Rural COOPERATIVES COOPERATIVES Investing In Your Co-op’s Future Co-op’s Your In Page 10 Page Commentary Ag co-ops remain strong

By Alan Guebert father, John, Sr., an attorney and farmer, and other burley growers employed to start, then manage, the cooperative. It Editor’s note: This guest commentary is reprinted courtesy The was an essential tool, they explain, used by hundreds of Farm and Food File, Guebert’s column that is published weekly in thousands of farmers and generations of farm families in five more than 70 newspapers in North America. Guebert can be states to maintain competitive markets, successful farms and contacted at: [email protected]. vibrant rural communities. The principles harnessed by Berry, Sr., my father, his The weekly hometown newspaper recently Illinois’ neighbors and many others continue to inspire brought news of a family friend’s death. The cooperation today. According to the U.S. Department of friend, a dairy farmer, had lived a long, good Agriculture, 2,238 agriculture, ranching and fishery life and was a respected member of his cooperatives and their 2.1 million members employed church, community and profession. 129,000 full-time and 56,000 part-time employees while My family’s connection, outside of cows and kids, was generating $235 billion in sales last year. business: he, my father and a few dozen farmers in Moreover, notes USDA in a recent issue of its “Rural neighboring southern Illinois counties were members of a Cooperatives” magazine, (http://www.rurdev.usda.gov/ small farm cooperative through which they purchased inputs SupportDocuments/rdRuralCoop_Sept_Oct13Vr_Web.pdf), like feed and fertilizer. today’s farm cooperatives — like today’s farms — run the Back then, 50 and more years ago, these very busy hog, gamut in size. cattle, dairy and grain farmer-members did all the “While 31 cooperatives recorded more than $1 billion in cooperative lifting, light, heavy and in-between. They sales” in 2012, reports the magazine, “almost 34 percent of ag gathered orders, kept accounts and, often as not, used their cooperatives (749) had less than $5 million in sales.” own trucks, tractors and wagons to deliver their co-op But the four biggest ag co-ops, CHS Inc., Land O’Lakes brothers’ purchases. Inc., Dairy Farmers of America and Growmark, are really In fact, I saw our dairying family friend only three or four big; their combined 2012 sales, $76.7 billion, equaled one- times a year. Once was always at the annual co-op picnic third of all ag cooperative business last year. (think summer Sunday afternoon, grilled pork steaks, cream Coincidentally, the number of cooperative members soda); the other times were when he left his never-done farm nationwide, 2.1 million, nearly matches the number of farms work to pick up and deliver soybean meal in his wheezing, nationwide, 2.2 million, even after membership and co-op single-axle truck to our farm. numbers dropped in 2012. Overall membership sank by How did he have the time to leave his hay-to-bale, silage- 200,000, or 7 percent, and co-op numbers fell (mostly to-chop dairy to bring us our goods in his truck? through of mergers) by 60. He didn’t. He made time because that’s what cooperative But even as the number of traditional ag co-ops begins to members did back then to aid the success of their shared trend lower, the number of non-traditional ag co-ops is enterprise and fellow farmers. It was — and is — the very beginning to bloom. In September, USDA’s “Rural essence of small “c” cooperation. Cooperatives” magazine carried short, informative stories Others recall similar selflessness in other, bigger about a new peony-selling co-op in Alaska, the founding of cooperatives. The Berry brothers, attorney John, Jr. and two community “food hub” co-ops in Wisconsin and the writer and poet Wendell, of Henry County, Kentucky, are recent start-up of a “wellness and yoga” co-op in rural eloquent, passionate explainers of the Burley Tobacco Montana. Growers Cooperative Association, based in their home state. These newcomers are learning what the old-timers well Neither defends tobacco because, as Wendell noted in a knew: working together works. Or, as some of the folks in discussion of the Burley Association with his brother at a Hamilton, Montana, now say, “Namaste, partner.” (Editor’s public forum last spring, “It’s indefensible.” note: “Namaste” is a greeting used in India). n Both, however, vigorously defend the principles their

2 January/February 2014 / Rural Cooperatives Features

Volume 81, Number 1 January/February 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. 20 p. 40 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 Food hubs: an evolution of the co-op business model Government Printing Office, Washington, By James Matson, Jessica Shaw and Jeremiah Thayer DC, 20402, at $23 per year. Postmaster: send address change to: Rural Cooperatives, USDA/RBS, Stop 3255, 10 Investing in your co-op’s future Wash., DC 20250-3255. Key finance, marketing issues examined during Farmer Co-ops Conference Mention in Rural Cooperatives of By Lynn Pitman company and brand names does not signify endorsement over other companies’ products and services. 18 Co-ops = Community Development Cooperative developers share ideas in Minneapolis Unless otherwise stated, articles in this publication are not copyrighted and may By Bruce J. Reynolds be reprinted freely. Any opinions express- ed are those of the writers, and do not 20 What leads to satisfied co-op members? necessarily reflect those of USDA or its employees. Surveys of dairy farmers show management and pricing are key By Carolyn B. Liebrand The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of 24 Welcome to the Club! race, color, national origin, age, disabili- ty, and where applicable, sex, marital Food buying club co-ops have potential to help increase food security for many status, familial status, parental status, By Alfonso Morales and Ali Loker religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual’s 29 Co-ops urged to observe Grain Bin Safety Week 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 Departments Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 02 COMMENTARY 1400 Independence Avenue, S.W., UTILITY CONNECTION Washington, D.C. 20250-9410, or call (800) 08 795-3272 (voice), or (202) 720-6382 (TDD). 15 IN THE SPOTLIGHT USDA is an equal opportunity provider and employer. 16 CO-OPS & COMMUNITY 30 NEWSLINE

Tom Vilsack, Secretary of Agriculture

Doug O’Brien, Acting Under Secretary, USDA Rural Development ON THE COVER: How cooperatives raise capital to Dan Campbell, Editor fund their operations was one of the major topics at Stephen A. Thompson, Assitant Editor the Farmer Cooperatives Conference, sponsored by Stephen Hall / KOTA, Design the University of Wisconsin. See page 10.

Have a cooperative-related question? Call (202) 720-6483, or email: [email protected]

This publication was printed with vegetable oil-based ink.

Rural Cooperatives / January/February 2014 3 Food hubs: an evolution of the co-op business model By James Matson, Jessica Shaw and Jeremiah Thayer

Cooperatives, long a mainstay of the agricultural industry, have evolved and adapted along with the ever- changing farm industry and overall economy. As the influence of co-ops has grown, the underlying principles of cooperative enterprises have proven vital to the success of the nation’s food and agricultural industry. In recent years, consumer demand for local foods has grown markedly, leading to a rise in local food systems. These include food hubs, which typically operate using cooperative principles

4 January/February 2014 / Rural Cooperatives and which often have an urban and However, community revitalization abstract goals of building a diversified social/environmental mission focus. extends beyond simple economics; it is food culture. By unifying agricultural producers, a result of an economic and social Food hubs have blossomed in large farmer co-ops can provide the scale, revitalization that fosters the long-term part due to the “surge in buying locally coordination and improved marketing sustainability of a community-based produced foods and support for local system needed to help their members food system. agriculture” (Matson et al., 2013). succeed. There is no universally Small-scale producers alone were accepted definition of a cooperative, Emergence of food hubs increasingly unable to meet the growing and the laws for cooperative USDA’s Agricultural Marketing surge of consumer demand for local organization vary from state to state. So Service says a food hub offers “a food. perhaps a cooperative is most easily combination of production, The growth in direct marketing recognized when it follows the three aggregation, distribution and marketing channels — and the increasing number core co-op principles developed by services [to] make it possible for of farmers choosing to use them — is USDA during a series of nationwide producers to gain entry into new and evidence of the rapid growth of local panels in 1986 (see sidebar, page 7). additional markets that would be foods production and consumption. Food hubs can be viewed as a natural difficult or impossible to access on their Producers are banding together and progression in the application of these own” (“Farmers Markets,” 2013). developing businesses to meet new cooperative principles and ideals. They Although this definition focuses on the opportunities to supply food to mid- do more than simply address the needs physical movement of goods, a food sized wholesale operations — including of producers; food hubs incorporate a hub can also be defined by market- institutions, restaurants and grocery “triple bottom line” focus to better efficiency functions, in addition to more stores — as well as individual address the needs and demands customers. of consumers seeking local Even in their short history, foods. food hubs have proven highly Food hubs, driven by the adaptable — in size, scope and cooperative spirit, expand the type of products offered — to traditional concept of meet the vagaries of consumer agricultural cooperatives to demand. Indeed, the term include other stakeholder “food hub” exists more as a groups in addition to description of a number of producers. Food hubs functions than as a defined represent a continued business structure. Thus, the evolution of the cooperative term “food hub” is often ideal of producers working applied to a continuously together to provide outlets for changing business model, their products, while also transforming to satisfy the addressing the concerns of ever-changing demands of workers, consumers and the local consumers. This community. continuous adaptation has Increased profit for local resulted in an increased focus producers and increased The coordination services a food hub provides can extend the on the social-mission aspects production can directly impact season of products. Larger crop volume and coordination of of many food hubs and their a community through the local production can ensure a steady flow of product that helps to community interactions, as retention of more food dollars. stabilize prices. well as a movement to address

Editor’s note: The authors are all with Aiken, S.C.-based Matson Consulting, which for more than a decade has assisted in the organization and infrastructure design of local food hubs. It is currently working in cooperation with USDA and the Virginia Foundation for Agriculture, Innovation and Rural Sustainability to develop a U.S. Food Hub Operations Guide. Matson is the lead consultant for the business with 25 years’ experience in agricultural business development; Thayer is an associate who focuses on feasibility studies, business plans and marketing documents; Shaw is an editor and consultant.

Rural Cooperatives / January/February 2014 5 multiple stakeholder classes in a various functions of the organization from local producers that can be stored community. and receive benefits. Individual farmers for longer periods at the warehouse. Multi-farm CSA’s (community and other producers are generally in the In addition to negotiating prices, supported agriculture), cooperatives and position of being price-takers. Food food hubs often connect farmers with farm-to-table initiatives are other non-farm businesses to just a few of the types of food meet a wide variety of mutual aggregation ventures taking needs. Local Food Hub, on the roles included in the located in Charlottesville, USDA definition of a food Virginia, offers an example of hub. This flexibility allows how food hubs can facilitate many food hub ventures to this connection between meet their mission by farmers and non-farm providing more than fresh businesses. Since this food produce — such as locally hub requires a clean water slaughtered meats, value- test from its producers, the added goods and locally food hub has partnered with finished food products. water testing companies to provide reduced rates for How food hubs Increased profit for local producers and increased production can producers in need of water embody co-op directly impact a community through the local retention of more food testing. This is just one way principles dollars. some food hubs are helping Food hubs represent a reduce overhead costs for continuation of the three main hubs can negotiate better prices for producers and also lowering prices paid cooperative principles (as outlined in their producers, keeping more farmers by consumers. sidebar, page 7). They not only address in business and helping them expand The aggregation function of food the needs of producer-members, similar production into new crops. hubs benefits consumers and businesses to the way agricultural cooperatives do, As with other types of cooperative, by providing access to local foods that but they also address the needs and the user-ownership and user-control would normally be hard, or impossible, concerns of consumers through their principles adhered to by food hubs to acquire. The ability to provide access inclusion as primary stakeholders. means that they will also pass along to additional outlets helps to connect Multi-stakeholder co-ops are able to other benefits to members. For local and regional growers with mid- provide for user-ownership of the example, food hubs allow producer- scale buyers, including local grocery business by all stakeholder classes. members to benefit by aggregating chains, restaurants and institutions, such Ownership leads to user-control, as product and accessing larger volume as colleges, schools and government each member-owner stakeholder class is markets. This aggregation often leads institutions. integral to the overall direction of the to greater control over pricing than Food hubs often provide education entity. User-benefits are ensured as they could achieve individually. for producers on topics such as safe each stakeholder class has its needs met The coordination services a food hub growing and crop handling practices; through the services of the business. can provide often result in an ability to similarly, they help consumers learn Sandhills Farm to Table Cooperative extend the season of products, while more about food safety in the home, in Southern Pines, N.C., is an example larger crop volume and coordination of cooking and food preparation, as well as of a multi-stakeholder co-op that allows production can ensure a steady flow of the benefits of a sustainable food supply producers, workers and customers to product that helps to stabilize prices. and keeping more farmland in become owners in the organization. Additional revenue can then be used to production. This diverse ownership allows all invest in infrastructure, such as stakeholders to provide input into how greenhouses, which, in turn, can create How food hubs the organization operates and helps a longer growing season. As an expand on co-op ideals ensure that it ultimately addresses the example, Fifth Season Cooperative in The emergence and evolution of needs of each owner-class. Producers, Wisconsin has capitalized on season food hubs stems from an educational workers and customers can work extension opportunities by sourcing and social mission to unite consumers together toward the success of the co-op. dairy, meat, and meat products from and producers in the marketplace. Based on their status as owners, the dairy-cooperative and meat-processing Although the main function of the food stakeholder classes can control the members, as well as more stable items hub is to sell local foods to consumers,

6 January/February 2014 / Rural Cooperatives supply chain has for local communities and economies. Other studies have Cooperative Principles shown that local food supply chains create a web of interconnected economic, community and These three “bedrock” cooperative principles were identified in 1986 by environmental benefits. USDA, working with co-op leaders and educators nationwide: The ability to earn a profit is not The User-Owner Principle — The people who use a cooperative own it. As always the primary underlying owners, the members of a cooperative are responsible for directing activities motivation for establishing a food hub. and driving the overall focus and mission of the cooperative towards its goal. Food hubs that operate cooperatively Because they own the business assets, the members have the obligation to aim to provide benefits beyond (and in provide financing, in accordance with use, to keep the cooperative in business some cases, instead of) simple economic and permit it to grow. returns. In these cases, the focus shifts The User-Control Principle — As owners, a cooperative’s members control from the producer to other social and its activities. This control is exercised through voting at annual and other environmental benefits. Research has membership meetings, and indirectly through those members elected to the shown that “an approach that allows board of directors. Members, in most instances, have one vote regardless of preferences to influence decision- the amount of equity they own or how much they patronize the organization. making makes people better off and The User-Benefits Principle — Since the cooperative is owned by its proud to contribute to sustainability” members, they have the opportunity to receive services otherwise not (Polemini et al.). available, get quality supplies at the right time, have access to markets, or for Consumer demand for food other mutually beneficial reasons. n traceability is a growing issue for the food industry. Food hubs — by shortening the food supply chain — can increase the ability to trace food to its origin. This is just one way food hubs enhance communication between producers and consumers.

Food hubs as a tool for community revitalization While the primary focus of farmers is on attaining financial stability by finding markets for their products, food hubs address the concerns of mid-scale producers while establishing values- based food value chains. These values- based food chains “encapsulate the dual goals of creating economic value through product differentiation and Food hubs can negotiate better prices for their producers, keeping more farmers in advancing a particular set of social, business and helping them expand production into new crops. economic or environmental values through collaborative supply chains that exemplify the broader trend of social entrepreneurship….” (Diamond and Barham, 2011). These “collaborative food hubs provide a wealth of benefits affects an individual’s purchasing supply chains” imply a philosophy of for producers, consumers and the local decisions. shared responsibility between producers community that extend beyond simply Food hubs are often highly and consumers (Janssen 2010). building a supply chain — benefits that committed to the co-op principle of One area where food hubs have the become a part of the milieu of service to community. For example, potential to significantly impact information extending beyond simple many studies have highlighted the communities is by addressing the needs self-interest (Zaichkowsky, 1985) that positive impact that a shorter food continued on page 37

Rural Cooperatives / January/February 2014 7 Utility Co-op Connection USDA works with co-ops on $250 million energy-efficiency effort

By Anne Mayberry, Public Affairs USDA Rural Utilities Service

America’s rural utilities will soon have access to $250 million in funding from the U.S. Department of Agriculture’s Rural Utilities Service (RUS) that can provide a financial boost to their energy efficiency and renewable energy programs. Agriculture Secretary Tom Vilsack announced final regulations for the new Energy Electric co-ops play a major role in educating consumers about ways to lower their energy bills, through means such as adding insulation and sealing air leaks. USDA’s Rural Utilities Service is Efficiency and Conservation Loan providing additional funding that will help co-ops make loans to members for energy efficiency Program Dec. 4. “This program will improvements to their homes and businesses. Photo courtesy National Rural Electric Cooperative help build a cleaner and more Association sustainable domestic energy sector for future generations by reducing barriers reduce emissions and strengthen rural efficiency measures can reduce home to investment in energy efficiency and economies,” Vilsack said. energy use considerably, many potentially cutting energy bills for Goals of the new Energy Efficiency consumers and businesses do not invest American families and businesses in the and Loan Conservation Program in them because they lack the capital or process,” said Vilsack. include funding projects to increase financing to do so,” O’Brien said. The program (scheduled to become energy efficiency for consumers (saving “Consistent with President Obama’s final Feb. 3, 2014) will make loans them money) and modifying electric Climate Action Plan, this program will available to RUS borrowers to load to reduce system demand. Other reduce barriers to these investments by implement various energy efficiency goals include the more efficient use of making financing more available.” and conservation measures, which can existing distribution, generation and National Rural Electric Cooperative reduce energy costs for consumers. transmission facilities; encouraging the Association (NRECA) CEO Jo Ann Typical funding uses include demand- use of renewable fuel sources; attracting Emerson said the new rule will provide side management to more efficiently new businesses and creating jobs. In financial assistance for co-op energy control the use and cost of power, announcing the program, Vilsack said efficiency programs. “Electric energy efficiency/conservation “Ultimately, reducing energy use helps cooperatives welcome this new programs, and on- and off-grid pump capital back into rural financing tool that will allow co-ops to renewable energy systems. communities. This program is designed help their members overcome the to meet the unique needs of consumers biggest hurdle to energy efficiency 40 percent savings possible and businesses to encourage energy upgrades: cost,” said Emerson. She Rural electric cooperatives have a efficiency retrofitting projects across added that 96 percent of member- successful history of promoting energy rural America.” owned, not-for-profit cooperatives offer efficiency; many have collected data to USDA Rural Development Deputy energy efficiency programs to help their measure the success of a variety of Under Secretary Doug O’Brien said members save money. “Co-ops may activities. “Energy efficiency retrofitting that the new program will make more lend RUS funds to consumers to can shrink home energy use by 40 capital available to expand energy undertake their own efficiency percent, save money for consumers, efficiency programs. “While energy upgrades. Consumers may have the

8 January/February 2014 / Rural Cooperatives ability to repay the loan through on-bill Cooperative worked with several groups provides environmental benefits while financing.” and government agencies — including contributing to U.S. energy independence.” Investments eligible for funding USDA Rural Development — to Hoosier’s program includes include: design, fund and administer the distributing more than 1,400 compact • Building weatherization; program. USDA’s Rural Economic fluorescent lighting fixtures to replace • Heating and cooling system upgrades; Development Loan and Grant Program incandescent bulbs and increasing • Ground-source heat pumps; (REDLG) provided loans to fund the efficiencies of heating, ventilation and • Lighting; “Help My House” projects. air conditioning (HVAC) systems, all by • Small-scale renewable generation, and The results of the South Carolina using strategies to offset incremental • Energy audits. program were impressive, with cost differences. Last year, the reductions in electric use averaging 34 cooperative increased incentives for Leveraging with other percent. U.S. Rep. James Clyburn, who commercial and industrial customers to USDA programs has been instrumental in promoting reduce demand during Hoosier’s peak Utilities may relend funds to energy efficiency, says energy efficiency load cycles, according to Tom Van consumers or finance their own programs have delivered benefits to Paris, vice president of Hoosier activities. These loans may be serviced rural areas in South Carolina. “This Member Services and Communications directly by RUS borrowers or financial announcement will mean jobs in rural and a speaker at USDA’s 2013 Ag institutions. Under the program, communities, significant utility savings Outlook Forum. “We offer our consumer loans are capped at 1.5 for rural homeowners, and environ- consumers tools to better manage their percent above the interest rate from mental benefits for all Americans at electric bills in an era of rising rates, RUS to the borrower. Rural little cost to taxpayers. This is a loan, and we work to help defer the need for Development’s Rural Business- not a grant, and enables working new capacity, which can be costly,” Van Cooperative Service (RBS) and Rural families to finance energy-efficiency Paris told the audience. Housing Service (RHS) have programs investments in some of the nation’s that can be leveraged with energy most persistent poverty areas.” Study: $1 trillion efficiency funds. Expanding energy efficiency and savings over 10 years South Carolina Electric Coopera- renewable energy programs in rural Several studies have pointed to the tives’ work on energy efficiency has areas not only helps residential and economic benefits of energy efficiency already leveraged another Rural commercial consumers reduce their use programs — not just in the savings for Development program, and achieved of electricity, but can also help rural consumers, but also in the long-term significant results. In this case, the electric cooperatives avoid the purchase effects on energy use. A March 2012 “Help My House” pilot was launched or construction of additional electric Rockefeller Foundation report on by Central Electric Power Cooperative, generation. Steve Smith, president and financing energy efficiency projects found that a $279 billion investment could return more than $1 trillion in “Electric cooperatives welcome this new financing tool energy savings over 10 years. that will allow co-ops to help their members overcome “Energy efficiency programs save money, curb emissions and help boost the biggest hurdle to energy efficiency upgrades: cost.” rural economies, based on the experience of rural electric cooperatives a wholesale power provider in South CEO of Hoosier Energy, a generation nationwide,” O’Brien noted in Carolina, in response to its board’s and transmission cooperative that discussing the new program. “Rural adoption of a 10-percent target supplies power to 18 rural electric communities may see an increase in reduction in residential energy use cooperatives that serve nearly 300,000 these programs to help fund affordable, within 10 years. This is coupled with consumers in Indiana and southeastern energy-efficient improvements for rural the goal of reducing average wholesale Illinois, said his co-op is among the business and residential consumers now power costs for residential customers, utilities that have developed metrics to that this rule is final.” while maintaining or improving measure success. Additional information on the member satisfaction. “Using energy efficiently empowers Energy Efficiency and Conservation Because many of the co-ops’ rural consumers to better manage their Loan program is available from the consumers across the state lacked funds energy bills as costs rise,” Smith said. RUS website: http://www.rurdev. to invest in energy efficiency “At the same time, co-op members like usda.gov/ UEP_HomePage.html. n improvements, Central Electric Power being part of a larger effort that

Rural Cooperatives / January/February 2014 9 Investing In Your Co-op’s Future

Key finance, marketing issues examined during Farmer Co-ops Conference

By Lynn Pitman, Outreach Specialist How does an agri- and a discussion of alternative University of Wisconsin Center business cooperative opportunities for finding capital for Cooperatives provide value to its launched the conference this year. member-owners? The Ronald McFall, a partner with the Stoel Editor’s note: Many of the presentations more than 160 people Rives law firm, provided a review of made during the Farmer Co-op Conference who attended the 16th annual Farmer debt and equity instruments through are posted online at: www.uwcc.wisc.edu. Cooperatives Conference in the lens of securities laws. Changes to That website will also carry periodic updates Minneapolis in November were able to the safe harbor exemption for securities about the next conference, which will be explore that perennial question from a registration may present an opportunity held Nov. 6-7, 2014, in Minneapolis. variety of viewpoints. for cooperatives to expand their securities offerings, he noted. The Investing for the long term exemption’s ban on public solicitations Capitalization presents unique will not apply if sales are made only to challenges for agribusiness cooperatives, accredited investors and if reasonable

10 January/February 2014 / Rural Cooperatives needed to invest in assets that are To provide an incentive to members beyond the reach of an individual to keep their equity invested in the co- farmer. Casale, a veteran of the 90-day op, West Central sets the rates based on cycle that drives a publicly traded maturity date. Dividends are taxed at company, contrasted those investor- the capital gains rates and are not driven demands to the “long view” that subject to self-employment taxes. The cooperatives can take by virtue of their dividends are sourced from non- “patient capital” equity structure. But member business, which provide a way sourcing cooperative permanent capital in which members can also directly can be challenging. benefit from this revenue source. Many cooperatives use earnings from The program must be managed to non-members as a source of permanent balance liquidity needs to meet equity to support growth. Casale noted potential redemption activities against that cooperative businesses can run into the needs for working capital. Stroburg trouble if they stray from their core mentioned the potential feasibility of a business. Because CHS members are public market for cooperative stock, responsible for 70 percent (and which would provide holders of the trending upward) of the co-op’s stock liquidity independent of the earnings, non-member business is not cooperative. seen as a source for equity growth. Debt, especially in these times of low Changing interest rates, presents another source ownership structure of capital for growth. However, market Ireland’s Glanbia Cooperative volatility makes liquidity very Society illustrates another approach to important. Allocated member equity is balancing outside investment, growth an important part of a healthy balance and the optimum deployment of owner sheet, but it can’t be considered equity. Michael Boland, professor at the permanent equity. While the co-op is University of Minnesota, provided not obligated to return the equity, the background on the co-op, which was expectation among members is there. created through the merger in the CHS has chosen to use “no-call” 1990s of two dairy cooperatives. preferred stock offerings to build the Each cooperative had owned a value- permanent equity portion of its balance added firm, and when the cooperatives sheet. merged, so did these firms, creating Jeff Stroburg, president and CEO of Glanbia plc (a public limited company, West Central Cooperative in Iowa, which is equivalent to a publicly traded described his co-op’s approach to company in the United States). Glanbia growth equity. West Central began Cooperative Society was the largest offering a dividend-bearing stock in shareholder in Glanbia plc, which is an steps have been taken to verify 2005. It is one of four different types of international marketer and accredited investor status. allocated stock that the co-op issues to manufacturer of cheese and other Carl Casale, president and CEO of provide flexibility in both revolving consumer dairy products, sports CHS Inc., provided insights into the patron equity and maintaining equity nutrition products, protein and capitalization strategies for this Fortune for growth. micronutrient products, as well as farm 100 cooperative. Strong earnings Qualified allocated equity is retained supplies. growth has supported the expansion of by issuing a class of revolving patronage In 2008, when the European Union CHS’ global reach. The co-op now is stock. It is redeemable into the announced that milk quotas would be seen as a “tier-one” supplier by its dividend-bearing stock after 7-10 years. repealed in 2015, a large number of customers. By becoming a strong The dividend on that stock is currently dairy co-op members began to push for international player, CHS has made its 8 percent and is available for expanded processing facilities to owners relevant to the global market. redemption any time, subject to board accommodate an expected increase in The challenge for CHS, he said, is to approval. It is only issued to revolve farm production. However, this continue to build the permanent capital patron equity and cannot be purchased. conflicted with Glanbia plc’s focus on

Rural Cooperatives / January/February 2014 11 value-added, high-margin production, restructuring was to increase processing the tax treatment of cooperatives). which did not require large amounts of capacity in Ireland, benefitting Irish The impacts of domestic policy on milk for its markets and which were farmers. While co-op member control agribusiness continued to be explored increasingly located outside of Ireland. The pressure to return earnings to shareholders and for debt servicing from earlier expansions, as well as the demand for equity retirement payments (for both retiring and current farmers) also created competition for a share of the earnings. In 2010, members narrowly rejected a proposal to acquire the Dairy Ireland Co-op capitalization strategies were discussed by a panel of (from left): Ronald McFall, of the division of Glanbia plc, dilute its Stoel Rives law firm; Jeff Stroberg, president and CEO of West Central Cooperative; and Carl membership stake in the plc to 10 Casale, president and CEO of CHS Inc. Photo Courtesy University of Wisconsin. Ireland’s Glanbia percent and use the cash raised to build Cooperative Society (GCS) was discussed to provide an example of another approach to dairy processing and agricultural assets. balancing outside investment, growth and the optimum deployment of owner equity. The co-op’s Those opposed to the proposal did not cheese innovation center is seen on facing page. Photo courtesy GCS

“ In situations this complex, the trust between the CEO and the board chair is critically important because it encourages frank discussion and makes sure there are no surprises.”

want to give up their control of the plc of the plc has been diluted from 55 with a panel discussion on ethanol, and to lose the potential returns on percent to 41 percent, the vote was moderated by Michael Weaver, a investments they had made in it. ultimately successful because it gave partner at the law firm of Linquist & The plc’s stock price continued to something to everyone. Vennum. The panel included Jim rise, and in 2012 the co-op and plc In situations this complex, the trust Miller, vice president at Growth announced a new proposal. Glanbia plc between the CEO and the board chair Energy, which represents ethanol would form an LLC with the co-op for is critically important because it producers and supporters; Greg a joint venture to build a dairy encourages frank discussion and makes Krissek, manager at Kennedy and Coe, processing plant in Ireland, controlled sure there are no surprises. Herlihy also a consulting firm; and Rick Schwarck, by the Glanbia Cooperative Society. To noted that outside directors were an president of Absolute Energy, which help finance the plant, the co-op would important addition to a board, bringing owns an ethanol plant in Iowa. The sell a portion of its plc holdings, ending in skill sets that are needed for growth. panel members presented their views its majority position. Proceeds would about the positive effects of the ethanol also be used to pay off long-term debt Policy landscape mandates on the agricultural economy. and retire equity. The plan was finally Chuck Conner, president and CEO ratified at the end of 2012. of the National Council of Farmer What’s ahead for economy? Boland interviewed Glanbia Co-op Cooperatives, said efforts to simplify A look at the increasing impact of board chair, Liam Herlihy, about the the tax code will continue to be China on U.S. agriculture and restructuring. Herlihy noted that the contentious. A preliminary plan floated agribusiness cooperatives was provided challenge was the trade-off involving by the Senate finance committee called by Dermot Hayes, professor at Iowa control of the plc vs. value that could for a repeal of Section 199 deductions, State University. Historically, the benefit members. A major goal of the but not Subchapter T (which describes Chinese have compensated for their

12 January/February 2014 / Rural Cooperatives geographical constraints — such the relative scarcity of good farmland in the eastern part of the country — through The long view of a changing world intensive labor on marginal lands and a diet that wastes very little. As the By John Shutske, Associate Dean country grows and becomes more College of Ag and Life Sciences, University of Wisconsin prosperous, this strategy has become increasingly challenging. Last month, I had the opportunity to be in Minneapolis for a couple days China’s current leadership has been at the Farmer Cooperatives Conference hosted by the University of open to a more free-market approach to Wisconsin Center for Cooperatives. I was particularly interested in an after- agriculture. Continued increases of dinner presentation on the first night, which touched on the major imported of soybeans, corn and challenges that the world faces in feeding a growing global population. livestock — the production of which is Steve Radelet, who recently joined the faculty of the School of Foreign considered an inefficient use on much Service at Georgetown University following his service as chief economist of its agriculture land — would allow for USAID, discussed “The Great Era of Global Development.” Radelet talked rural populations to move to urban about the worldwide economic and human progress during the past 50 centers and bolster the workforce there. years, which has been unprecedented in human history. In just 20 years, China’s growth has already had a billions of people have been lifted out of poverty and hunger.

In just 20 years, billions of people have been lifted out of poverty and hunger.

But most inspiring was Radelet’s discussion of the role that democratic ideas, leadership accountability and economic freedom have played in the progress made by developing countries. Not all countries have equally participated in these past few decades of progress. And this progress could face significant setbacks, or even be derailed, by a major global conflict or environmental catastrophe. But ideals of freedom, democracy, accountability and transparency do clearly work. This discussion reminded me that we see many of these principles and ideals embodied in the work of cooperatives. Radelet’s discussion has also inspired me to think about the role of land- grant universities, such as ours. President Abraham Lincoln signed the Morrill Act of 1862, leading to the formation of our colleges that housed agriculture programs and other educational, research, and eventually substantial impact on Midwest U.S. extension programs. He and leaders before him clearly understood that agriculture. Hayes said that due to this education was, and remains, an important pillar to freedom and democracy. demand, and for other reasons, the As our world continues to progress, we will need to adapt in entirely new economic outlook for Midwest ways because of issues such as climate change, emerging human (and agriculture remains very strong. animal) health concerns, and the continued forces and implications Joseph Mahon, economic analyst connected to a more globalized economy. with the Federal Reserve Bank of I am confident, however, that our science and educational programs will Minneapolis, said that the domestic keep pushing forward. It is also clear that the role of cooperatives and the economic situation for agriculture ideals that Radelet described as being so successful in improving the human continues to be positive. Federal condition have only upside growth potential. n Reserve District 9, which encompasses

Rural Cooperatives / January/February 2014 13 most of the Midwest, weathered the There are a variety of strategies to comparative product information for recession better than other regions, in deal with these challenges, including making purchasing decisions. These part because of the strength of the agricultural innovations that increase include more information about agricultural sector. crop resiliency, productivity and nutrition, production methods and Overall, the 2014 forecast for the 9th efficiency, as well as reduce greenhouse sourcing. Producers need a variety of District is similar to 2013, with the gas emissions. Carefully matching crops strategies to meet consumer demands economy likely to enjoy a moderate to environments, for instance, can for information at the retail level. recovery. Farm income has remained optimize nutrient and water use. steady, and while crop prices overall are Cooperatives are uniquely positioned “Pretty big data” down, land values and rents are still to play a role in this shift. There is a Data, whether used to inform climbing, Mahon said. developing need for tools that allow consumers or to assess the trade-offs in producers to manage more complex complex decision-making, represent a Global and sustainability trade-offs, Jahn said. By critical asset for co-ops. Knowing where consumer-driven impacts aggregating and sharing producer data, data comes from, and how it is Molly Jahn, a professor at the cooperatives can create knowledge- captured, is important. George Olney, University of Wisconsin-Madison, based assets that will support chief operating officer of iRely, a looked at future demand trends and the sustainable outcomes for all. provider of enterprise software for likely impacts on production commodity management, described the agriculture. Farm output in 2008 was Consumers putting process of implementing new data 158 percent above production in 1948, more demands on industry collection software systems. These new and now food systems can meet the Christine Walsh, vice president with systems are also the basis of potential needs for global per capita caloric Point Zero Retail, a research and data-sharing arrangements that could sufficiency. But evolving pests and marketing agency, talked about support metrics, risk management and diseases constantly challenge these sustainability from a consumer-demand trend analysis. gains, and continual research is needed perspective. Producer cooperatives have Larry Romuald, treasurer of to keep up. Furthermore, the current focused on operational efficiencies Cooperative Resources International food system is causing critical resource rather than the influence that (CRI), a livestock breeding co-op, degradation in many areas. consumers play in the market place. described the implementation of one Noting the historical correlation Consumers are more engaged than ever, such system. The co-op has been using between civil instability and food prices and the transparency that they expect a patchwork of old software programs during this time of increased from producers of their food is no that was not keeping pace with the co-

“By aggregating and sharing producer data, co-ops can create knowledge-based assets that support sustainable outcomes for all.”

agricultural productivity, Jahn said that different than the transparency that op’s growth or the increasing maximizing productivity does not they expect from other businesses or complexity of its domestic and always equate to food security. Jahn said government, Walsh said. international operations. her work with the International She reminded the audience that CRI identified important strategic Commission on Sustainable Agriculture agricultural producers are not being capabilities that could only be met by and Climate Change has focused on “picked on.” Consumer demand for new enterprise software systems, and developing recommendations to help information about issues they care that would justify the substantial time balance agriculture-induced climate about spans many sectors and will likely and budget commitments required for change, food needs for a growing global only grow. implementation. The three-year project population and climate constraints on Walsh highlighted several new tools will be launched in the spring of 2014. n food production. now available to consumers that provide

14 January/February 2014 / Rural Cooperatives In the Spotlight Jerry Kozak Life Lessons

By Jerry Kozak to define consensus as getting everyone to be in accord on a particular position. But if it’s a tough issue, waiting for 100 Editor’s note: Jerry Kozak stepped down Dec. 31 after 16 percent alignment can paralyze the organization and years a president and CEO of the National Milk Producers neutralize its effectiveness. Federation (NMPF). He shares his insight in this final column he That was the situation I found when I came to NMPF in wrote for NMPF’s member newsletter. 1997. One of the first things I said was that striving for NMPF consists of 31 cooperatives that produce the majority of consensus is incredibly necessary, but defining it as a situation the U.S. milk supply, making NMPF the voice of 40,000 dairy where everyone has to be completely happy is a mistake. producers on legislative issues. Since 1991, Kozak has also served as Hard choices never lead to complete harmony, but as long as executive director of the American Butter Institute and was the people have input into the process and contribute their two first American to serve as president of the International Dairy cents, an organization then needs to move forward in order Federation, based in Brussels, Belgium, from 1996-2000. Kozak to be effective. was senior vice president of the International Dairy Foods This belief roiled the membership in my first few years at Association in Washington, D.C., from 1989 to 1997. Prior work NMPF, but made my job easier in the long run. included service with the U.S. Food and Drug Administration, Credibility is your credit. NMPF doesn’t sell products; where he was chief of the Milk Safety Branch from 1984 to 1988, rather, it offers ideas to our industry and to policymakers. and then director of its Division of Cooperative Programs from Nevertheless, any marketing effort involves getting people to 1988 to 1989. buy into the ideas you’re selling. In order to gain traction in the world of ideas, they have to be credible. They must be Of all the decisions any of us make based on sound science, and the economics have to be clearly professionally, the two most important are understood. To the extent that we’ve had success in the past whether to take a job, and then when to leave 16 years, it’s because we have not advocated positions that it. Sixteen years after deciding to become weren’t defensible and credible. The legislators and president and CEO of the National Milk regulators we’ve worked with have appreciated that we have Producers Federation, I’ve chosen to retire at the end of the grounded our ideas in the facts, not in ideology or year — which means this is my last column for NMPF’s CEO mythology. Corner. So, all my big decisions have been made. And we have gained greater traction over time, and gotten Rather than offer a recitation of memorable moments more credit, because we could back up our ideas with the (there have been many cherished ones with people in this facts. Making a convincing case — making the sale — the business) or a list of regrets (as that other singer from New second, third, or 100th time is only possible if you have a Jersey famously said, “I’ve had a few, but too few to reserve of credibility from delivering on your word the first mention”), allow me to offer a few parting observations about time. the lessons I learned at NMPF and how they shaped the past Proactivity uses less energy than reactivity. While 16 years working for the organization’s members and the there’s some value to the notion that if it ain’t broke, don’t fix dairy industry. it, it’s also true that it’s far easier to change things before How you define consensus can give you everything, or they’re completely broken. One thing I did at NMPF is to nothing. The tendency among most organizations, identify areas where we needed to make changes, to learn and particularly trade associations led by a board of directors, is continued on page 37

Rural Cooperatives / January/February 2014 15 Co-ops & Community Restoring a Living Landmark

By Paul Newton A normally quiet, country road in Boone pnewton@ruralmissouri.coop County was bustling with activity recently as volunteers, electric cooperative crews, Editor’s note: This article is reprinted courtesy Rural arborists and others worked to give a central- Missouri (www.rural missouri.coop), the member Missouri landmark some much-needed care publication of the Missouri Association of Electric and attention. Cooperatives. Newton is the magazine’s field editor. The The overall condition of the more than 350-year-old “Co-ops & Community” page spotlights co-op efforts that McBaine Bur Oak, simply known as “The Big Tree” to locals, fulfill the mission of commitment to community. If you has been in decline lately, and sixth-generation property know of a co-op, a co-op member or co-op employee whose owner John Sam Williamson, Jr. says the work was needed. efforts deserve to be recognized on this page, please contact: “The drought last year was hard on it,” says the Boone [email protected]. Electric Cooperative member. “It’s genetically superior, or it

16 January/February 2014 / Rural Cooperatives A 350-year-old bur oak tree that rises up majestically in Boone County, Mo., has survived centuries of floods, droughts and lightning strikes. Below and opposite page, arborists and co-op staff take steps to help ensure that the tree continues to be enjoyed by future generations of the “Show Me” state. Photos by Paul Newton, courtesy Rural Missouri wouldn’t have lived this long. But donated money to plant trees in it’s also been really lucky. It’s had Joplin last year, heard about the floods, droughts, lightning strikes needs of the tree and felt it was a and a lot of things that could have worthy cause. killed that tree, but didn’t.” “We have to cut and clear a lot Arborist Bill Spradley of of trees,” he says. “This is an Kirkwood served as the general opportunity that we can give back contractor for the care of the tree, to the community for a tree that so which sits between the Katy Trail many people love and come to and the Missouri River southwest of admire and see.” Columbia. On Oct. 22, crews from The Missouri state champion Spradley’s company, Trees, Forests and national co-champion bur oak and Landscapes Inc., Cuivre River has been a destination for visitors Electric Cooperative, Boone for some time, according to Electric, the Missouri Cooperatives Williamson, whose family has Right of Way Management owned and farmed the land the tree Association and the city of Richmond occupies since 1835. Heights spent the day pruning deadwood, installing lightning “There are a lot of stories about things that have protection and applying treatment to and around the tree to happened under the tree, some of them good, some of them enhance growth and inhibit future deterioration. bad,” Williamson says. “Everybody tries to take care of the “What we have found from the first time we were here tree. A lot more people take care of the tree than don’t. was there are more people connected to this tree than we That’s a good thing.” ever had imagined,” says Spradley, who first worked on the This was only the second time the bur oak received tree five years ago. “Whether it’s high school kids gathering professional care. Spradley worked on the tree in 2008 with a here, wedding proposals, motorcycle riders that come back much smaller delegation of workers. His work to help the year after year, we just thought it was important to keep this tree wasn’t warmly — albeit mistakenly — accepted at first. going because of the connection people have with it.” “We were setting up to cut some of the big deadwood, and At first glance, the tree seems out of place. The branches a few locals came out. They thought we were cutting the tree of the sprawling bur oak, which was already more than 150 down, and they were totally upset. I had to calm some of years old when the Show-Me State was admitted to the them down,” says Spradley with a laugh. “So that shows you union, stretch well above anything else on the surrounding how much it means to the community.” farmland. The tree dwarfed the 70-foot-tall elevator lifts As the Williamson family continues to farm the land that brought in to work on it. Crews had to rely on secured ropes straddles Burr Oak Road, the hope is that all the work done and their best tree-climbing skills to get to the top. to what John Sam calls the “oldest living thing in Boone In addition to Cuivre River and Boone Electric donating County” will help prolong its life for future generations. their time and equipment for the day, the Missouri “I think it will outlive me,” he says. “It’s definitely on a Cooperatives Right of Way Management Association decline. Big trees like this could take 50 years to die. It’ll be purchased nearly $1,700 worth of hardware used for really sad when it does, but it’s lived a long full life.” n lightning protection on the tree. “The lightning protection is really important because we The McBaine Bur Oak is located on Burr Oak Road 10.4 miles can do all this work to prolong the life of the tree, but one from the intersection of Nifong Boulevard and South Providence strike and it would be a quick kill,” Spradley says. “Lightning Road in Columbia. The road begins as South Providence and could hit at any time.” changes to Route K, Perche Avenue and finally Burr Oak Road. Scott Skopec, Cuivre River Electric’s supervisor of right- The tree will be on the right. of-way maintenance, says the right-of-way association, which

Rural Cooperatives / January/February 2014 17 Co-ops = Community Development Cooperative developers share ideas in Minneapolis

By Bruce J. Reynolds, Economist USDA’s Rural Cooperative importance of local ownership by Cooperative Programs Development Grant (RCDG) program. members based on their use of co-op USDA Rural Development services. This means that patronage Understanding co-op heritage dividends and member equity are The significant role Chris Kopka, a law professor and distributed to local residents; hence, cooperatives are playing vice president of Thrivent Financial, this source of income stays in the in community revival opened the conference by reminding community. and development was the audience of the importance of the focus of a understanding our nation’s cooperative Roundtables discuss conference in Minneapolis in heritage, including the reasons why key co-op topics November, appropriately titled numerous farmer cooperatives were The conference luncheon featured “Cooperatives = Community formed during the late 19th century, a roundtable discussions led by experts in Development.” The meeting was time when farmers were struggling to various co-op sectors. At the USDA sponsored by CoMinnesota, a gain the marketing power and Rural Development table, the “networking group” formed in 2011 to affordable supplies necessary to survive. discussion focused on USDA’s Rural share ideas among Minnesota’s These early co-ops established the Economic Development Loan and cooperatives and community traditions of education and self-help, Grant (REDLG) program. Mike developers. which would also be embraced by Murtaugh from Freeborn-Mower Co- It was one of three co-op future generations of cooperatives. op Services, a rural electric cooperative conferences held the same week in In his keynote address, Mark Ritchie, headquartered in Albert Lea, Minn., Minneapolis. The others were the Minnesota secretary of state, provided explained its re-lending activity under annual Farmer Cooperatives an overview of the importance of the program to promote local Conference (see page 10), sponsored by cooperatives to the state’s economy, as businesses. The workings of the the University of Wisconsin, and well as the benefits of additional REDLG program were further NCERA-210, sponsored annually by security (such as reliable markets, or the elaborated on by Cheryl Seanoa and the Land Grant University Extension availability of vital supplies) and unique Naomi Lenz from the Minnesota office system to present the findings of the services that co-op members receive. of USDA Rural Development. latest research on cooperatives He also discussed the potential for The afternoon sessions featured (http://ncera. aae.wisc.edu/). sustaining many of the family businesses seven workshops on various cooperative The CoMinnesota conference, the of retiring baby boomers through topics. Warren Kramer of the focus of this article, was held at the transitioning businesses to worker Northcountry Cooperative Foundation headquarters of Thrivent Financial, a ownership. (NCF), a participant in USDA’s RCDG fraternal group that originally Cooperative “basics” were discussed program, discussed the development of developed to meet insurance needs of by Kevin Edberg of Cooperative manufactured home park cooperatives. Lutherans. Participants came from a Development Services, and Margaret By helping home owners to establish cross-sector of cooperatives, USDA Bau, co-op development specialist with cooperative ownership and control of Rural Development and staff from four USDA-Rural Development’s Wisconsin their land, NCF is contributing to the statewide or regional cooperative state office. Bau discussed the essentials residents’ financial security and development centers that participate in of cooperative ownership, including the community well-being. Some of these

18 January/February 2014 / Rural Cooperatives ownership and access to farmer markets in urban areas. During the past two years, LEDC has participated in the RCDG program to increase its level of assistance to both Hmong and Latino farmers. A workshop on how to finance development projects looked at the issues facing housing, business and consumer cooperatives. Christina Jennings, executive director of the Northcountry Cooperative Development Fund, described the nuts and bolts of evaluating and underwriting co-op projects. The discussion also covered sources of financing, including opportunities for partnering with various lending institutions, including USDA Rural Development. The conversion of businesses from sole proprietorships to ownership by employees is gaining increased attention nationwide. Margaret Lund, a Minnesota-based cooperative developer, gave a presentation on Terra Firma Building & Remodeling. Marty Ruddy, who started the business, and another co-op employee also participated in the presentation. While most conversions to co-ops are pursued to maintain the business and distribute a share of its value to retiring owners who had previously operated as sole proprietors, this case was unique. Ruddy built the business and initiated the conversion to a worker co- op, for which he plans to continue working for many more years as a Efforts are being made to help immigrant farmworkers, including Hmong farmers from Southeast Asia (seen here), become farm owners through the use of cooperatives. Janssen Hang, an worker-member. His motivation for organizer with the Hmong American Farmers Association, and John Flory, director with the transitioning the business to a worker- Latino Economic Development Center (LEDC), discussed the challenges facing immigrant farmers owned co-op, Ruddy explained, was during a recent conference sponsored by CoMinnesota. USDA Photo by Bob Nichols based on his experience of collaborating with his employees in planning and co-ops have been formed in response to (LEDC), discussed the challenges for making decisions. While he prospered park owners announcing plans to sell immigrant farmers in obtaining access as sole owner, he believes the best years their land to developers, which would to land. Many of these farmers operate are ahead for Terra Firma Building & have forced the eviction of residents. with “insecure” or unfavorable land- Remodeling in operating as a worker Janssen Hang, an organizer with the leasing arrangements, or find cooperative. Hmong American Farmers Association, themselves unable to transition from The CoMinnesota web page includes and John Flory, director with the farm workers to owners. a video of the conference, at: http:// Latino Economic Development Center The speakers cited progress in farm cominnesota.coop/home. n

Rural Cooperatives / January/February 2014 19 What leads to satisfied co-op members? Surveys of dairy farmers show management and pricing are key

Surveys show that overall satisfaction with a By Carolyn B. Liebrand, Ag Economist dairy cooperative is strongly linked to Cooperative Programs, USDA Rural Development members’ satisfaction with their co-op board of directors. Members hold management and the board responsible for the functions that affect Editor’s note: This article is based on Research Report 229, their farms’ financial bottom line. Photo “Member Satisfaction with Their Cooperatives: Insights from courtesy Dairylea Dairy Farmers.” For more information, please contact the author via: [email protected].

Do you know how your farmer-members feel about their co-op? Some proactive cooperative leaders wondered just that… and then took action to find out. provided input on all of the questions that the surveys had in The key to running a successful cooperative common. is no great secret: the co-op must perform functions and The surveys included questions about the cooperatives’ provide services needed and desired by its members to their internal management and operational issues, which fell into satisfaction. A number of factors influence levels of overall six general topic areas: satisfaction with a co-op. • Milk pricing; One way for a cooperative to find out what members think • Cooperative services; and feel about their cooperative is to ask them for direct • Cooperative operations; input. Several major dairy cooperatives have done that in • Cooperative principles; recent years by surveying their members by mail. • Cooperative governance, and USDA Cooperative Programs played a role in these • Member connections with their cooperatives. surveys, resulting in the collection of 1,736 cooperative The producer-members were asked to indicate their member opinions on 43 questions that were common to each opinion on various statements by selecting a number, ranging survey. The surveys were conducted independently from from 1 to 5, to represent their intensity of feeling about a January through March in various years between 1993 and given item. For example, on some questions, those surveyed 2012. About 40 percent of the members in these cooperatives were asked if “strongly disagree,” “disagree,” “unsure,”

20 January/February 2014 / Rural Cooperatives “agree” or “strongly agree” would best describe their The bottom line response to a question. Other questions asked the dairy Dairy farmers’ livelihood depends on their milk being farmer members if they were “very dissatisfied,” “somewhat efficiently marketed and receiving the highest possible price dissatisfied,” “unsure,” “somewhat satisfied,” or “very for it. Many studies show that dairy farmers greatly value an satisfied” with cooperative services and operations. assured market and high milk price. So, it is natural that their To find out factors most closely linked with members’ satisfaction with their cooperative is tied closely to whether overall satisfaction with their cooperative, correlations the cooperative does a good job of marketing their milk at a between each of the survey items were calculated, assigning a reasonable cost, then returns a competitive milk price to value to each pair of survey items. This value indicates the members. strength of the relationship between the topics of the two Corporate-level issues that concern how well the questions. cooperative is run (board and management efficiency and/or For example, higher levels of satisfaction in one area may competency) and items that affect members’ pocketbooks be related to higher levels of satisfaction in another area. (pay prices and cooperative operational costs) are most Conversely, the value may indicate a relationship where strongly associated with overall member satisfaction with higher levels of satisfaction may be related to lower levels of their cooperative (see figure 1). Members’ overall satisfaction agreement with a particular principle or practice. with their cooperative is very strongly correlated with

Rural Cooperatives / January/February 2014 21 member satisfaction with management and pricing policies. Similarly, member satisfaction is strongly related to their perception of how well the co-op is managing operating and Figure 2 — Members’ satisfaction with their cooperative marketing costs. overall is strongly correlated with communication issues Overall satisfaction with the cooperative is strongly linked to feelings toward the board of directors. Members hold Item Strength of management and the board of directors responsible for relationship cooperative activities and functions that affect their farms’ financial bottom line. Level of agreement that… Co-op keeps me well informed about Communication key to satisfaction its operations Strong Three communication (member relations) issues are strongly correlated with members’ satisfaction with their co- Members have a great amount of ops (figure 2). Agreement that their cooperative keeps them influence on how co-op is run Strong well informed about its operations was strongly linked to overall feelings about the cooperative. Similarly, members’ feelings that they can influence the cooperative and have an impact on how it is run are strongly related to overall satisfaction. It may be that feeling well members’ overall satisfaction with the cooperative (figure 3). informed about their co-op contributes to members’ being Some are similar to those identified above that affect satisfied with the corporate level issues mentioned above. It members’ pocketbooks (agreement that cooperative pays all then seems possible that less satisfied members would show members fairly for their milk) and communication greater satisfaction with the co-op if they were more aware of (agreement that members receive as much information as how the cooperative operates and/or felt like they had more they need about operations and programs). of a role in how it is run. Member connection to co-op Contributing factors Feelings of “being connected” to the co-op influence Many additional topics are moderately associated with member satisfaction. Member satisfaction was linked to a view that “the cooperative is not more concerned about its operations than about members.” Likewise, agreement that the cooperative “is not just another place to do business” is Figure 1 — Members’ overall satisfaction with their related to overall satisfaction with the cooperative. cooperative is strongly correlated with corporate level issues In addition, agreement that belonging to the cooperative is an important part of the member’s identity as a farmer and Item Strength of relationship that the member feels that he or she is a part owner of the cooperative also have a moderate impact on overall feelings Satisfaction with… toward the cooperative. Together, the link between these Cooperative’s management Very strong items and member satisfaction indicates that members’ view Cooperative’s pricing policies Very strong of their cooperative as a unique organization may play a role in their overall level of satisfaction. Level of agreement that… Cooperative does a good job of Cooperative services marketing members’ milk and returns The surveys asked about five different co-op services. a competitive price for their milk Strong (Individual surveys asked other additional questions about Satisfaction with… specific services provided by the cooperative, but these five Cooperative’s management of were comparable across all surveys.) The level of satisfaction operating and marketing costs Strong with the cooperative’s provision of market information, with Cooperative’s board of directors Strong its milk hauling policies, with the cooperative’s field representative, and with the cooperative’s laboratory services Level of agreement that… were each moderately correlated with member overall Member would not drop out if an satisfaction. However, satisfaction with milk hauling services alternative was available Strong (operating or arranging routes) was only weakly linked to satisfaction with the cooperative.

22 January/February 2014 / Rural Cooperatives The relatively weaker correlations between member services the cooperative supplies are not important to satisfaction with their cooperative and satisfaction with the member satisfaction. It may just mean that member various services provided by, or through, the cooperative may unhappiness with certain aspects of the services provided may be because of the individualistic nature of the relationships or may not translate into dissatisfaction with the cooperative between service provider and member. Members may hold overall, depending upon the nature of the specific issue. service providers — such as field representatives and milk haulers whom they have direct contact with — accountable Cooperative practices for the quality of the services provided, rather than the Finally, agreement that the cooperative does not try to cooperative itself. cover too big a geographic area is moderately linked to the Members’ satisfaction with their cooperative may be more level of overall satisfaction with the cooperative. In other heavily influenced by how the cooperative guides the words, members who were satisfied with their cooperative provision of these services. For example, members’ rating of usually did not agree that it tried to cover too big an area. the cooperatives’ milk hauling policy is more strongly The level of agreement with the statements that the correlated with satisfaction with the cooperative overall than cooperative’s earnings were a return on the member’s is members’ rating of the milk hauling service itself. investment and that the cooperative paid patronage in While member satisfaction with the cooperative was proportion to the member’s patronage are both moderately moderately related to satisfaction with, or rating of, these associated with overall satisfaction. Likewise, agreement that services, the fact that they were not more strongly correlated their cooperative works appropriately with other agricultural does not necessarily mean that the provision of, or quality of, cooperatives and that it supports cooperative education for members and the public are also moderately correlated with the level of overall satisfaction. That these are not more strongly linked may indicate that for some members, satisfaction with the cooperative does not Figure 3 — A range of topics are moderately associated depend on whether or not their cooperative practices these with member satisfaction with their cooperative overall principles, or perhaps whether or not the members are aware of their cooperative’s practices. Level of agreement with items concerning member connection to the cooperative: Cultivating member satisfaction • Co-op is not more concerned about operations than its In summary, it is clear that the factors most strongly members linked to member satisfaction are a cooperative’s: • Belonging to the cooperative is an important part of the • Management, in general; member’s identity as a farmer • Members feel they are part owner of the cooperative • Milk pricing policies; • The cooperative is not just another place to do business • Management of operating and marketing costs; • Board of directors, in general, and Satisfaction with cooperative services: • Communication with members. • Cooperative’s provision of market information Thus, the first priority for cultivating improved member • Cooperative’s milk hauling policy satisfaction appears to be having a competent board of • Field representation (farm visits, interface between producers and cooperative) directors and a capable management team in place. To • Laboratory services (component and quality tests, and reports) achieve this, members should elect a board that is competent in setting policies and in recruiting and supervising a capable Level of agreement with cooperative practices: management team. Members look to management to do the • Cooperative pays all members fairly for their milk best possible job of marketing member milk, minimizing • Cooperative members receive as much information as they operating costs and setting satisfactory milk pricing policies. need about operations and programs A second key area for member satisfaction is sound • The cooperative does not try to cover too big an area as an organization communication that keeps members well informed about • The cooperative’s year-end earnings are considered a return on cooperative operations and provides feedback from members member’s investment regarding their wishes and concerns. Third, the cooperative • The cooperative works appropriately with other agricultural should have an education program to augment members’ cooperatives understanding of the milk market and the nature of the • The cooperative pays patronage refunds in proportion to cooperative business model. patronage • The cooperative supports cooperative education for members Last, but not the least, the cooperative should ensure that and the public service providers who are in direct personal contact with

continued on page 38

Rural Cooperatives / January/February 2014 23 Many buying clubs initially focus on acquiring food staples and dry goods, since storage for such items is limited only by space, without the need for refrigeration. Canned goods offer similar advantages, but margins on them tend to be much lower.

Welcome to the Club!

Food buying club co-ops have potential to help increase food security for many

By Alfonso Morales and Ali Loker The World Food In 2010, about 85.5 percent of Summit of 1996 households were food secure, 9.1 Editor’s note: Morales is an associate defined food security percent had low food security and 5.4 professor of urban and regional planning as existing “when all percent had very low food security, at the University of Wisconsin-Madison. people at all times according to the U.S. Department of Loker earned a bachelor’s degree in have access to sufficient, safe, Agriculture (USDA). This equates to Community & Environmental Sociology nutritious food to maintain a healthy 48.8 million households that were in 2012 from the University of and active life.” While food food insecure in 2010. Wisconsin-Madison and is currently a insecurity is a global issue, this article Of these low food security volunteer with Americorps. Support for will primarily focus on the situation households, 40.2 percent were this research was provided by USDA’s in the United States and the role of classified as being below the poverty National Institute of Food and food buying clubs in helping to line, 35.1 percent were single-parent Agriculture. address it. households headed by a female and

24 January/February 2014 / Rural Cooperatives 25.4 percent were single-parent and/or natural foods. to witness firsthand the power of households headed by a male. Many of the food co-ops that exist cooperation and what can be Households with children were about today got their start as buying clubs. accomplished through group action. twice as likely to be food insecure as Some of these smaller, less formal co- Many leaders of co-ops (not simply were households without children. ops have developed into larger co-ops food co-ops) got their start in buying These statistics are only a small with less member involvement. clubs (Sekerak, Danforth). The smaller snapshot of the issue of food insecurity In Food Co-ops: An Alternative to scale of buying clubs is an approachable in the United States. Shopping in Supermarkets, William entry point for individuals who may not There are a wide variety of solutions Ronco argues that “the relationship otherwise be likely to join a that have been used to fight food between buying clubs and more visible cooperative. The small scale also insecurity. USDA has developed the storefronts is not one of evolution, but provides a more manageable level of Community Food Security Initiative to interplay...many storefronts help start responsibility than does being an “forge partnerships between USDA and and support buying clubs” (pages 125- employee of a co-op store. local communities to build local food 126). This interaction between buying A job at an established cooperative systems, decrease need and improve clubs and cooperatives is very important may entail part- or full-time work. A nutrition” (Kanto). to keep in mind when examining their job at a buying club, however, might This initiative includes a Food histories. simply be two or three hours per week, Security Toolkit that helps communities or even per month. A buying club can identify needs and that provides Why food buying clubs? provide invaluable experience with tasks possible solutions. These solutions A dominant theme in articles on such as working with wholesalers, include farmers markets, community- food clubs is the ability of consumers to keeping records and running a small supported agriculture, farm-to-school alter the market through participating business. programs, community gardens and in buying clubs. In a 1999 report on These experiences and more are community kitchens. All of these food security in Canada, Jacinda provided by the buying club with the “tools” are currently under-utilized by Fairholm frames the issue well: “By support of other members and low-income individuals. Through this changing our purchasing patterns as volunteers. Participating in a leadership toolkit, USDA hopes to increase the use consumers, we can help alter the market position in a buying club can give an of these programs by food insecure so that it better reflects the needs and individual the confidence to use these individuals. wishes of all consumers, particularly skills in a more formal job setting, even Food clubs are an additional solution families and individuals with low those that are not associated with co- to food insecurity. income.” ops. Buying clubs empower consumers by Sekerak and Danforth say another Linking consumers encouraging them to pool their benefit is the relative ease of forming a with wholesalers purchasing power and participate in an buying club, compared to other food Buying clubs are a form of alternative distribution system. Buying security solutions, such as forming cooperative that involves a group of clubs also allow consumers to have consumer cooperatives. There is no people who collectively purchase food greater control over the quality of the need to secure a permanent space for a directly from a wholesaler. This process food, the price and the source food club; many are run out of eliminates many steps of traditional (Fairholm, page 32). A buying club members’ homes or churches, food distribution, allowing the members “influences prices and quality in its area community centers or other public to save money. because members are better informed locations where space is free or The 1960s and ‘70s were a time of and have a larger choice.” Learning the available at a low cost. All jobs are growth in co-op popularity. Many strength of consumer power is a benefit performed by volunteers, eliminating consumer co-ops were established mentioned by Fairholm, Sekerak and the hassle associated with hiring during this time, but there was Danforth, as well as in Moving Ahead employees. resistance in some communities to these with Group Action. The ability to reduce costs results in co-ops, which some people regarded as This consumer power can be lower priced food. By reducing or “a hippie fad” that catered to people especially effective for low-income completely eliminating the costs with odd food preferences. However, populations, where people are often associated with modern food this image has changed considerably initially interested in a buying club distribution, buying clubs are able to with the increasing diversity of people because of their ability to save money. make fresh, healthy foods more involved in co-ops and the rapidly However, after participating in a buying accessible to low-income populations. growing demand for local, organic club for some time, the members begin The social benefits of a buying club

Rural Cooperatives / January/February 2014 25 are also worth noting. Buying clubs are buying clubs and other cooperatives, updated about the progress being made. a wonderful opportunity to build centers that provide resources to Members of the group should consider community. Community members work cooperative groups, professional what they want to accomplish with the together towards a common, tangible organizers and existing cooperatives or buying club. What are the long- and goal of providing better food to the buying clubs in the area (Evans, page short-term goals? Put these in writing residents at a lower cost. The 6). Reaching out to these groups during so that the group can periodically assess relationships that are built through the the planning stages can help a club whether they are being met.

“Buying clubs allow consumers to have greater control over the quality of the food, the price and the source.”

buying club extend beyond the The preliminary meeting (or the boundaries of the club and can be an second meeting) is also a good important jumping-off point for the opportunity to discuss and assign roles. community to pursue social justice in There are many tasks in setting up a other forms (Moving Ahead). buying club: general coordinating, creating and tallying order forms, Starting and running purchasing and dividing up the food, a food buying club cashiering, set-up and clean-up work on A common first step in forming a distribution day, coordinating buying club is to familiarize oneself volunteers and bookkeeping (Evans, with the community and any existing pages 9-10). It is crucial to divide the infrastructure that might make the area Food orders are distributed at the Cumberland work as evenly as possible to prevent a good or bad fit. Food Buying Club in Crossville, Tenn. Photo “burn out” of volunteers. Organization and Management of courtesy Cumberland Food Buying Club Consumers’ Cooperatives and Buying Clubs Food offering choices provides a helpful outline to survey a The group must also determine what community. It includes questions under establish supportive relationships at a types of food to offer through the these categories: community crucial point in development. These buying club. How to Form a Food Co-op characteristics, local competition groups will be able to provide useful offers recommendations. Many buying (existing agencies), trading and insight and advice to newcomers. clubs decide to order staples and dry membership prospects, trading The next step in the process is to goods. Storage for dry goods is limited facilities, financing, other cooperatives, hold a preliminary meeting with a only by space, as they do not require operation of the association and a group of core volunteers who are refrigeration. Canned goods may seem summary and recommendation portion committed to establishing the buying appealing for similar reasons to dry (page 54). This survey encourages club. This meeting should begin with goods, however, the margin of savings individuals to take into consideration discussing what a buying club is and on canned goods is low — almost many factors that could affect the how it will address the needs of the negligible in some instances. establishment of a buying club. group. If it is decided that a buying club Produce can be difficult for Although buying clubs are relatively will not address the group’s needs, the beginning buying clubs to offer, due to simple to establish, even a well-run club community is not a good fit and other storage constraints. However, many in the wrong community could easily solutions should be considered. At this clubs carry produce because it provides fail. Careful selection of location, meeting, it is important to emphasize the largest savings for its members. combined with a well-run club, will communication and to receive input Meat and dairy come with storage likely lead to success. about how to remain in contact considerations that are similar to those An optional, but recommended, next between meetings. for produce, along with the additional step is to contact local service groups. Tasks will be distributed among the complication of grades. It is important These groups can include committees volunteers, so it is imperative that for the club to solicit input from its that provide technical assistance to everyone remain connected and members as to their preferences in

26 January/February 2014 / Rural Cooperatives grades for these products before enough money to pay the wholesaler and to recruit. Once the club is more deciding to offer them. without needing to have an outside established, the focus shifts from Determining the types of food to source of capital. recruitment to education. offer is a balancing act between savings, Payment at pickup eliminates much storage consideration and member of the bookkeeping, including tracking Structure and processes preferences. This is an extremely prepayments and issuing credits or After the appropriate planning steps important decision and should be made refunds if there are damaged or lost have occurred, the buying club is ready only with the input of as many goods. However, payment at pick up to begin its operation. A semi- members as possible. Ann Evans necessitates an outside source of formalized structure is encouraged by recommends that clubs begin by funding to pay the wholesaler upfront. several sources, including Organization offering staples and moving up to meat, A buying club can do this through a and Management of Consumers’ dairy and produce only after they’ve loan or initial deposits from its Cooperatives and Buying Clubs, Form a been successful at the former. members. A bank account should be set Buying Club in California and Moving Once the buying club has up to handle the cash flow (Evans). Ahead. These sources recommend determined what types of food it would The only way a buying club will creating written bylaws and a like to include in its offerings, it must survive is if it has members recruited constitution or a policy sheet. locate a wholesaler. Moving Ahead from the community. The first objective These documents state the purpose suggests first searching for a wholesaler is to raise awareness of the buying club of the buying club, detail membership that is owned by consumer co-ops in the area (page 11). If this is not possible, work with other wholesalers serving the area. Co-op Stores and Buying Food buying clubs in Canada provides a list of important questions to ask a potential wholesaler, including There is not much literature on food buying clubs outside of the United questions about mark-ups, membership States. However, buying club initiatives in Canada were the focus of Jacinda requirements, prices, frequency of Fairholm’s article: Urban Agriculture and Food Security Initiatives in Canada: A orders and deliveries, policies on Survey of Canadian Non-Governmental Organizations. damaged goods and minimum order The Ontario Natural Food Co-op (ONFC) is an organization that supports requirements. more than 330 buying clubs. The clubs invest in ONFC, which provides the It is crucial to have a thorough inventory, equipment and space necessary for distribution. The ONFC plays a conversation with the wholesaler to critical role in sustaining these buying clubs. It provides education about help the group avoid unexpected cooperatives and produces a quarterly newsletter that includes information on complications. Try to interview several “food security issues, recipes, cooperative model education, event/conference wholesalers, taking notes and information, permaculture, sustainable agriculture techniques and more.” performing calculations for The Field-to-Table program developed the Good Food Box project, which comparisons. Throughout this process, has been an inspiration for many similar programs in Canada. The Good Food the members should keep information Box is a large buying club that “combines the economies of scale involved in on other wholesalers confidential and bulk purchasing with extensive community involvement” (page 33). should not use this information in The Good Food Box differs from other buying clubs in that it offers a flat-fee discussion with competing wholesalers box of fruits and vegetables that changes each month. This is a similar idea to (Lefever, page 2). community supported agriculture (CSA). In a CSA, individuals pay in advance for a season’s worth of produce boxes that they pick up weekly. The Good Financing options Food Box is much more accessible to low-income individuals because there is Finally, the buying club should no large upfront cost and members are not required to purchase the boxes for decide how it would like to handle its an entire season, unless they choose to. finances. The primary decision that Indeed, 56 percent of these boxes are sold to individuals below the poverty must be made is when to collect line. The program tries to source from local farmers when possible. The Good payment from members. There are two Food Box also provides its customers an information sheet about produce and options, both with advantages and cooperatives. The Field-to-Table program has published a guide for disadvantages. establishing Good Food Boxes in other locations. n Prepayment requires more book- keeping. However, it is a guarantee that all food that is ordered will be paid for. Prepayment also allows the club to have

Rural Cooperatives / January/February 2014 27 requirements, explain the use of any smaller co-ops compiles the orders into how much of a service fee to charge committees (if applicable), and describe a “block order.” The larger club then members. This fee will cover operating how finances and amendments are compiles the block orders and places a costs, such as for bags, delivery, etc. In handled (Moving Ahead, pages 26-27). single order with the wholesaler. Each setting the fee, consider all operating These documents can be referenced if smaller co-op takes a turn as the costs. Typically, this will be 2-3 percent any issues or questions arise, and can “master block” to provide volunteers of each order. However, most clubs help when orienting new members to for that week’s distribution. charge 5-10 percent to allow a the club. (2) In the team system, members “cushion” (Evans, page 28). The Keeping these cooperative principles volunteer to be a part of a team difference between the fee charged and in mind may be helpful when creating (bagging, transportation, secretarial, the operating costs will eventually add these documents: up to a significant amount. • Open membership; The Oklahoma Food Cooperative, seen here, It is up to the club to decide what to • Neutrality in religion and politics; started out as a food buying club. Many do with this surplus. The club can give • Democratic control; buying clubs have followed a similar growth this money (or a portion) back to its • Limited return (if any) on share path, but such a step should be taken only members as a reward for their capital; after a careful market study and planning. patronage. Another option is to save the • Net earnings belong to the user-owners; money for future goals. • Education; The use of credit is strongly • Cooperation among co-ops. discouraged (Organization and These principles are a good foundation Management, Dodge). Credit creates for a cooperative of any kind, including many problems and its use is not buying clubs. justified by the convenience for Most buying clubs operate on a consumers. committee system. Moving Ahead It is very important to remain recommends the following committees: connected to the members. They are ordering, finance, packaging and the driving force, and without them the membership-education. These club would not exist.

“Determining the types of food to offer is a balancing act between savings, storage consideration and member preferences.”

committees are then responsible to the treasurer, etc.). These teams perform A good way of keeping members officers, who also work with the overall the same task each month. updated about the club is through a organization of the club, call and run (3) The rotating job system is similar newsletter. This can be a monthly meetings and handle finances (beyond to the team system; however, volunteers publication that members pick up with the finance committee). Again, it is rotate jobs at regular intervals. their food, or a quarterly newsletter important to share the labor and avoid Financial management is key to the with more indepth organizational over-working the volunteers. economic viability of the club, which updates. Regular meetings can also be For larger buying clubs Evans means sound bookkeeping is needed to held to update members and to solicit suggests three different work systems: track cash flow. This is a time- their input. Informed members will (1) The block system is effective for consuming job and should be shared, usually have a greater sense of clubs of up to 200 households. The when possible (Evans, 30). The prices ownership and be more committed to larger buying club is broken down into charged for goods should be above the club. smaller, pre-order co-ops of 5-10 wholesale price, but less than retail households. Members of each of these store price. This way, the club will Transitioning to a co-op store smaller co-ops place their orders as they make a small profit and provide savings Some successful buying clubs opt to normally would in a buying club. Then for members. expand and form a co-op store, but if a coordinator from each of these The buying club must also decide continued on page 38

28 January/February 2014 / Rural Cooperatives Co-ops urged to observe Grain Bin Safety Week

During the past 50 years, more safe-work procedures, Occupational Safety and than 900 cases of grain Health Administration (OSHA) standards and engulfment of workers have more. Space is limited, so making an early been reported in the United reservation is advised at: http://nwagcompany States, with a 62-percent events.fugent.com/home/events.asp. fatality rate. In 2010, at least 26 U.S. workers Nationwide Agribusiness, Farm Safety For were killed in grain engulfments — the highest Just Kids and NECAS will host #AgChat on number for one year on record. Twitter from 7-9 p.m. (Central time) on Feb The most tragic fact of all: grain 25. This moderated, online conversation will engulfments are preventable look at grain bin safety from with proper safety training and a number of angles. Anyone procedures. with a Twitter account can Nationwide Agribusiness participate by going to Insurance Co. is partnering Twubs.com/agchat to tweet with the Farm Safety For Just during the chat. The site Kids, Heartland Co-op, Iowa automatically enters the FFA Foundation, National #agchat hashtag in every Education Center for tweet and allows users to Agricultural Safety (NECAS) participate in real time. and others to increase An example of an awareness of the dangers of ambitious Safety Week flowing grain and bring program is “Staying Safe on visibility to safety procedures the Farm,” Feb. 24, an all- that can save lives through an annual Grain day event at the FFA Enrichment Center Bin Safety Week, Feb. 23-March 1. (adjoining Des Moines Area Community The week is timed to bring safety awareness College) in Ankeny, Iowa. On-site activities of the dangers of grain bins prior to the include: Featured speaker Bill Chizek, safety planting season in much of the country. The director at Heartland Co-op in West Des week-long event will highlight a different Moines, and demonstrations with a grain bin component on each of the seven days: entrapment simulator and a manure pit • Sun. Feb. 23: Grain management; simulator. There will be farm implement and • Mon., Feb. 24: Bin hazard identification; driver safety tips, as well as demonstrations of • Tues., Feb. 25: Bin and equipment design, safe handling of Anhydrous Ammonia (NH3) including safety equipment; fertilizer. There will also be a grain dust • Wed., Feb. 26: Bin entry; explosion demonstration and an auger safety • Thurs., Feb. 27: Working safely in a bin; demonstration. • Fri., Feb. 28: Extraction/rescue; Nationwide Agribusiness and NECAS have • Sat., Mar. 1: Confined spaces beyond the bin. partnered to provide grain entrapment rescue A website, www.GrainBinSafety Week.com, training and a bin rescue tube (valued at Training exercises such as provides more information, tools for the media $2,600) to one fire department or emergency this can help co-op staff be and information to help people get the word rescue squad. Nominations are due by April 30 prepared for an emergency out as well as participate. and should be e-mailed to: [email protected] — and to avoid the chances On Feb. 26, Nationwide Agribusiness will or mailed to: NECAS, Grain Bin Safety of one occurring. host a free, live webinar on grain bin safety Contest, 8342 NICC Dr., Peosta, IA 52068. that’s open to everyone. Farmers and Official rules will be available online at: commercial grain handlers will gain valuable www.GrainBin SafetyWeek.com. n insight into the risks and hazards of grain bins,

Rural Cooperatives / January/February 2014 29 Newsline Co-op developments, coast to coast

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

Ocean Spray sales top $1.6 billion Ocean Spray Cranberries Inc. had net sales of $1.66 billion for fiscal 2013, on par with the cooperative’s record sales year in 2012. Proceeds to common shareholders totaled $380 million, up 15.5 percent over the prior year. Ocean Spray’s Ingredient Technology Group’s dried cranberry business experienced particularly strong growth in both domestic and international markets, surpassing the 100-million-pound mark for the first time. “This was a strong year for Ocean Spray in terms of continuing to deliver a premium to our grower-owners and advancing a number of strategic Ocean Spray’s net sales of $1.66 billion in 2013 nearly equaled the record set the previous year. initiatives that will grow our business at Photo courtesy Ocean Spray. home and abroad,” says Randy Papadellis, Ocean Spray’s president and CEO. USDA Ag Outlook and USDA Chief Economist Joseph The co-op reported that it Forum Feb. 20-21 Glauber will kick off the conference completed a series of transactions with “The Changing Face of Agriculture” with their views of the state of the CoBank, resulting in the increased is the theme of USDA’s 2014 nation’s farm economy heading into availability of $215 million in financing Agricultural Outlook Forum, Feb. 20- 2014, including USDA’s latest crop and that will allow Ocean Spray to 21, at the Crystal Gateway Marriott in market forecasts. They will be followed rebalance its capital position to create a the Washington, D.C., suburb of by two plenary panel sessions more conservative structure and support Arlington, Va. The Outlook Forum addressing: “The Future of Agriculture: plans for cooperative growth. brings together the agricultural Building Markets Here and Abroad,” Other highlights for 2013 included: community to discuss policy, trade, and “The Future of Agriculture: Young the launch of Cran-Lemonade, now science, rural development and the Farmers - Unlimited Opportunities.” distributed in 80 percent of grocery economic outlook for the coming year. There are dozens of breakout accounts nationwide; the launch of The Forum also focuses on forestry, sessions on key farm and rural issues, Craisins Dried Cranberries in two new health and nutrition issues and the including: the latest agricultural census; package forms, and the launch of the changing dynamics and face of rural how agriculture can support veterans; eighth domestic dried cranberry line in America, among other topics. Farmer food price and farm income outlooks; Middleboro, Mass. Significant progress co-ops will be involved in discussions international trade issues; news of was also made in the construction of a about the burgeoning local food efforts to control invasive pests; state-of-the-art beverage plant in market. agroforestry trends; the Know Your Pennsylvania’s Lehigh Valley. Agriculture Secretary Tom Vilsack Farmer, Know Your Food effort; citrus

30 January/February 2014 / Rural Cooperatives disease challenges; the 100th which provides banking products to (CARES) in San Diego. CARES works anniversary of the Cooperative cooperatives and other socially with children and adults diagnosed with Extension program, among many responsible organizations, recently autism, providing evaluation, training, others. To view the full schedule and completed $6.5 million in financing for education and a wide-range of other register, visit: www.usda.gov/oce/ two California healthcare organizations. services to participants. forum/. NCB provided a $4 million loan to The bank also provided a $2.5 Novata Behavioral Health, a subsidiary million loan to help the Center for NCB financing autism, of Mental Health Systems (MHS), to Elders’ Independence (CEI) refinance elder care organizations acquire the Center for Autism existing debt from the purchase of its National Cooperative Bank (NCB), Research, Evaluation and Service four-story corporate headquarters in the

Four named to Co-op Hall of Fame

The Cooperative Development advisor to NCBA CLUSA, where he has sectors. This list sparked the Foundation (CDF) has named four served for three decades. Sene, who International Cooperative Alliance’s outstanding cooperative leaders as grew up in Naikhar, Senegal, has Global 300 report. From 2005-2009, 2014 inductees to the Cooperative Hall shared, taught, enhanced and helped Silver worked on a multi-billion dollar of Fame. The Hall of Fame is to spread co-op values globally. He project for the World Bank in China, administered by CDF, a nonprofit began spreading the co-op message in helping to create new ag co-ops by affiliate of the National Cooperative the Boy Scouts, then led a educating leaders about cooperatives. Business Association CLUSA transformative co-op housing n Harriet May, former president International (NCBA CLUSA). Visit the movement in Dakar, Senegal, in the and CEO of the Government Employees Hall of Fame at: www.heroes.coop. 1960s. He served as the head of Credit Union (GECU), began her credit The latest inductees are: accounting for a regional cooperative union career as a teller nearly 40 years n Martin Lowery, executive vice and studied cooperative businesses at ago, rising to become the leader of the president of external affairs at the the National School for Applied largest credit union (and financial National Rural Electric Cooperative Economics. He led the development of institution) in her hometown of El Paso, Association (NRECA). For more than the “CLUSA Approach,” which has Texas. May led the charge to make three decades, Lowery has been a been used across economic sectors home ownership available to lower strong advocate for the cooperative around the world, where it has been income, minority members of her west business model. He began working at applied for natural resource Texas community by helping to NRECA in 1982, where he has played a management, community health and establish an Affordable Housing Credit leadership role on many projects, co-op governance issues. He has Union Service Organization. The including forming and promoting new written several books and received dramatic results include: sponsorship cooperatives, such as the Kauai Island numerous awards. of 732 credit workshops with 10,700 Utility Cooperative — Hawaii’s first n Barry Silver, executive vice participants; more than 16,200 first-time electric co-op. Lowery played a key president of National Cooperative Bank savings accounts opened; providing role in drawing together disparate (NCB), where he has served for more credit counseling to 8,600 families, and groups to create the Touchstone than 33 years in various leadership preparing (for free) 73,372 tax returns Energy Cooperatives brand in 1998. He positions. Silver has helped thousands under the Volunteer Income Tax currently oversees NRECA’s of cooperatives obtain financing and Assistance (VITA) program. She has Cooperative Research Network (CRN), was a major force behind the creation been an innovator in financial literacy which brings co-ops together to of NCBA CLUSA’s Annual Purchasing (even participating in a panel support large research projects, such Cooperatives Conference. It was discussion with the President of the as a $33.9 million U.S. Department of Silver’s passion for co-op education United States) and has worked across Energy grant for smart grid that led to the creation of the annual the border with Mexican officials to technologies. NCB Co-op 100 — a list of the nation’s create a system of affordable n Papa Sene, senior technical 100 largest co-ops across all economic remittance services. n

Rural Cooperatives / January/February 2014 31 Oakland/Berkeley area. CEI was Sahel,” says Mike Beall, president and Starting at Home” program. founded 25 years ago to offer a CEO of NCBA CLUSA. The Texas Food Bank Network community-based system of This new effort is based on the provides support for all the food banks comprehensive health and related premise that bolstering food security in Texas. By joining forces with them, services to low-income, frail elderly requires a holistic approach, which must all proceeds were ear-marked for the residents of the East Bay region. CEI simultaneously improve agricultural county in which they were received. serves more than 580 members through production, manage and sustain the Texas Food Bank Network turns every four different sites. natural resource base, increase farmers’ dollar in donations into five dollars in “NCB is proud to be a financial revenues and increase access to water food. resource for senior living and healthcare and basic public health services. The food drive tractor traveled more providers throughout the United States than 1,000 miles as it visited rural for over 30 years,” says Ann Fedorchak, Texas Tractor Drive communities in 23 counties in West and NCB senior vice president. “To date, helps feed hungry Central Texas. The John Deere 5045 we have arranged over $530 million in A diverse group of cooperatives in tractor was donated by B.E. Implement loans to serve the needs of this industry. West and Central Texas recently in Brownfield and Bramlett Implement Our role in the healthcare sector, whether as a sole lender or a partner with other financial institutions, is critical to NCB’s mission, and we look forward to expanding our commitment in 2014.”

$70 million to promote economic growth in Africa The National Cooperative Business Association CLUSA International (NCBA CLUSA) has signed a five-year, $70 million cooperative agreement with the United States Agency for International Development (USAID) to help accelerate economic growth for individuals and families in the Sahel regions of Niger and Burkina Faso. About 86 percent of Niger’s rural population lives under the poverty level. The project — known as Resilience Breckenridge (Texas) FFA officers with the tractor their chapter won by raising the most money and Economic Growth in Sahel — will to fight hunger in Texas. FFA chapters were supported by farm credit, electric and famer co-ops. benefit more than 2 million vulnerable people by addressing the structural banded together to help feed the in Stephenville as a prize for the FFA causes of chronic food insecurity and hungry. Avant Marketing Group of St. chapter that raised the most money per nutritional vulnerability in the Sahel Louis, Mo., got the ball rolling by ag student (32 chapters competed). region of West Africa. reaching out to U.S. Farm Credit More than $105,000 was raised, NCBA CLUSA started working in Associations. In Texas, Lubbock-based which became the equivalent of Niger in 1985 and Burkina Faso in AgTexas Farm Credit took up the $525,000 of food for those in need. The 1993, establishing community-based challenge, and a plan was drafted for Breckenridge FFA Chapter won the health services, developing effective “Tractor Drive 2013: Driving Hunger tractor by raising $19,493, or $209 per rural organizations, linking farmers to Out of Rural Texas.” member. Breckenridge is in Comanche input suppliers and buyers, promoting The goal was three-fold: (1) to raise Electric Cooperative’s (CECA) service strong and dynamic markets, and awareness of hunger in rural Texas; (2) territory — a co-op that was a major improving household incomes. “This to raise money to support food banks, sponsor of the drive. fully integrated project will address and (3) to achieve these two goals by resilience at its core and build the supporting FFA chapters and their Co-op leaders honored foundation for sustainable and scalable efforts to support local food pantries as by Co-op Network economic growth for the people of the a part of FFA’s “Feeding the World — The Cooperative Network recently

32 January/February 2014 / Rural Cooperatives Foremost earns Green Professional designation

Foremost Farms USA, Baraboo, financially responsible manner makes • Replacing light bulbs, appliances and Wis., has been recognized as a Green good business sense,” says Michael manufacturing equipment with Professional business in the Green McDonald, Foremost’s vice president modern, energy efficient models; Masters Program of the Wisconsin for environment, health, safety and • Installing motion sensors, timers or Sustainable Business Council. The sustainability. “To be recognized for other lighting controls at plants and designation recognizes the co-op’s our efforts is the cheddar cheese on offices; continued commitment to our apple pie!” • Constructing an industrial sustainability. Examples of Foremost Farms’ efforts wastewater treatment facility (with “Foremost Farms has demonstrated in sustainability include: another dairy processor) that continued commitment to the triple • Developing goals and strategies to captures the methane produced in bottom line: people, planet and reduce greenhouse gas emissions; anaerobic processes and fuels an profitability, and we look forward to • Finding efficient ways to transfer the internal combustion engine-driven seeing more of their innovative energy from dairy products that have electrical generator that creates sustainability initiatives in the future,” been cooled or preheated to reduce electricity, which is sold to a local says Tom Eggert, executive director of energy consumption; utility company; the Wisconsin Sustainable Business • Reducing overall energy use at its • Working with customers to minimize Council. dairy plants by 4 percent, even packaging materials and placing “We believe that acting in an though product processing volume finished dairy products in reusable environmentally, socially and increased 4.8 percent; containers. n

This industrial wastewater treatment facility at Richland Center, Wis., captures methane produced in anaerobic processes. The methane gas fuels an engine-driven electrical generator that creates electricity, which is sold to a local utility. Photo courtesy Foremost Farms

presented its Cooperative Builder Machtan, board president of Group given to individuals who demonstrate Award — its highest statewide honor — Health Cooperative of South Central the utmost loyalty and service to the to three cooperative leaders: Steven Wisconsin (GHC-SCW); and Larry cooperative movement at the local, Krikava, retired director of government Swalheim, retired CEO of Landmark state, regional or national level. relations for Land O’Lakes; Kenneth Services Cooperative. The honor is “Recipients of the Cooperative

Rural Cooperatives / January/February 2014 33 Builder Award give above and beyond sustainable jobs through the • Large Cooperative: Coop Zeno to improve the lives of everyday people; development, education and support of Gandí, a credit union headquartered in their achievements represent the worker-owned cooperatives, Pike notes. Arecibo, Puerto Rico, with more than lifeblood of the cooperative The Austin Cooperative Business 35,000 members. It was cited for movement,” says Bill Oemichen, Association is another major force providing cutting-edge technology that president and CEO of Cooperative helping to expand and strengthen the allows members to use Internet and Network, which provides government co-op sector in Austin and the mobile services for many functions and relations, education, marketing and surrounding region. Texas also has connects the cooperative to the youth technical services to a wide variety of strong statewide co-op associations, of the community. member-cooperatives in Minnesota and notably the Texas Agricultural • Medium Cooperative: First Wisconsin. “Each year at our annual Cooperative Council and Texas Rural Alternative Cooperative, a retail food meeting, we are proud to recognize the Cooperative Center, which are strong cooperative in Corvallis, Ore., provides admirable work of our fellow proponents for co-ops and co-op natural and organic food in community- ‘cooperators,’ who consistently education. oriented stores to more than 7,000 challenge us to aspire even more for our New and/or expanding co-ops in members. It was saluted for being a members.” Austin include: Wheatsville Food Co- business that focuses on member and Krikava, from Edina, Minn., retired op, Black Star Co-op (a brewpub), Yo community needs, including this past year after a 39-year career with Mamas Catering Co-op, Red Rabbit maintaining a website that is rich with Land O’Lakes. Machtan, from Cooperative Bakery and College information about buying local, classes, McFarland, Wis., has served on GHC- Houses, among many others. Austin’s recipes and wellness. SCW’s board of directors since 1988 thriving co-op sector has attracted • Small Cooperative: Cooperativa and as board president since 2001. media coverage, including a recent PBS Orientación y Securidad C.T.A., is a Swalheim, from Stoughton, Wis., television program, Fixing the Future, worker cooperative that provides retired from Landmark Services and articles in the Austin Post. monitoring, private security and Cooperative in 2011 after 20 years as Accommodations will be available at investigations for hospitals. The co-op, CEO. the Hampton Inn and at local student based in Bogota, Colombia, was cited in housing co-ops. For more information, part for an outstanding website that ACE conference contact Pike at: [email protected]. explains the cooperative business model slated for Austin in July and how the co-op and its members are The Association of Cooperative Four co-ops win connected to their communities and Educators (ACE) will hold its annual dotCoop Awards other co-ops across Colombia. institute this July 13-16 at the Co-ops in Columbia, Puerto Rico, • Cooperative Organization: The University of Texas in Austin. Austin is Canada and Oregon have been Canadian Cooperative Association recognized with the 2013 dotCoop (CCA), based in Ottawa, Ontario, Global Awards for Excellence, represents more than 9 million recognizing their application of cooperatives and credit union members cooperative values and principles as from more than 2,000 organizations driving forces in their success. The throughout Canada. CCA is itself a awards were presented by Michael federally incorporated cooperative, Beall, president and CEO of the owned by its member organizations, National Cooperative Business and provides leadership to promote, a hotbed of co-op development and Association CLUSA International, develop and unite cooperatives and education efforts, according to ACE during the International Cooperative credit unions to benefit people in spokesperson Sarah Pike, making it a Alliance (ICA) Global Conference and Canada and around the world. fitting location for the conference. The General Assembly in Cape Town, South ACE institute is attended by co-op Africa. Florida’s Natural makes educators and development specialists “The recognition of these co-op’s third-highest payout from throughout the United States exceptional cooperative businesses is a Even though citrus sales volume (including Puerto Rico) and Canada. testament to the power of the dipped 3 percent last year, Lake Wales, Among the organizations helping to movement and how the model’s Fla.-based Florida’s Natural Growers boost the city’s co-op sector is differences can be harnessed and was still able to provide grower- Cooperation Texas, formed in Austin in utilized to positively impact members the third-highest profit share 2009 as a nonprofit organization that is communities globally,” Beall said. in the co-op’s history, according to The committed to the creation of Award winners (by category) are: Ledger newspaper. More than 1,000

34 January/February 2014 / Rural Cooperatives Florida’s Natural farmers received $1.75 in the dedication of three new facility) and NOVEC worked together per pound solids for their oranges and generators at the Prince William to develop the landfill gas-to-energy $1.60 for their grapefruit during its County Landfill, about 45 minutes west project. “This is a great example of a 2012-13 fiscal year, William Hendry, of Washington, D.C. The new public/private partnership,” says SWD the co-op’s chief financial officer, generators, along with two generators Chief Tom Smith. Fortistar sells 100 reported at the cooperative’s 80th that have been in service since 1998, percent of the facility’s electrical energy annual meeting have more than doubled the electric output to NOVEC under a long-term The meeting was attended by about output at the landfill. The five sales arrangement. A portion of the 300 members and guests. The 2012-13 generators are now providing about 48 proceeds received from the energy sales orange market was softer because of million kilowatt-hours annually for the is returned to Prince William County as high inventories. NOVEC system. royalties. These new green power projects, NOVEC, headquartered in NOVEC distributes combined with hydroelectric power Manassas, Va., distributes electricity and more green energy NOVEC buys from the Southeastern energy-related services to more than More Northern Virginia Electric Power Administration, is helping all co- 150,000 customers in Northern Cooperative (NOVEC) members are op customers illuminate their homes Virginia. lighting up their homes with “green and businesses and run their appliances power” thanks to the co-op’s with more renewable energy. “We Co-op merger participation in two renewable energy realize our customers want sensible creates Prairieland FS projects. In November, NOVEC alternative energy choices, and we’re Two Illinois farmer cooperatives — dedicated a 49.9-megawatt biomass looking for opportunities to add more Lincoln Land FS Inc. in Jacksonville plant in Halifax County, Va. The plant competitively priced renewable energy and Two Rivers FS Inc. in Rushville — burns wood waste left over from to NOVEC’s power supply,” says Stan have merged to create Prairieland FS Inc., with headquarters in Jacksonville. The new co-op will serve 13 counties in west-central Illinois and northeast Missouri. Shareholders of both co-ops approved the merger, which became effective Dec. 1, according to a report in the Herald-Whig newspaper. “Customers should see little or no change at the local level,” Keith Hufendick, Prairieland CEO, told the newspaper. “What this does is create efficiencies at the corporate level. This will help us sustain long-term profitability.” Prairieland FS is a full- service cooperative that This biomass plant in Halifax County, Va., burns wood waste leftover from logging, generating provides agronomy, energy, facility enough power to light up 16,000 homes. Photos courtesy Northern Virginia Electric Cooperative planning and logistics products and (NOVEC). services, as well as grain marketing, for farmers and other customers. logging and lumber operations in the Feuerberg, NOVEC president and south/central region of the state. CEO. Co-op educator NOVEC estimates that the plant will The Prince William County Solid Ian MacPherson dies supply enough electricity to power Waste Division (SWD), Fortistar (a Ian MacPherson, a leading co-op 16,000 homes. New York-based company that owns historian, educator, author and frequent In December, NOVEC participated and operates the landfill gas-to-energy speaker at co-op meetings, died Nov. 16

Rural Cooperatives / January/February 2014 35 at age 74. Dr. MacPherson was known To read more about McPherson, C-FARE received technical support internationally for his role in the 1995 visit: www.ianmacphersonmemorial. for the project from the Council for revision of cooperative principles. As blogspot.ca/. Economic Education (CEE), which both a scholar and a cooperative aided in the coordination of peer and activist, MacPherson “personified the Land O’Lakes Inc. teacher review of the modules. CEE relationship between Canadian acquires Geosys focuses on economic and financial cooperative academics and co-op Land O’Lakes Inc. has acquired education for K-12 students. In 2012, practitioners,” according to a posting Geosys, a global technology firm that CEE trained more than 55,000 teachers on the Canadian Cooperative provides satellite imaging and insights who, in turn, reached 5 million Association website. for agribusiness. The acquisition caps a students. The CHS Foundation MacPherson served as president of multi-year relationship between Geosys provided key initial support to help both the Canadian Cooperative and Land O’Lakes through the co-op’s launch the effort. Association (CCA) and Credit Union WinField division, which uses select Project leaders are Barbara O’Neill, Central of British Columbia (now part Geosys technologies in the United distinguished professor and Extension of Central 1 Credit Union), as well as States. specialist in financial resource on the boards of various consumer, “These industry-leading technologies management at Rutgers Cooperative financial and health-care cooperatives. give farmers the tools to make critical Extension ([email protected]), MacPherson was the author of decisions to improve yields while and Sanjib Bhuyan, associate professor dozens of books and articles about reducing their environmental and graduate program director of the cooperatives, including A Century of footprint,” says Land O’Lakes President Department of Agricultural, Food and Cooperation, a 2009 commemorative and CEO Chris Policinski. “These Resource Economics at Rutgers book marking the 100th anniversary of technologies further help our member University ([email protected]). Canada’s organized cooperative cooperatives to leverage proven tools “C-FARE is pleased to be a part of movement. In 1976, he joined the that turn data into decision enablers educating the next generation of faculty of the University of Victoria and that drive productivity and sustainable owners, leaders and patrons about the later served as chair of the history agricultural practices.” cooperative business model and department there. From 1992 to 1999, Geosys, which has more than 50 structure,” says Roger Coupal, associate he was the university’s dean of employees in multiple countries, had professor in the Department of humanities, stepping down from that been seeking a strategic partner to Agricultural and Applied Economics at position to found and head the B.C. accelerate growth, says Damien the University of Wyoming and current Institute for Cooperative Studies (since Lepoutre, president of Geosys. C-FARE board chairman. “The renamed the Centre for Cooperative leadership and support of the project and Community-Based Economy). C-FARE launches national from the cooperative community will He was also a founder of the co-op education project allow students in key states across the Canadian Association for Studies in The Council on Food, Agricultural nation to learn about the economics of Cooperation (CASC), a multi- and Resource Economics (C-FARE — cooperatives as early as 2014, with the disciplinary research organization which www.cfare.org) in 2013 began a two- goal for continued expansion in future brings together co-operative academics year project, “The Role of Cooperatives in years.” and practitioners. the Nation’s Economy: Educating Future Cooperative leaders interested in “There is no researcher in Cooperative Owners and Leaders” to learning more about this program cooperative studies in Canada who has develop high school teaching modules should contact C-FARE at: (202) 408- not benefited from Ian’s large presence about the economics of cooperatives. 8522 or [email protected]. and path-breaking work,” says Sonja The effort involves a panel of experts C-FARE is a Washington, D.C.- Novkovic, professor of economics at experienced in working with based nonprofit that promotes the work Saint Mary’s University and chair of the cooperatives, state councils of economic of applied economists and serves as a ICA Committee on Cooperative education, agricultural education catalyst for incorporating economic Research. “He was the founder of experts and high school teachers. The thinking into the analysis of food, CASC and a mentor to many students broad backgrounds represented on the agricultural and resource decisions. It and researchers whose lives have panel will help ensure that the modules serves as a conduit between the changed because they were influenced meet economic education standards academic research/Extension by Ian’s passion and deep understanding while also allowing for widespread community and government of the cooperative movement. We will dissemination of the information once policymakers and agencies, helping to miss him as a friend, a humanitarian the instructional module is complete match expertise to public needs. n and an inspiration.” and field tested.

36 January/February 2014 / Rural Cooperatives In the Spotlight until the consuming public thinks It’s relatively easy to define the right continued from page 15 there’s a problem, and only then try to thing, but much more difficult to push fix it. toward it. Again, with trade associa- Yes, it’s been hard work, and that tions, it can be a chore in pulling the work continues. But one look at the members together to work on evolve, before we had our collective challenges of other sectors of controversial positions. backs up against the wall. agriculture tells us that building a But as I noted in my last column, the The National Dairy Farmers program like FARM will make our jobs one discussing our position opposing Assuring Responsible Management as dairy marketers easier in the future. the greater availability of raw milk, (FARM) program is an example of this Doing the right thing is harder in easier paths are usually not the right dynamic. As consumer expectations the short term but makes life easier ones. And all of us, regardless of where change, we need to be out in front in in the long run. As I’ve said so many we are in our careers, end up regretting developing a national industry standard times in discussions with our members, the times when we chose the easy path for dairy cow care. We couldn’t wait doing the right thing is often very hard. over the right one. n

community through a different type of supported by grants and donations from Food hubs sustainability that is achieved through the community. Supporters of the food continued from page 7 more than just economic profits for hub see their donations as a way to producers and the food hub. Many food invest in the community, since Local hubs, due largely to their focus on Food Hub donates generously to of “food deserts.” Food deserts are social mission, are formed as nonprofits charities and local food banks. As an defined as “communities, particularly with the intent of promoting social and example, around 25 percent of the low-income areas, in which residents do environmental benefits as much, or produce grown at Local Food Hub’s not live in close proximity to retailers more, than economic profit. This farm is donated to such charitable organizations. All food production systems have their place and address a specific set of stakeholder needs. The authors believe that taking a collaborative view will produce the best solution for both consumers and producers for long-term sustainability. Further, we believe that additional research is necessary to fully explore the exciting possibilities that exist for local foods producers in today’s food industry. n

Selected References • Diamond, Adam and James Barham. Money and Mission: Moving Food with Value and Values. Journal of Agriculture, Food Systems, and Community Development no.4 (2011): 101–117. http://dx.doi.org/10.5304/jafscd. 2011.014.013 • Matson, James, Martha Sullins and Chris Cook. The Role of Food Hubs in Local Food Marketing. Washington D.C.: U.S. Department of Even in their short history, food hubs have proven highly adaptable — in size, scope and type of Agriculture, Rural Development. 2013. • Polimeni, John M., Raluca Iorgulescu Polimeni, products offered — to meet the vagaries of consumer demand. L. Shirey, Christina L. Trees, W. Scott Trees, The Supply Of Community Supported Agriculture. offering affordable and healthy food. secondary approach to sustainability has Journal of Business & Economics Research. March 2006, Volume 4, Number 3. Healthy food options in these also proven to be successful, as • U.S. Department of Health and Human communities are hard to find or are evidenced by the longevity of a number Services. Healthy Food Financing Initiative. Office unaffordable” (U.S. Department of of nonprofit food hubs. Local Food of Community Services. 18 January 2011. ww.acf.hhs.gov/programs/ocs/resource/ healthy- Health and Human Services 2011). Hub is a nonprofit organization, and a food-financing-initiative-0. (Accessed May 16, Food hubs provide value to a majority of the finances of the hub are 2013.)

Rural Cooperatives / January/February 2014 37 Welcome to the club recommend against developing them The issue of food buying clubs continued from page 28 into a co-op store. Moving Ahead agrees outside of the United States also needs with this sentiment. to be researched. What are the effects However, the growing demand for of different distribution systems on the local and organic foods is creating a role of buying clubs in foreign market that is often conducive to countries? How many of these buying there is any doubt about such a move, support for co-op food stores. clubs evolve into new forms (besides co- the expansion should be delayed until Ultimately, the decision to expand a op stores)? the concerns are addressed. food club into to a co-op store should The role of food buying clubs in the Member input is critical to such a be made carefully, on a case-by-case United States has fluctuated over time. decision. One important consideration basis. Food buying clubs will likely continue is whether there should be a limit on to be part of the solution to food membership to prevent uncontrolled Opportunities for insecurity. However, much research is growth. A successful transition to a co- future research still needed on their long-term effects. n op store will also require having a Buying clubs represent only one way reliable wholesaler and source of to increase food access, choices and References • Black, Herbert. People and Plows Against Hunger: capital. Pooling resources with other affordability. As such, they emphasizes Self-Help Experiment in a Rural Community. buying clubs or co-ops when forming a some aspects of food access over others, Boston, Massachusetts: Noodles for America, new co-op store may reduce the burden with varying implications. For instance, Inc., 1975. • Dodge, Philip. How to Form a Food Co-op., 1980. on any one food buying club and result minimizing costs by using volunteers • Evans, Ann M. Form a Buying Club in California. in a better end product. means there are fewer full- or part-time Division of Consumer Services, 1980. There are conflicting opinions about jobs involved. Additionally, using • Fairholm, Jacinda. Urban Agriculture and Food Security Initiatives in Canada: A Survey of the advisability of creating a co-op store “scratched and dented” food items, Canadian Non-Governmental Organizations. from a buying club. The opinions of which may have similar nutritional LifeCycles: 32, 33, 34. 1999. whether to start a co-op store seem to value, may also have implications for • Food Security in the United States: Key Statistics and Graphics. Sept, 7, 2011. http://www.ers.usda. shift depending on the time period. For how consumers feel about themselves gov/briefing/foodsecurity/stats_graphs.htm example, Organization and Management that may outweigh the lower costs. • Kanto, Linda Scott. Community Food Security of Consumers’ Cooperatives and Buying Buying clubs also represent Programs Improve Food Access. Food Review 24.1 (2011). Clubs written in 1940, says that a buying important food access opportunities • Lefever, Don. Co-op Stores and Buying Clubs, club’s ultimate objective is to develop a with important economic and social 1972. store, with the buying club being a consequences. These many reasons • Lewis, Bob, et al. Food Co-ops in New York City: An Organizing Handbook and Resource Guide. temporary stage. should stimulate more research on Community Food Resource Center, 1983. In Consumer Cooperation: the Heritage buying clubs. It would be useful to track • Moving Ahead with Group Action: A Buying Club and the Dream, written in 1974, Sekerak basic data on the number of buying Manual. Ed. Cooperative League of the USA, 1975. and Danforth are against the idea, clubs, their business volume and how • Organization and Management of Consumers’ saying: “The requirements for survival many have become co-op stores, Cooperatives and Buying Clubs. Ed. Frances and growth are much greater [with a although such data is difficult to Perkins, 1940. • Ronco, William. Food Co-ops: An Alternative to co-op store] — in terms of management compile due to the informal nature of Shopping in Supermarkets. Beacon Press, 1974. skills and capital and sales volume the clubs. This data would help answer • Sekerak, Emil, and Art Danforth. Consumer [required].” They say buying clubs are a the question of whether buying clubs Cooperation: The Heritage and the Dream. Con- sumers Cooperative Publishing Association, great tool for small groups of people to work best as an end product, or as a 1974. get fresher food at a reduced price, but means to the formation of a co-op.

What leads to satisfied level of customer service. satisfaction with their cooperatives that co-op members? The information presented here is are not identified by the analysis of continued from page 23 gleaned from surveys designed for these member opinions. However, this specific needs of the cooperatives collection of member opinions reveals involved; surveys were conducted in a important factors that can influence number of years and during varying member satisfaction and highlights members are well trained, with the market conditions. Therefore, it is some of the areas that cooperatives may technical expertise members expect and possible there may be other important want to focus attention on. n who are committed to delivering a high factors that play a role in members’

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