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Bringing Home California's Billion-Pound Baby

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Bringing Home California's Billion-Pound Baby al r u R COOPERATIVESCOOPERATIVESUSDA / Rural Development January/February 2007 Bringing home California's billion-pound baby page 8 COMMENTARY Working for the long term Editor’s note: as part of an interview with Blue Diamond Almond been placed at a Growers leaders that appears on page 8 of this issue, Rural disadvantage Cooperatives asked whether there had been any ramifications at because of this Blue Diamond when one of its sister tree-nut co-ops voted about two action? The busi- year ago to convert to an investor-owned corporation. The answer of ness is now owned Board Chairman Clinton Shick deserves special attention, and is by stockholders printed below. whose economic motivation may be As a former member of the walnut cooperative that con- sharply divergent verted — and one who continues to grow walnuts (as well as from the growers' almonds) — it remains unclear whether the conversion helps interests. The the walnut industry long term. If anything, it confirmed in my "rest of the story" mind that I am on the Blue Diamond board to serve in a way is still to be writ- that benefits all growers in the almond industry. ten, and who can Still, the conversion required us to evaluate their action as say how it will Blue Diamond Chairman Clinton Shick on his a significant event in the co-op world. Blue Diamond didn't almond ranch in Kern County, Calif. Photo by turn out? get to be the world’s largest almond processor and marketer Catherine Merlo But for Blue over night. We've been working at it for 96 years, and the suc- Diamond, it has cess we may enjoy today is made possible by standing on the caused our mem- shoulders of a lot of folks who worked bers to reaffirm their support of the hard way before us. cooperative business model that is As a director of a cooperative, the lure focused on building strong markets with of short-term gains that may be possible These gains have profitable returns to members. We because of preceding, long-term endeav- believe we have proven, and can contin- ors is seductive and tempting. But what resulted in large ue, to be highly successful conducting about the future stability of an industry business as a cooperative in which all that has been served well by the coopera- part from members are treated fairly and equitably tive business model? over the long term. At Blue Diamond, we think the coop- When I started growing almonds, erative business model, when properly growers working there were about 300,000 acres of managed, can continue to serve not just almonds in California. Today, there are today’s member-owners, but those who together in a 680,000 acres, and California dominates will follow after us. the world almond market with an 80-per- At a recent Young Co-op Leaders cooperative. cent share. I simply do not believe that meeting, I made the comment that, in and this type of sustained industry growth of itself, there is nothing special about a would have been possible without the cooperative. But when you have the right presence of a grower-owned cooperative management with a long-term outlook, and you have an leading the industry in so many crucial ways, from processing engaged board, and you have the best people in every disci- to marketing. These gains have resulted in large part from pline, some magic happens. When you enjoy success, all the growers working together in a cooperative for their common benefits flow directly through to the member-owners. good and the good of the industry. In the walnut co-op’s case, there have been short-term ben- efits in the form of a payout for selling the co-op's facilities — Clinton Shick, Chairman and brand. But at what long-term cost? Have future growers Blue Diamond Growers I 2 January/February 2007 / Rural Cooperatives al r u R January/FebruaryCOOPERATIVES 2007 Volume 74 Number 1 FEATURES 4 Changing of the Guard Market changes lead to higher level of farmer collaboration in England Rural COOPERATIVES (1088-8845) is published By Charlotte Lee-Woolf bimonthly by Rural Business–Cooperative Service, U.S. Department of Agriculture, 1400 Independence 8 Billion-Pound Baby Ave. SW, Stop 0705, Washington, DC. 20250-0705. p. 4 The Secretary of Agriculture has determined that ‘High-octane’ almond orchards fuel sustained growth as Blue Diamond publication of this periodical is necessary in the expands global market reach transaction of public business required by law of the Department. Periodicals postage paid at By Dan Campbell Washington, DC. and additional mailing offices. Copies may be obtained from the Superintendent of 14 King’s Ransom Documents, Government Printing Office, Washington, DC, 20402, at $23 per year. Postmaster: send address Ohio tree farmers’ co-op seeks better markets, prices for ‘King of Pines’ change to: Rural Cooperatives, USDA/RBS, Stop p. 14 By Ashley Lykins 3255, Wash., DC 20250-3255. Mention in Rural COOPERATIVES of company and brand names does not signify endorsement over 18 Renewable fuels industry rife with opportunity other companies’ products and services. for co-ops Unless otherwise stated, contents of this publication By Lynn Pitman are not copyrighted and may be reprinted freely. For noncopyrighted articles, mention of source will be appreciated but is not required. p. 18 22 Outside the Box The U.S. Department of Agriculture (USDA) prohibits Community-owned department stores an alternative to big-box chain stores discrimination in all its programs and activities on the basis of race, color, national origin, age, disabili- By Jane Livingston ty, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, 24 Turning Over a New Leaf genetic information, political beliefs, reprisal, or because all or part of an individual’s income is End of tobacco program, rising foreign competition thrust burley co-op derived from any public assistance program. (Not into new role all prohibited bases apply to all programs.) Persons p. 24 with disabilities who require alternative means for By Anne Todd communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). 28 Global 300 list reveals world’s largest co-ops To file a complaint of discrimination, write to USDA, David S. Chesnick & Carolyn Liebrand Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, or call (800) 795-3272 (voice), or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer. DEPARTMENTS Mike Johanns, Secretary of Agriculture 2 COMMENTARY Thomas C. Dorr, Under Secretary, 17 IN THE SPOTLIGHT USDA Rural Development 32 CO-OP DEVELOPMENT ACTION Jack Gleason, Administrator, Rural Business-Cooperative Programs 34 NEWSLINE 42 PAGE FROM THE PAST Dan Campbell, Editor Vision Integrated Marketing/KOTA, Design On the Cover: Have a cooperative-related question? Call (202) 720-6483, or Almonds are swept into windrows for harvest. The U.S. almond Fax (202) 720-4641, Information Director, industry now produces more than 1 billion pounds annually. Blue This publication was printed with vegetable oil-based ink. Diamond Growers officers discuss marketing and other challenges associated with industry growth, beginning on page 8. Photo cour- tesy Blue Diamond Growers Rural Cooperatives / January/February 2007 3 Changing of the Guard Market changes lead to higher level of farmer collaboration in England By Charlotte Lee-Woolf Research Associate, EFFP Ltd. he farming and food industry in England is currently going through a period of funda- T mental change. It is widely believed that the recent reform of the Common Agricultural Policy (CAP), particularly the decoupling of subsidy support from production, will increase the scope for farmers to become more flexible in what they produce. These changing dynamics represent both opportunities and challenges for farmers as they alter production in response to market forces rather than subsidy payments. They must ensure that they meet the needs of their cus- tomers in the supply chain in order to compete successfully in the global food economy. Collaboration provides a means for farmers to achieve this: by farmers working with one another to gain economies of scale in purchasing of inputs, in production or marketing of products, or by collaborating with their suppliers and cus- tomers in the supply chain to enable farmers to deliver a cost-effective, professional service to their customers. However, the farming industry in England is behind the game in collaboration. For a range of historical reasons— Grainfarmers PLC is the largest farmer-owned grain-marketing including previous trading relationships, differing support struc- company in the United Kingdom, with an estimated 20 percent of the tures and land laws and a political focus on the consumer—col- nation’s grain volume. Members’ crop is processed into bread and laboration among farmers has not developed in England to the other wheat-based foods. Photo Courtesy Grainfarmers PLC extent it has in some areas of Europe and North America. 4 January/February 2007 / Rural Cooperatives The total output of farmer-controlled businesses (or businesses involved, including collaborative purchasing of FCBs, which are collaborative initiatives often referred to as inputs, farm production, storage and processing and market- cooperatives) in England is at some £4.7 billion, or roughly ing of outputs. 35 percent of gross agricultural output. By contrast, in They demonstrate the importance of collaboration in cre- Denmark and Sweden farmer-controlled business is double ating a vibrant and profitable farming and food industry in that of their agricultural industries. England and reinforce the need for farmers to develop English Farming & Food Partnerships (EFFP) is a mem- understanding of the market they are producing for, act upon bership organization with an industry mission to strengthen opportunities identified, reduce unnecessary costs and add the profitability, competitiveness and sustainability of value to production.
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