his death. And with good cause. His successor would deliver Hirth’s in Jefferson City to explain farmers’ Because of his national leadership promised improvements. intentions in building self-help efforts and accomplishments, Hirth’s One more revelatory anecdote about cooperatives. MFA’s corporate board name would be formally submitted Hirth: After delivering testimony to the sponsored the law and saw to its passage unanimously by the entire Missouri Senate Agriculture Committee in 1940, by the newly lobbied legislature in delegation — Democrats and Hirth turned on his heel and stalked 1919. Republicans — to President Calvin out of the room. U.S. Secretary of Just a year before, Hirth, never one Coolidge for the position of secretary of Agriculture Henry Wallace, who had to think small, took a group of official agriculture. Hirth demurred, asking attended, chased after Hirth, finally MFA representatives to Washington, that his name be withdrawn. catching him in the Senate corridor. D.C., to meet with the Agricultural “Mr. Hirth,” he is reported to have said, Committee of the Senate to explain Road builder “Mr. Hirth,” he repeated when Hirth MFA’s position on a federal cattle and But Hirth’s focus was not simply stopped and turned to face Wallace. hog feeder program. In each case, Hirth national. Missouri had plenty of “You didn’t give that committee some was upfront on intentions. MFA would obstacles for farmers trying to grow and of the facts.” Hirth scrunched down his be known for putting cards on the table move products. Country roads were eyebrows, scowled at the U.S. Secretary frankly, in full view. No subterfuge for impassible for large chunks of the year of Agriculture and said, “Facts? That the new MFA. making it difficult if not impossible to committee didn’t need facts. They deliver farm products to towns and needed their minds changed.” Hirth the politician MFA markets. In his many years of leadership with MFA needed more than organizing; Solution? Hirth jumped with both MFA, it is safe to say Hirth changed a it required political capital, both state feet into initiating legislation great many minds, both in Washington and national. Hirth was uniquely suited authorizing farm-to-market roads and and on farms all across the nation, for that job. By the mid-1920s, he was a personally lobbied political leaders and about cooperatives and how they could member of the executive committee of newspaper editorial boards. Through contribute to the success of their the American Council of Agriculture, his highly influential The Missouri farmer-members. ■

Rural Cooperatives / May/June 2014 27 Co-ops & Community Coming Home — Skills learned in the military often transfer to the rural workforce

By Lisa Moorhouse

Editor’s note: This article is reprinted from “C” magazine, the member publication of CHS Inc., where Moorhouse is a member of the communications staff. CHS Inc. is just one of the many co-ops nationally that provide good jobs for America’s Armed Forces veterans after they leave the service. The “Co-ops & Community” page spotlights co-op efforts that fulfill the mission of commitment to community. If you know of a co-op, a co-op member or co- op employee whose efforts deserve to be recognized on this page, please contact: dan.campbell @wdc.usda.gov.

In 2003, Army combat engineer Mike Tangen found himself in the Kuwait desert training for Operation Enduring Freedom. When the “go” signal came, in the form of 36 overhead artillery shots, the troops and Apache helicopters headed out in long convoys across the Iraq border. “The convoy moved so slowly,” Tangen recalls. “I felt like we were hundreds of miles from the border and just crawling. There were some nerve- wracking parts, especially when we went through a narrow pass where there was supposed to be an ambush.” Although there was a firefight, they made it to the border relatively untouched. They punched through sand berms surrounding the country Mike Tangen and advanced on Baghdad. Tangen’s job in the U.S. Army focused on designing battlefields. His cattle and later went to work for an area “I came in as the new guy, but not an skills didn’t seem likely to transfer to a farmer, spending much of his time as a unknown guy,” he says about joining career back home in central Minnesota. long-haul trucker. With a young family, the agronomy team at CHS Prairie After returning to the United States in though, he was ready to have more time Lakes in Starbuck, Minn. He works in 2003, he purchased a small herd of at home. the location’s energy department and

28 May/June 2014 / Rural Cooperatives delivers propane. and we see a good fit for CHS and the the nuclear-powered aircraft carrier as a “There’s a real sense of teamwork cooperative system,” says Cate Sprout, combination plant operator, chemist and camaraderie here that is very talent acquisition manager. and radiological controls technician. similar to my military experience. I “By focusing on helping military Paulson was deployed to the Persian work with guys from different personnel translate the characteristics Gulf for six months, providing support backgrounds, but we’re all focused on and the skills gained in the military into to ensure safe travel of seagoing vessels getting the job done, even if that is civilian language, we can help our and conducting training exercises with delivering propane at 3 a.m.,” he says. soldiers and companies understand how other U.S. military branches and allied military roles translate to the forces. Soldier support workforce,” Lanceta says. After six years in the Navy, he used Transitioning back to civilian life the GI Bill to earn a degree in chemical isn’t easy. Just ask Colonel Allan Valuable Experience engineering from Montana State Lanceta, central region director for Ken Paulson has always been University. U.S. Army Soldier for Life, which helps fascinated by how things work. Today he’s a process engineer at the reintegrate veterans into civilian life. Growing up, he worked alongside his CHS Laurel, Mont., refinery, where he Lanceta is on a dual mission: to help dad, who owned a body and mechanics works on control systems and military veterans find meaningful shop. He applied that interest in a six- automation, ensuring electronics work employment and to build understanding year tour in the Navy as part of the correctly. of the value of hiring veterans. nuclear power program. “The military is process oriented. “Military personnel bring special “I had two years of schooling before What you do affects 6,000 people in the skill sets to the workplace. Loyalty, going out to the ship. It was rigorous middle of the ocean. That gives you the dedication, duty and respect are right from the start,” says Paulson. Of mindset and framework to build a pro- ingrained in our soldiers,” says Lanceta. 84 people in his basic training company, cess and complete a task,” Paulson says. Each year, about 234,000 soldiers end 42 were designated for the nuclear He adds that hiring veterans brings their service with the U.S. Army, Air power program. From those 42, only real-world, real-work experience to the Force, Coast Guard, Marine Corps and Paulson and three others completed the workplace. Navy. In the next 10 years, more than 1 program. To view a video with Mike Tangen, million soldiers will transition from the He describes his responsibilities on visit: www.chsinc.com/c. ■ Army. One focus of Soldier for Life is ensuring that soldiers leaving the Army have a job waiting. Putting skills to work “It can be a challenge to translate military experience into civilian terms. The pressure tanks and semi tractors who saw the opportunity with CHS That can make it hard to find a job, lined up outside the CHS Transportation to get back to his roots even when the skill set might be a Transportation shop in Minot, N.D., and “wrench on equipment.” perfect match. We’re helping soldiers would be dwarfed by the B52 “There’s a lot of predictability in outline skills in non-military terms,” bombers and other support equipment what you do in the military, but there says Lanceta, who recommends Hero to Ben Tudor maintained during his 22 are also a lot of challenges and Hired (H2H.jobs) for transitioning years in the U.S. Air Force. opportunities. We were always military personnel. It offers career “Our job was to keep planes in the looking for ways to improve exploration tools, military-to-civilian air. Our unit was very technical,” says processes and approach problems skills translation, and education and Tudor. Over his military career, he differently. That carries over to any training resources. worked his way up to serving as a job,” says Tudor. “We’re also working with companies training manager and later a During his military career, Tudor to help them understand what deployment manager for his spent one year in Korea and individuals with military experience squadron, where he oversaw 400 Air completed three four-month tours in bring to the workplace,” adds Lanceta. Force personnel. Saudi Arabia. “After more than 20 CHS is one of those companies. When Tudor retired last year, he years, you take a lot from your military “We look at the ability of individuals chose to stay near Minot. “Most guys experience. Seeing how people in with military backgrounds to solve I know who are retiring out of the other countries live changes your ■ problems and work in stressful military are looking for stability and perspective.” situations. We look at how those opportunities to grow,” says Tudor, military values align with CHS values,

Rural Cooperatives / May/June 2014 29 Remembering the ‘Badlands’ Report

By Bill Patrie, Executive Director We met at a bed and breakfast in the Badlands of North Common Enterprise Development Dakota. This was Teddy Roosevelt country, not far from his Corporation, Mandan, N.D. former ranch site. It is rough country where the summer e-mail: [email protected] months are often hot and very dry. Our subject was cooperative development: where was it headed after the decade of the 1990s and “co-op fever” which had swept through Minnesota and North Dakota, with some spin off in South Dakota as well. Although it was 13 years ago, I still remember the feelings engendered as we sought to understand what was coming for those of us who make a living starting cooperatives. In reflection, we were somewhat prophetic. I

30 May/June 2014 / Rural Cooperatives President Teddy Roosevelt said the Badlands of North Dakota “restored his soul.” The remarkable landscape also helped inspire a group of co-op “thinkers” in 2001, when they gathered to discuss some of the major questions about co-op development. Photo courtesy North Dakota Tourism Office

don’t know if all prophets suggest that bad things are about to happen if ways aren’t changed — but we certainly felt that way. And some of those bad things did happen. We thought that the industrial age would give way to the information age, but it looks like we now have both. And agriculture is both getting bigger as a response to the industrial age, and getting way smaller as a response to the information age. In 2001, we thought the environmental ethic would become a much more powerful force than it is in 2014. The Badlands of North Dakota have the Bakken and Three Forks oil formation under them. The fault lines between conservation and oil production are now clearly drawn. We thought leadership would emerge in the cooperative community that would take us cooperators to a better place. Perhaps the change we were looking for was us — and that didn’t turn out exactly the way we had hoped either. The inability of leaders to “see over the horizon” turned out to be as bad as we thought, and we still long for those folks who can tell us the location of the cooperative promised land. Perhaps we need to listen to new voices who are describing the “cooperative economy” from Jackson, Miss., and the voice of the cooperative movement’s favorite prophet, Gar Alperovitz, who answers the question “what then must we do?” Teddy Roosevelt said that the Badlands restored his soul, and I have found that same beneficial effect for myself. There is something so big and empty about this place that it minimizes personal problems. It is a good place to go to think about big subjects, and I think it contributed to the insights that were shared in 2001. I hope this reflection on a 13-year-old report can be a stimulus to new thinking for those of us who care deeply about the cooperative movement. How do we get together again and answer Gar’s question?

Thoughts About Co-ops in North America

Preamble the issues that impact cooperatives. We thoughts from developers, teachers, As individuals who work with, study hope you find our thoughts useful. Lori researchers, government officials, or write about cooperatives, we report Capouch, Susan Davis, Lee Egerstrom, media, lawyers and cooperative our thinking about cooperative Wally Goulet, Roger Herman, Julie employees. None of the ideas presented enterprises in North America. We met Hogeland, Audrey Malan, William Nelson, here should be attributed to any for two days in the Badlands of North Steve Noack, Bill Patrie and Judy Ziewacz individual. We are presenting Dakota. While we make no claims to statements in this report without the unique insights, we did want to share Disclaimer requirement of unanimous agreement. our reflections and discussions about This report reflects a spectrum of These thoughts reflect an emphasis on

Rural Cooperatives / May/June 2014 31 rural or agriculturally based existing is taken for granted. “What have you traditional cooperatives and new done for me lately?” is often asked. generation cooperatives, because of the 8. Members are not meeting their background familiarity of the responsibilities. Without a crisis or participants. extreme door prizes, members don’t This report follows the sequence of seem interested in their civic and the actual dialog that occurred, starting democratic responsibilities. with opening lamentations and ending Management expects less, and less with consoling realities and reasons for commitment from members, and hope. members respond with less and less This meeting room, with its panoramic view participation. Don’t ask for much from We lamented of the Badlands near Medora, N.D., is where the members; they will just as likely 1. Complete vertical integration is the brain storming sessions occurred for the patronize a competitor. They for sure too hard and often fails. Starting a Badlands Report. Photo courtesy Eagle Ridge won’t sacrifice for the cooperative. new generation cooperative — one that Lodge. Opposite page: Hiking in the Badlands. Have cooperatives become latent is completely vertically integrated from Photo courtesy North Dakota Tourism Office democracies? the production of the commodity to the 9. Speculators, price takers and final sale of the finished product — is meaningful benefits to existing and new builders. Some new generation very hard. Most of these startups are members. cooperatives are experiencing not successful. Very few cooperatives 6. Losing track of social capital. speculators who buy shares but never can master all of these essential steps. One of the assets important to intend to produce the product. They Achieving competent management and cooperatives is social capital. We rely on the cooperative to purchase adequate capitalization seems defined social capital as a community- commodities on their behalf through a overwhelming. or society-held common understanding, “pool.” The value of their investment is 2. Some existing cooperatives favorable attitude and/or commitment only measured in dividends paid since seem interested in serving to cooperation and cooperative that most directly influences share themselves first. Existing cooperatives organizations. We noted that value. Other members only care about seem to turn a deaf ear to new cooperatives once meant something to the price they receive at delivery, trying cooperatives, appearing to be interested our communities. We were new and to force the cooperative to pay higher in achieving what is good for the exciting, and we were mainstays in the and higher prices without consideration cooperative, rather than what is good community. We built good will and we for maintaining operating margins. for the members. acted differently than our competitors. The third category are those 3. Existing cooperatives are We don’t have a place on our balance members who raise quality products focused on getting through the day sheets for social capital, but we feel as if and deliver them to the cooperative for (no long views). Cooperative leaders we are losing it. The loss of social processing and understand that the true don’t have the luxury of thinking about capital is reflected in decreasing value that will be paid to them is what the long-term destination of the employee commitment, member loyalty the cooperative can sell the finished movement. Visionary leaders have died and community affection. We know it product for after deducting the or retired, visionary institutions have has real value to a business cooperative, operating costs. These members will merged or consolidated, member we are unsure about how to build and “build the business” by investing and services positions have been eliminated account for it. (See end note (a) for more wait until final operating margins are to save money and cooperatives are sources of information on social capital.) known before demanding dividend focused on getting through the day. 7. Our member benefits have payments. If either the price takers or 4. Losing track of our members. become obscure. The reasons to join the speculators gain operating control We realized that we no longer really our cooperatives used to be clear and of the cooperative, it may become know our members. We don’t know the benefits transparent. Now they are impossible to manage and may fail. (See who they are or what they want. hard to see. Phone service or electrons end note (b) for more discussion on this 5. We have become reactionary are often purchased only on price; so, subject.) rather than creative. Instead of too, with the selling of grain or the 10. Too small a cadre of principal looking for opportunities, we are buying of inputs — it’s who has the best advisors. Cooperatives have looked for fighting off enemies, trying to defend deal. No one worries what the cost advice primarily from agricultural our territories and markets instead of would be if the cooperative were not economists. While this advice is needed looking for new ways to provide there. The existence of the cooperative and useful, it has not been adequate to

32 May/June 2014 / Rural Cooperatives fully utilize the social, spiritual and swiftness of foot and our ability to sacrifice or the investment continue to psychological value of cooperation. connect with our members in deeply get the benefit of cooperative 11. Aging of members and meaningful ways. enterprises. leaders. We’re mourning the loss of 14. We try to define ourselves as • Horizon problems startle us when the visionary co-op leaders. Once the something separate — as the fourth new generation cannot appreciate the founders of great cooperatives sacrificed sector after government, nonprofit sacrifice of the founding generation and and struggled to provide services and and private business. Our difference is will leave the cooperative for little or no start the enterprises. Now some not in our organizational structure, but reason. • Portfolio problems, such as trying to manage hog operations and dairy operations at the same time, over- burden leadership and management, leading to complaints among the membership. • Control by members is lost as the cooperative becomes so large and so distant that members no longer know what the cooperative is or why they should care. • Decision-making takes place by directors and managers who are unevenly influenced by members. All members and all directors are not the same — some members’ and some directors’ opinions matter more than others do, usually because they do large volumes of business with the cooperative. Do you really want to lose members have become parasitical, in how we behave. We cooperate, and your largest buyer? (See end note (c) for believing that the cooperative is a good we can do that as government, or as a more information on agency theory place to get “perks” if you become a nonprofit, or as any one of the business problems.) director. Instead of seeking the office to forms available in North America. lead and “carpe diem” (seize the day), Being legally organized as a cooperative Consoling realities and some members seek to become does not ensure our uniqueness. We some reasons for hope directors to “carpe per diem” (seize the want to examine, instead, how the We began to enjoy these benefits). organization behaves — does it lamentations. We had reasons to feel 12. The world paints all cooperate? miserable and unappreciated. Our great cooperatives with the same brush. 15. We are not diverse. leaders had died or retired, our favorite There is a vast difference in Homogenous boards encourage easy cooperatives are operating as uninspired cooperatives and their operating consensus, but they do not create the imitations of competitors and we had strategies. There are important high-bred vigor of diverse thought and difficulty in naming CEOs who met our differences between economic sectors. input. Our organizations are not self- definition of heroes. Even though we All cooperatives are not the same, yet challenging, bring narrow perspectives enjoyed this self-pity, participants began negative images seem to catch many and are not using the strength of to call us back to a more positive and good cooperatives in the same net as diverse membership. accurate vision of reality and created the bad ones. 16. Agency theory problems seem reasons for hope. We did not attempt to 13. Cooperatives too often seek to to overwhelm us. We all agreed that answer our lamentations on a point-by- fight with their competitors’ cooperatives are “agents” for their point basis. We agreed that future weapons. We are often asked to fight members and are designed to provide meetings could more thoroughly build our competitors with their weapons — benefits to those who “patronize” the antidotes to the problems we identified. such as economies of scale and size, and cooperative. However, numerous But we knew that the reality was not as requiring more and more benefits at problems continue to plague this form dark as the picture we had just painted. lower and lower prices. Uncomfortable of business organization. They include: Those consoling realities included: in this new armor, we have lost our • “Free riders” who have not made the 1. New leaders: Our old leaders are

Rural Cooperatives / May/June 2014 33 being replaced, not by well-known members and customers, and we can through these changes experience names, but by skilled and visionary know them better because of this internal anxieties. Within cooperative leaders, nonetheless. While having technology. organizations, well-meaning and humble beginnings, these leaders have 7. The courage to break ranks: forward-looking individuals can be fought and won many battles. While Agriculture, we decided, is much like a wrongly perceived as a threat under not yet ready for the highest levels of column of soldiers marching left/right, these circumstances. We have reason to leadership, they truly understand their left/right on a weakened bridge. When hope because we can understand this own skills. They will volunteer to lead. all the weight of the column hits at the type of organizational behavior and can 2. Learned lessons: We understood same time, it will collapse the bridge. usually avoid negative consequences. that we now have a new resource to call The wise leader orders, “Break ranks!” 10. Faith in the future: Even upon. Some in the group called it Agriculture needs to break ranks. though many cooperative institutions maturity, others preferred to call it Farmers can’t just keep pounding out are struggling with the change from the wisdom. We have unique knowledge commodities in lock step. The lock step industrial age to the new economy, they and experience. We now need to production of commodities is collapsing are moving. The direction of that capture that wisdom and translate it the system. Farmers and ranchers can movement is toward more responsive, into our daily work. We need to not break ranks, but it takes intelligence to diversified and meaningful only teach others how successful new do so without going broke. The organizations. Cooperatives have the generation cooperatives got started, but information age now allows us to gather ability to break ranks more easily than also the lessons they have learned as and apply that intelligence prior to other forms of business ventures. Many operating companies. These leaping into new ventures. existing cooperatives were formed cooperatives have operating history and 8. The new model: Uniformity, because traditional systems failed to can be asked, “What would you do conformity and standardization are provide the desired benefits. differently?” parts of the mechanical process of the Designing new cooperatives, forging 3. The new economy values industrial age. Many cooperatives still new alliances and redesigning existing cooperation: We understood that the use these operating strategies. Some cooperatives are all possible in the new economy values cooperation. cooperatives are trying to gain positive view of the future commonly Authentic concern for humankind once operating efficiencies by mergers. Most held by cooperators. Much has already again provides cooperatives the cooperatives are trying to reduce costs been done, and though the road will be opportunity to make a meaningful and standardize. While many of these difficult, it is a journey well worth difference in the lives of our members. tactics may be appropriate for taking. It is a reason for hope. 4. Seeing the forest and the trees: institutional survival, they may not be We understood that we are capable of adequate to build the organizations we A one-time report holding long-range views about the desire. We left the meeting without any future of cooperatives and managing to The new economy and the formal plans to meet again. We were get through the day, at the same time. information age acknowledge that generally satisfied that for these several We could cite examples of such humans have always been biological days we were able to reflect on issues at cooperatives. creatures. The biological model of greater depth than possible in our 5. Knowing the force of change: human behavior encourages diversity professional lives. Individuals in the We realized that the transition from the and specialization instead of machine- group expressed willingness to old industrial economy to the new like standardization. As it is in participate in similar discussions in the information-based economy creates agriculture, organizational diversity in future. ■ forces that will buffet us as human cooperatives is a strength. While the beings. The desire to stay the same grip of the old way is strong, the pull of End notes collides with the demand for change, the new economy toward a new model • See Measuring Social Capital in Five Communities in NSW by Paul Bullen and Jenny Onyx at: and we personally feel the turbulence. is a reason for hope. http://www.mapl. com.au/A2.htm. Knowing that there will be turbulence 9. Surviving the transition: In- • See A Cooperative Approach to Local Economic helps prepare for it. dividuals working for cooperative Development, edited by Christopher D. Merrett and Norman Walzer, published by Quorum 6. Electronic communication: A organizations need to be aware of the Books 2001, Chapter 11. wonderful characteristic of the new powerful influence of the industrial age. • New Generation Cooperatives in the New economy and the information age is the Few organizations can instantly Millennium by Doeke Faber and Lee Egerstrom (What NGC’s Cannot Do and False Hopes and ability to communicate electronically transition to the information age. Expectations) Pages 179, 180, 181. and understand consumer preference in North America is not completely in the • Ibid (Agency Theory Problems) Pages 178 and new ways. We can get closer to our new economy. Organizations going 179.

34 May/June 2014 / Rural Cooperatives Rural Cooperatives / May/June 2014 35 Newsline Co-op developments, coast to coast

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Two co-ops share wind energy honors Old Dominion Electric Cooperative in Virginia and Rural Electric Convenience Cooperative The National Rural Electric (RECC) in Illinois shared honors as Wind Cooperative of the Year. Top: The GobNob Wind Cooperative Assoc. (NRECA) and U.S. Farm in central Illinois. Photo courtesy RECC. Below: The Mehoopany Wind Farm in Department of Energy have awarded Wyoming County, Pennsylvania. Photo courtesy BP Wind Energy top honors for wind energy production to Old Dominion Electric Cooperative of Virginia (ODEC) and the Rural Electric Convenience Cooperative of Illinois (RECC). The cooperatives were recognized March 6 as the 2013 Wind Cooperatives of the Year at the TechAdvantage 2014 Conference and Expo in Nashville, Tenn. Co-op executives said they appreciated the honor for outstanding leadership in advancing U.S. wind power and acknowledged what the award means for wind energy going forward. RECC worked with the Illinois Department of Natural Resources to install the utility-scale wind turbine on an elevated section of an abandoned mine to capture a large amount of wind to serve its 5,800 member-consumers. ODEC, a wholesale power supply co- op, has added more than 260 megawatts of capacity to its renewable resource portfolio since 2008 to serve its 11 member distribution co-ops. A panel of judges from the wind industry, utilities, government, national laboratories and cooperatives picked the two co-ops based on their corporate leadership, project innovation, and benefits to customers.

AMPI reports $1.8 billion in sales Associated Milk Producers Inc. (AMPI) had sales of $1.8 billion and earnings of $7.5 million in 2013, it was

36 May/June 2014 / Rural Cooperatives USDA supports co-op development, small- and mid-sized farmers

Agriculture Secretary Tom Vilsack in funding through the Cooperative assess the impact of economic late April announced that USDA will be Programs office of USDA Rural changes to new and beginning providing additional support and Development helped 17,773 rural farmers, and conduct outreach resources for America’s small and mid- businesses, including 4,200 farmers activities that may enhance small sized farmers and ranchers and for co- and 4,472 small businesses. These farmers’ well-being. op development. “Small and mid-sized investments created or saved more ■ The Small, Socially Disadvantaged producers are a vital part of America’s than 41,600 jobs. Under the 2014 Farm Producer Grant program (SSDPG) will agricultural future, and we are Bill, USDA will be creating an make $3 million available to provide dedicated to ensuring their success,” Interagency Working Group to improve technical assistance to small, socially Vilsack said. “USDA is continually coordination of programs and services disadvantaged agricultural producers reviewing our resources, programs and between federal agencies and national through eligible cooperatives and policies to make sure we are working and local cooperatives through the cooperative development centers. for producers of all sizes.” RCDG program. Awardees will be able to conduct Efforts announced by Vilsack ■ $7 million in grants are being market research, product and/or include: awarded to 10 universities to develop service improvement, feasibility ■ The Rural Cooperative Development programs that will help small and studies, and training, and implement Grant Program (RCDG) will make up to medium-sized farmers grow their business plans. Applications are being $5.8 million available to Rural operations, enhance their production accepted through June 30, 2014. More information about how to apply is on the Rural Development website. ■ USDA Certification for Small and Very Small Producers of grass-fed beef is a new verification program administered by USDA’s Agricultural Marketing Service (AMS). It is tailored to meet the needs of small-scale livestock producers and the growing grass-fed beef industry. It allows small- and very small-scale producers to certify that their animals meet the requirements of the grass-fed marketing claim standard, helping them differentiate themselves and communicate value to their customers. AMS is targeting producers that market 49 cattle or less each year by USDA photo by Lance Cheung designing a less costly application Cooperative Development Centers and become economically viable. process for these producers to use the (RCDCs), which, in turn, provide These awards, made by USDA’s USDA Certified Grass-Fed claim. technical assistance focused on National Institute of Food and Producers who are certified under the improving the economic condition of Agriculture (NIFA) Agriculture and new program will receive certificates rural areas by supporting the start-up, Food Research Initiative (AFRI) Small that allow them to market cattle to expansion or operational improvement and Medium-Sized Farms program, slaughter facilities as USDA certified of rural cooperatives and other focus on developing models to assist grass-fed, increasing their market business entities. Cooperatives have small farmers develop management value and creating new economic often been the mechanism used by strategies, adopt new technologies and opportunities throughout the supply producers to work together to access improve their competitiveness. These chain. new markets or market value added awards prioritize strategies that For more information on these products. enhance access to markets, develop programs, visit: www.usda.gov ■ ■ In 2013, business and cooperative local and regional food systems,

Rural Cooperatives / May/June 2014 37 announced in Bloomington, Minn., during the annual meeting of the 2,600- member co-op. “Our manufacturing Southern States hails lifting of capacity and production flexibility made it possible for AMPI to reap the Chinese ban on Virginia poultry benefits of increased demand for our core product line — cheese, butter and China’s decision to lift its seven- exports topping $186 million. powdered dairy products,” AMPI year ban on poultry imports from Southern States has more than 3,000 President and CEO Ed Welch told Virginia has the potential to create a Virginia poultry producer-members. some 400 members, employees and $20 million boost in poultry sales to “We are gratified to see the end guests at the meeting. “Coupled with the fast-growing Chinese market, of this ban and the increased market plant improvements, the cooperative’s according to Southern States potential China offers for our performance improved and the balance Cooperative, Richmond, Va. The ban producers,” says Turner Gravitt, sheet was strengthened.” was prompted in 2007 by an isolated Southern States’ director of American-style cheese production of case of a mild strain of avian flu government affairs, adding that the 400 million pounds in 2013 remains the discovered at a single Shenandoah co-op “greatly appreciates the cooperative’s top product category. Valley farm. “No one expected the efforts” of state government and AMPI was also a Midwest leader in Chinese action to last as long as it federal officials to help end the ban. milk powder production. Products such has,” the co-op said in recent Southern States is a farm supply as nonfat dry milk, whey protein announcement. and service cooperative, founded in concentrate and lactose were sold to Poultry production is the single 1923, which now has more than domestic and global customers as largest segment of agriculture in the 200,000 farmer-members. ■ demand for milk proteins increased commonwealth of Virginia, with 2013 worldwide. Cheese and butter packaged for consumers at the cooperative’s manufacturing plants grew once again. Cheese sales increased 7 percent, while butter sales rose for the eighth consecutive year, posting a 3 percent gain. Nearly 70 percent of AMPI’s consumer-packaged business is sold to foodservice customers. AMPI Board Chairman Steve Schlangen reviewed the steps taken in the past year to position the cooperative for strategic growth. “Through carefully considered moves made at every level of our cow-to-consumer business, we made great progress in 2013,” he said. “This was done by focusing on a core product line and taking an active role in reforming dairy policy that provides meaningful options for reducing price risk.” Additional AMPI 2013 highlights include: • 5.8 billion pounds of milk was marketed through 10 manufacturing plants; • 2,600 AMPI dairy farmer-owners shared $10 million in equity payments; • Export markets accounted for 23 percent of AMPI powder sales,

primarily to Mexico. USDA photo by Lance Cheung

38 May/June 2014 / Rural Cooperatives • A Parmesan cheese wheel produced at Vilsack said that $48 million in loan marketing and promotional support AMPI’s Hoven, S.D., plant was guarantees for local food projects is specifically for local food businesses, named best Italian cheese entry at the now available through the Business and including food hubs, delivery and 2013 National Milk Producers Industry Guaranteed Loan Program, aggregation businesses, and processing Federation Championship Cheese administered by USDA Rural and storage facilities along the local Contest. Development. Another $30 million is food supply chain, while $15 million is available through competitive grants for marketing support for farmers Farmer Co-op from the Agricultural Marketing markets and other direct to consumer Conference Nov. 6-7 Service’s (AMS) Farmers Market and outlets. The 2014 Farmer Cooperative Local Foods Promotion Program. Since 2009, AMS, which administers Conference (FCC) will be held Nov. 6- The 2014 Farm Bill requires USDA to this program, has provided $27 million 7 in Minneapolis, Minn. The 17th set aside at least 5 percent of Business for nearly 450 projects to support direct annual FCC is being organized by the and Industry (B&I) program loan marketing efforts for local food. More University of Wisconsin Center for guarantees for projects that focus on information about how to apply is Cooperatives to provide a forum for local food business enterprises. Details available on the AMS website: cooperative directors, managers and on how to apply for local food funding www.AMS.usda.gov. Applications are those doing business with agricultural through the B&I program are available due June 20, 2014. cooperatives to address issues currently on the Rural Development website: affecting the agricultural cooperative www.rurdev.usda.gov. CDF grant helps community. Applications are accepted on a in typhoon recovery This year’s program will focus on rolling basis. The B&I program has the The Cooperative Development economic trends, policy developments authority to fund local food Foundation’s (CDF) board has approved and what it will take to sustain and lead infrastructure in urban areas as long as a grant of $20,000 to the International your cooperative into the future. For the project supports farm and ranch Cooperative Alliance (ICA) to be used more information, contact: Anne income and expands healthy food access to help co-ops and members recover Reynolds at: [email protected] in underserved communities. from Typhoon Haiyan in the Rural Development’s B&I program Philippines and Southeast Asia. The USDA investing $78 million provides financial backing for rural National Confederation of for local food enterprises business development in partnership Cooperatives in the Philippines Agriculture Secretary Tom Vilsack with private-sector lenders. It is one of reported that at least 350,000 announced May 8 that USDA is making several USDA programs that help cooperative members had been affected a historic, $78 million investment in finance local foods projects. In 2013, by the typhoon. local and regional food systems, Rural Development supported more Dame Pauline Green, president of including food hubs, farmers markets, than 170 local food infrastructure the International Cooperative Alliance, aggregation and processing facilities, projects, including food hubs, scale- issued an appeal for donations for co-op distribution services and other local appropriate processing facilities, cold recovery in the Philippines. Robynn food business enterprises. storage and distribution networks. Shrader, CEO of the National “The 2014 Farm Bill has given Entities eligible for B&I loan Cooperative Grocers Association, asked USDA new tools, resources and guarantees include cooperatives, that CDF accept donations made for authority to support the rural nonprofit organizations, corporations, this appeal and forward them to the economy,” Vilsack said. “Consumer partnerships or other legal entities, ICA. “When tragedies like Haiyan demand for locally produced food is Indian tribes, public bodies or occur, it is heartening to see the strong and growing, and farmers and individuals. cooperative community come together ranchers are positioning their The 2014 Farm Bill tripled funding and show the true spirit of our businesses to meet that demand. As this for marketing and promotion support movement, which is that together we sector continues to mature, we see for local food enterprises by creating are stronger and more effective aggregation, processing, and the Farmers Market and Local Foods together than alone,” said Shrader. distribution enterprises across the local Promotion Program, administered by “Recovery has been slow in the wake of food supply chain growing rapidly. the Agricultural Marketing Service. Haiyan, and these monies will be a These historic USDA investments in This new program makes $30 million tremendous help in the re-building support of local food give farmers and available annually to farmers markets, effort.” ranchers more market opportunities, other direct producer-to-consumer CDF’s Co-op Disaster Recovery provide consumers with more choices venues, and other businesses in the local Fund helps co-ops and their members and create jobs in both rural and urban food supply chain. Under this program, recover from disasters and promotes co- communities.” $15 million is now available for op enterprise in recovering areas. The

Rural Cooperatives / May/June 2014 39 grant was made possible by a $10,000 year to fund local food projects and 2013, a 6 percent increase compared to donation from the National Coop- help people in the local foods 2012. erative Grocers Association as well as community work with and access “At DFA, we’re about making sure contributions from food co-ops and USDA programs, such as USDA Rural our members can farm successfully and cooperators around the country. Development’s Value-Added Producer profitably,” says Rick Smith, president Grants, Business and Industry Loan and chief executive officer. “In 2013, we USDA supporting Guarantees and Community Facilities had a successful year. Through strong food hub development Loans and Grants. operational performance and joint USDA’s Agricultural Marketing The conference brings together venture returns, we were able to execute Service has entered into a cooperative people and resources dedicated to on our strategic plan. We are also agreement with FamilyFarmed.org to supporting the diverse aspects of food pleased with the improved margins for develop a national guide on “Building hubs and regional food systems. With members.” Successful Food Hubs.” The increasing demand for fresh, local In 2013, DFA directed the marketing announcement was made during the foods, food hubs aggregate products of 60.6 billion pounds of milk for both National Good Food Network’s 2014 from small and mid-size farms so that members and others through its Food Hub Collaboration Conference in large-volume buyers, such as grocery consolidated businesses and related Raleigh, N.C. stores, can buy local foods from family affiliates. This represents about 30 The new national planning guide farms in the region. percent of the total milk production in will include descriptions of key Additional USDA research, the United States. Payments to functions, best practices and proven members for milk marketed were $7.9 strategies for food hubs — all based on billion in 2013, compared to $7.3 successful models operating across the billion in 2012. This increase is United States. The number of food primarily a result of the higher U.S. hubs has risen by 65 percent since annual average all-milk price, which 2009, with more than 230 food hubs averaged $20.01 per hundredweight. now operating around the country. On Returns to members in 2013 totaled average, each food hub supports 20 jobs $41.9 million, with $23.3 million and generates nearly $4 million in distributed from the cooperative’s annual sales. allocated patronage and $18.6 million The nonprofit FamilyFarmed.org, through DFA’s various capital based in Chicago, is committed to retirement programs. expanding the production, marketing DFA continued to grow its and distribution of locally grown and commercial investments in 2013. The responsibly produced food. The guide, Cooperative’s Fluid Milk and Ice Cream “Building Successful Food Hubs,” will Division acquired Frederick, Md.-based be one of several valuable tools USDA Dairy Maid Dairy — a processor of has developed to help establish, milk, juice and fruit drinks that markets enhance or expand food hubs. to major grocery chains, schools, and “Food hubs are helping producers of Food hubs, such Eastern Market in (Michigan governmental entities such as military all sizes grow, which in turn supports above), should benefit from a new guide, installations. the economic health and well-being of “Building Successful Food Hubs,” developed The Ingredients Division also with support from USDA. rural communities,” said conference continued to expand, with a focus on speaker Doug O’Brien, acting under export opportunities with global secretary for USDA Rural information and findings about food customers in strategic markets. DFA Development. “USDA is a proud hubs is available at: exported 222 million pounds of product supporter of food hubs because we www.ams.usda.gov/foodhubs. in 2013, for a fourth consecutive year of know they help build stronger regional record export sales. food systems.” DFA sales hit $12.8 billion In 2013, DFA broke ground on two O’Brien noted that USDA Rural Dairy Farmers of America ended the new plants. On Sept. 20, ground- Development provided support to year with strong operating results from breaking was conducted in Linwood, more than 150 local food infrastructure its wholly owned commercial N.Y., for a new cold-process milk projects in 2013, including food hubs, investments and increased earnings separation plant. The plant, which is scale-appropriate processing facilities, from affiliates. The cooperative’s scheduled to be completed later in cold storage and distribution networks. adjusted net income was $61.3 million, 2014, will produce cream and skim milk He said that USDA set new goals this while net sales reached $12.8 billion for for a range of regional customers. A

40 May/June 2014 / Rural Cooperatives second dairy ingredient plant is food comes from, and to support a MMPA sales nearing $1 billion currently under construction in Cass democratically controlled business that Michigan Milk Producers Assoc. City, Mich., which will produce high- is governed by its member-owners. (MMPA) had $957 million in revenue quality condensed whole and skim milk for 2013, indicating that the co-op is and cream. “clearly on track to reach the $1 billion Earnings of affiliates were $72.8 mark for the first time,” General million in 2013 compared to $57.6 Manager Clay Galarneau told delegates million in 2012. Cash distributions at the co-op’s 98th annual meeting in from DFA affiliates totaled $38 million March. It was the second consecutive in 2013 compared to $36.4 million in year that MMPA’s milk supply increased 2012. by nearly 5 percent, and Galarneau says he expects to see another 5-percent Dakota food co-op increase in milk volume for 2014. finds strong support Members are thus seeing a good Leaders of the BisMan Community return on the $62 million invested in Food Co-op (BCFC), a start-up retail 2010 for a major expansion of MMPA’s food cooperative in Bismarck, N.D., Ovid processing plant. “In the first four recently met with representatives from years of operation, this investment has Basin Electric Cooperative to discuss realized over $23.7 million, or a return how the organizations could support of 15 cents per hundredweight for our each other as cooperatives. members,” he said. By the meeting’s end, Basin Electric Most of MMPA’s increase milk Heidi Demars waits to sign up another had agreed to contribute $50 toward volume is going to export markets, such member for the BisMan Community Food Co- every membership purchased by a Basin as China and Mexico, where demand op, which is nearing the goal of 600 members Electric employee. That means a Basin needed to launch the co-op in Bismarck, N.D. for infant formula ingredients has been employees could invest as a member- The event here is an annual health fair growing rapidly. Last year, the co-op owner of BCFC for $150 and Basin will sponsored by Basin Electric Cooperative, saw the export volume of nonfat contribute the rest. Since the program’s which is contributing to the membership fees powder increase by 427 percent from launch in late February 2014, the paid by employees who join the food co-op. the 2012 level, representing 5.7 of its BCFC has seen its membership soar Photo courtesy Basin Electric total production. from 350 to nearly 500 in early May. The initial goal was 600 members, increasing to 1,000 by the time the store is ready to open. Transformative power of co-ops This strong early showing of support for the co-op proves that “the local to be focus of ACE in Austin food and cooperative movement is alive and well in North Dakota!” says co-op Registrations are now being other topics will be: leader Heidi Demars. accepted for the 2014 ACE Institute • Laying the Foundation for Co-op Stakeholders from BCFC and Basin in Austin, Texas, July 13-16. The Education: Inform, Train, Educate; Electric discussed how the food co-op’s gathering of co-op educators and • Living the Cooperative Values board of directors, founding members, developers will explore cooperative Within Your Organization; and volunteers are standing where other education resources and research • The State of Co-op Business cooperative pioneers in North Dakota and development projects that are Education; stood many years ago, when co-ops transforming people, cooperatives • Collective Courage: A History of were the only way electricity could be and communities across North African-American Cooperative brought to the countryside. America. Economic Thought and Practice. BCFC founding members are Among the areas of focus will be To register and see the banding together to achieve access to a look at communities that are preliminary program agenda, visit: healthier, fresher, local food and to creating a systematic approach to http://s.coop/ustin. For questions, support local farmers who make North cooperative development, as well as contact Sarah Pike at: (763) 432-2032. Dakota their home, Demars notes. efforts to develop a new co-op ■ BCFC founding members want to be curriculum for youth. Among the part of a strong local economy and to empower members to know where their

Rural Cooperatives / May/June 2014 41 “Butter exports were nearly as an impressive accomplishment for any industry in the U.S. on paper.” impressive, showing an increase of 176 cooperative,” says Galarneau. During The cooperative movement in percent for 2012, or nearly 24 percent fiscal year 2013, MMPA members Turkey dates back to the republic’s of production,” Galarneau said. “It is earned $26 million in total premiums. founding in 1923. There are currently clear that Michigan has been, and 84,000 co-ops in Turkey, spanning 30 continues to be, a growing dairy state,” Turkish delegates industries. Construction, agricultural he added, noting that since 2000, the studying U.S. co-ops and transportation co-ops comprise the state has seen its annual milk In what marked the first official top co-op industries, but there are production increase from 5.7 billion to cooperative-to-cooperative visit virtually no consumer co-ops. About 10 9.1 billion pounds. between the United States and Turkey, percent of the country’s population — MMPA members received an “all- representatives from the Ankara-based or 8 million people — are members of milk average price of $20.35 per Ministry of Customs and Trade General co-ops. National laws in Turkey govern hundredweight for 2013, above the Directorate of Cooperatives recently how co-ops are founded and dictate national average of $20.01 (as estimated met with NCBA CLUSA officials in agricultural credits and sales. by USDA),” Galarneau said, adding Washington, D.C. The visit Tom Decker, director of cooperative that the co-op sees the potential for a underscored a movement toward development for NCBA CLUSA, led record average price of $23 per greater collaboration between the the group through an overview of hundredweight for 2014. global cooperative community and the cooperative development in the United MMPA made cash payments of $3.8 United States as a leader in the States, from the birth of agriculture, million in equity retirements in April. cooperative development sphere. finance and electric co-ops in the These cash payments represent the “We are here to evaluate the well- 1920s-‘30s to a recent upswing in retirement of the 2005 equities. This is established U.S. cooperative system, consumer cooperatives as communities in addition to the $2 million in cash discuss future collaboration and hear increasingly value organic, farm-to- patronage from 2013 earnings paid to success stories,” said Ismail Kalender, table food. members earlier this year. general director of Turkey’s Ministry of Decker also noted a trend toward “We continue to revolve equity back Customs and Trade. “Until now, we collaboration among co-ops in order to to our members on a nine-year cycle, have only studied the cooperative strengthen their collective impact and better raise the profile of cooperatives. Co-ops, Decker said, are “on the cusp of major growth” in the coming years. The Turkish delegation expressed keen interest in worker co-ops. A presentation by Leslie Mead, executive director of the Cooperative Development Foundation, highlighted the established benefits of organizing home healthcare workers into worker co-ops.

NCB backing solar power projects National Cooperative Bank (NCB) provided $82 million in financing for solar projects during 2013. The bank worked with Strata Solar of Chapel Hill, N.C., on 15 solar projects around North Carolina, which will generate 94 megawatts of power, enough to support the energy needs of 11,250 homes. That power will also offset more than 63,360 tons of carbon dioxide emissions, equivalent to reducing auto This solar panel array at Fuquay Farms in Wake County, N.C., generates 9,600 megawatt hours of travel by 120 million miles, reducing electricity per year, enough energy for 750 average homes. Photo courtesy National Cooperative the carbon footprint by 11,700 cars. Bank All of the electricity generated will

42 May/June 2014 / Rural Cooperatives Farm Partners LLC would equally merge the two companies to protect, strengthen and grow members’ equity Census shows steady decline investments for the future, the co-ops in land devoted to farming said in an announcement. The boards of directors of FSA and The 2012 Census of Agriculture, reported in 19 states. The largest TCFA determined that pursuing this released May 2, shows a nationwide percentage gains were in: Maine, 7.9 new business structure is in the best drop in land devoted to agricultural percent; Connecticut, 7.6 percent; interest of the collective membership, production, from 922 million acres in Florida, 3.4 percent; Rhode Island, 2.6 which values the cooperative system 2007 to less than 915 million acres, percent, and Virginia, 2.4 percent. and its ability to serve their growing according to an announcement by But these upticks don’t tell the whole needs. American Farmland Trust. This story. “In recent years, we have seen reduction continues a downward “In recent years, we’ve cooperatives sell to national companies trend that has resulted in a 72- developed more than 50 acres of and eliminate the cooperative from the million-acre decrease of land in agricultural land every hour,” says local market,” TCFA President Tim agriculture since 1982. McElwaine. “Since 1982, we’ve Spector said. “We want to ensure that The census counts land devoted converted 24.1 million acres – an our member-producers can continue to to cropland, woodland, pasture and area the size of Indiana and Rhode depend on the cooperative system that rangeland, and farmsteads/farm Island combined.” they value and trust to provide the buildings, but does not track Estimates from the latest National high-quality, competitively priced changes in rural land use, including Resources Inventory – a nationwide products and services that they have acres lost to development. survey of non-federal land come to expect.” “This latest census continues the conducted by USDA’s Natural The merger would also create more steady decline of land in agricultural Resources Conservation Service – opportunities for growth and position use as demand for agricultural also show that every state the new LLC to lead the cooperative products grows worldwide,” says developed rural land and lost system in the state of Arkansas. Andrew McElwaine, president and cropland soil to erosion between Farmers Supply Association, based in CEO of AFT. “Globally, we face the 2007 and 2010. According to an Harrisburg, is an ag supply cooperative challenge of doubling food analysis by American Farmland that has been working with farmers for production by 2050 to feed the Trust, each of the 19 states with more than 52 years in seven counties in world’s population.” more land in farms in the 2012 northeast Arkansas. States with the largest census also developed significant With headquarters in Brinkley, Tri- percentage declines in land devoted acres of rural land. County Farmers Association has served to agriculture were: Kentucky, 6.7 For more analysis of the 2012 its cooperative members for more than percent; Alaska, 5.4 percent; Census of Agriculture, visit: 58 years in nine eastern Arkansas Georgia, 5.2 percent; Mississippi, 4.6 www.farmlandinfo.org/statistics#Cen counties. percent; and Wisconsin, 4.1 percent. sus of Agriculture. ■ Increases in land in farms were Oregon co-op markets GMO-free cherries A new line of maraschino cherries that are certified to be free of be purchased by subsidiaries of Duke move from one job to the next creating genetically modified organisms (GMO) Energy. More than half of the solar sustainable long-term job growth,” says has been introduced by Oregon Cherry projects serve low- to moderate-income Markus Wilhelm, CEO of Strata Solar. Growers, a Salem-based cherry rural communities. processing cooperative. According to a These projects also have created new Arkansas ag co-ops report in the Statesman Journal jobs. The co-op bank’s partner, Strata pursue merger newspaper, the line of natural Solar, is committed to hiring and Farmers Supply Association (FSA) maraschinos has passed an independent training a local workforce for long-term and Tri-County Farmers Association verification process by the Non-GMO employment opportunities. In 2013, (TCFA) recently announced the Project, a nonprofit organization that Strata Solar tripled its workforce by planned merger of their two performs third-party verification and creating 1,200 new jobs. “Our strategy cooperatives to create a new limited labeling. is to build our utility-scale projects in liability corporation (LLC). Pending Oregon Cherry Growers is one of regional clusters, so that our teams membership approval, the Arkansas the largest processors of sweet cherries

Rural Cooperatives / May/June 2014 43 in the world, supplying fresh, timber. USDA says the loan also will the program through prepayment of maraschino, dried and frozen sweet preserve 20 jobs at the business in their Rural Utilities Service loans. cherries, as well as blueberries and Trego, in northwest Wisconsin. other fruits. “Since our line of Royal Founded in 1996, Tri-State Lumber & Trupointe Co-op Harvest Maraschinos already met all of Land is a locally owned sawmill that opens Indiana facility the non-GMO criteria, it seemed only specializes in high-grade lumber, Trupointe Cooperative in April natural that we would pursue the non- paneling, flooring, corner trim and opened a full-service agronomy hub in GMO certification,” Tim Ramsey, the moldings for wholesale and retail Milford, Ind. Located on a 275-acre co-op’s CEO, told the newspaper. markets. site, the facility will hold 2 million Founded in 1932, Oregon Cherry USDA’s REDLG program provides gallons of liquid fertilizer and 37,000 Growers is a grower-owned cooperative zero-interest loans for co-ops to relend tons of dry fertilizer. Its automated of family farms cultivating, for job creation efforts, typically handling systems will provide accuracy manufacturing and marketing fruit through revolving economic and efficiency with load-out times set at grown in the Willamette Valley and the development accounts. Co-ops support seven minutes for dry fertilizer, 17 Columbia River Gorge. The co-op minutes for liquid fertilizer employs more than 400 people at its and 15 minutes for processing plants in Salem and The anhydrous ammonia. Dalles. Certain products will be available for loading 24 Co-op using USDA loan to hours a day, seven days a create new jobs in forest week. products Chase Snyder is the A Wisconsin forest products business manager of the new is set to expand with the help of a rural agronomy facility. Snyder development loan secured by Barron graduated from Ohio State Electric Cooperative. The $657,000 University with a loan, issued by USDA Rural bachelor’s degree in crop Development under its Rural Economic science and agricultural Development Loan and Grant systems management. He (REDLG) program, will enable Tri- previously worked as a State Lumber & Land to add as many superintendent at as 10 jobs during the next three years, Consolidated Grain & according to a report on the Electric Barge in Mount Vernon Cooperatives Today website. and Princeton, where he The company’s growth plans call for Construction work was nearing completion when this photo managed grain quality, producing pallet parts from small- was taken inside the dry fertilizer storage building at the new personnel, logistics and the diameter, low-grade timber, which will Trupointe Cooperative agronomy hub in Milford, Ind. The preventative maintenance maximize production of all harvested facility opened in April. Photo courtesy Trupointe Co-op program. ■

Commentary on a renovation and expansion project. two operating rooms and an education continued from page 2 The $24 million project was made center. possible through many partnerships, Marc Knisely, CEO of United FCS, including investments from AgStar, says the project provides local United FCS, CoBank and financing communities with improved access to from USDA Rural Development. In quality health care today while also www.usda.gov/investmentconference. addition, Renville County Hospital and promoting opportunities for future Clinics has committed a portion of the expansion of services. Promoting rural healthcare project costs from its own cash reserves. Both of these endeavors show that In another indication of how Farm This 62,000-square-foot project the cooperative mission of FCS can Credit works with USDA, AgStar includes a new clinic featuring 15 exam manifest in many worthy ways, and Financial Services and United FCS have rooms and one procedure room, 16 USDA Rural Development looks partnered with Renville County inpatient beds, lab radiology and forward to more such collaborative Hospital and Clinics in Olivia, Minn., therapy, outpatient and specialty clinics, efforts in the future. ■

44 May/June 2014 / Rural Cooperatives The Right Blend co-op has begun the build up to sitting at the same table to make continued from page 17 increase production two-fold of the decisions, accountability exists where it proven blends. This is a direct response otherwise may not. to the increased demand for the This accountability between the products from institutional and supply chain sectors leads to increase in commercial buyers. communication and trust at the Co-op leaders say it appears likely individual level, which results in that the sales volume of the vegetable adequate transparency at the individual blends — each 40,000 pounds of raw blends will increase in 2015 and 2016 and organizational levels. Fifth Season’s product — at Sno Pac Foods in the and that new products will be added to model is changing the culture of doing early winter of 2013. By collecting pre- the co-op’s offerings, including carrot business within an otherwise orders from enough institutional fries, a late-summer vegetable medley conventional food supply chain and is buyers, Chapeta was able to justify and pureed products. normalizing a new approach, rooted in moving forward with the project. The Organic Valley benefited greatly accountability and transparency across result was a success for Fifth Season from the success of this project. The sectors. Cooperative, and for farmers and small family farmers in this cooperative, The values of environmental, social schools, as well as the other many of whom are Amish farmers, and economic health and fairness institutional buyers. produced all of the butternut squash, motivate the co-op to produce, process Historically, tracking food through red beets and golden beets for the and market healthy, locally grown foods conventional supply chains — with the Winter Moon Blend, most of which in its region. As Fifth Season continues goal of educating consumers about the were seconds. Until this project, the to grow and build a community and origins of their food — has been farmers had not found a suitable market regional food system, the hope is that difficult. In typical supply chains, where for their cosmetically imperfect the values themselves will transform procurement decisions are made based seconds. relationships that have the potential for on least expensive available product, the The relationship between Organic positive social change. origin of products can be highly Valley and Fifth Season Cooperative is If the success of Fifth Season is any variable. reciprocal. Organic Valley provides sign of the potential of this model, then However, Fifth Season provides full locally grown organic vegetables and there should be great hope and transparency on product origins for all Fifth Season provides member-owned confidence for building sustainable local customers. For the frozen blends, Fifth processing infrastructure and a market food systems across the country. ■ Season provided farmer-identified for these products through its educational materials, giving the distributor-member, Reinhart Food References consumer information about the Service. These relationships have come • Berkenkamp, Joanne. (2014). Eating our Peas full circle within Fifth Season. and Carrots: Strategies for Expanding K-12. farmers and their growing practices. Access to Fruits and Vegetables Through The winter availability of these Supply Chain Innovation and Investment. locally grown products helped Robust, regional food system Prepared for School Food Focus a program of Fifth Season Cooperative, as part of Public Health Solutions institutions meet the demands of their • Centers for Disease Control and Prevention. customers to extend the season for local an applied research project, fostered (2011).Youth Risk Behavior Survey. Available at: products. The schools ability to order supply chain relationships that created a www.cdc.gov/yrbs. Accessed January 2014. market for under-utilized produce, • Edwards-Jones, G., Milà i Canals, L., frozen, locally grown products through Hounsome, N., Truninger, M., Koerber, G., their existing distributor was seen as enhanced business viability, provided Hounsome, B., ... and Jones, D. L. (2008). highly convenient, while simultaneously fair pricing to farmers and supplied Testing the assertion that ‘local food is best’: the children with healthy food at a challenges of an evidence-based approach. providing the opportunity for small- Trends in Food Science and Technology, 19(5), 265- and mid-sized growers to access new reasonable cost. By developing a robust 274. institutional markets. regional food system that increases • Day-Farnsworth, L., and Morales, A. (2011). access for small farmers to institutional Satiating the Demand: Planning for Alternative Models of Food Distribution. Journal of Promising markets and markets, Fifth Season is building a Agriculture, Food Systems and Community values-based supply chains strong, resilient local economy. Development, 2, 227-247. Fifth Season provides a model of • Goldberg, G. (Ed.). (2008). Plants: diet and Fifth Season Cooperative used 90 health. The report of a British Nutrition percent cosmetically imperfect seconds how cooperatives can contribute to Foundation Task Force, Blackwell Publicing to create its root vegetable blends and economically thriving communities by Ltd., Oxford, UK John Wiley & Sons. bringing together groups that typically • Hinsch, R. T., Slaughter, D. C., Craig, W. L., will continue to develop a new product and Thompson, J. F. (1993). Vibration of fresh line of frozen, minimally processed do not work closely together, such as fruits and vegetables during refrigerated truck vegetables and vegetable blends in the distributors and small organic farmers. transport. Transactions of the ASAE, 36. coming years. For the 2014 season, the Because these diverse stakeholders are

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