Rural COOPERA COOPERA SA/RrlDvlpet July/August2007 USDA /RuralDevelopment SA/RrlDvlpet July/August2007 USDA /RuralDevelopment Rubble Rising from the TIVES TIVES COMMENTARY

Co-ops’ role in renewable energy economy

Editor’s note: the following remarks are excerpted from a talk Agriculture Secretary Mike Johanns gave during a reception hosted by the National Council of Farmer Cooperatives at USDA headquarters in Washington, D.C., in June.

The public’s appetite for renewable energy and the President's renewable energy goal are both pulling us to a new era. Today, the market is driving more of the decisions that farmers make about what crops they plant. It’s shaping the choices that your cooperatives are making about how to organize your businesses and where to invest your equity. Cooperatives are a vital part of the economic well-being of rural America. For more than 80 years, you've been delivering collective purchasing and marketing power to our farmers, and you have often been the first to see and act on new opportunities, such as renewable energy and the opportunity Agriculture Secretary Mike Johanns (left) greets NCFC Chairman and CHS Inc. CEO John Johnson and NCFC President that it presents today. Jean-Mari Peltier during a co-op reception at USDA I want to urge you to continue to work aggressively to headquarters in Washington, D.C. USDA photo by Alice Welch make sure your members’ equity is invested wisely and that it remains transparent and that it benefits the future generations as you have benefited in the past. The focus of our research effort will be relative to We are fortunate today that we have a very strong cellulosic ethanol, a practical and cost-effective alternative economy. Except for cotton, prices for major commodity fuel. But we also want to see progress in other areas, including crops are relatively high and in some areas historically high. making more use of methane to generate electric power. We are showing great strength in agricultural exports as well. I know many dairy cooperatives are already working in this We expect them to top $77 billion this year. This is shaping area, and I applaud them for their efforts. Part of our up to be our fourth record year in a row and the eighth renewable energy proposal calls for an additional $500 million straight year of growth. in funding for a grant program that funds energy efficiency What all this means is that more farmers are working for and alternative energy projects. This program has already themselves, and that’s a good thing. Farmers tell me that’s a helped fund more than 90 methane-to-energy projects around good thing. In March, U.S. farmers reported to us that they this country. have planted 90.5 million acres of corn this year, 15 percent In fact, since 2002, USDA Rural Development has more than last year, and the most corn we have seen in the provided a total of $37 million to support methane-to-energy ground since 1944. That means we hope for a record crop of projects. That investment has leveraged more than $122 12.5 billion bushels in 2007, 2 billion more than last year. So million in other funds. farmers are responding to the marketplace, and then some. These types of investments made by USDA, and the type But we know that to break our dependence on foreign oil, we many of your co-ops are making, will help reduce our can’t solely rely on ethanol from corn. We must also support dependence on foreign oil. the market as it seeks out alternative feedstocks to meet our We appreciate the great work you do out there for present energy needs and the energy needs of the future. American agriculture. We appreciate all you do, and I look That’s why we propose $1.6 billion in new spending for this forward to working with you as your Secretary of Agriculture. year's Farm Bill to speed up the development and the production of renewable fuels. — Mike Johanns, U.S. Secretary of Agriculture ■

2 July/August 2007 / Rural Cooperatives Rural July/AugustCOOPERACOOPERA 2007 TIVESTIVESVolume 74 Number 4

FEATURES

4 Co-op salvages hope amid ruins Southern Plains takes a licking, but keeps on ticking By Stephen Thompson

Rural COOPERATIVES (1088-8845) is published bimonthly by Rural Business–Cooperative Service, U.S. Department of Agriculture, 1400 Independence p. 4 12 Upstate Niagara Goes Uptown Ave. SW, Stop 0705, Washington, DC. 20250-0705. The Secretary of Agriculture has determined that Team effort provides financing for modern, $35 million dairy plant publication of this periodical is necessary in the transaction of public business required by law of the Department. Periodicals postage paid at Washington, DC. and additional mailing offices. 18 Wired for Success Copies may be obtained from the Superintendent of Broadband co-op helping southern Virginia attract new information technology jobs Documents, Government Printing Office, Washington, DC, 20402, at $23 per year. Postmaster: send address By Dan Campbell change to: Rural Cooperatives, USDA/RBS, Stop p. 12 3255, Wash., DC 20250-3255.

Mention in Rural COOPERATIVES of company and 29 Mica, Abernathy, Ditsch named top co-op brand names does not signify endorsement over communicators other companies’ products and services.

Unless otherwise stated, contents of this publication are not copyrighted and may be reprinted freely. For 30 Evolving technology may generate profit from noncopyrighted articles, mention of source will be p. 18 appreciated but is not required. biodiesel glycerin glut

The U.S. Department of Agriculture (USDA) prohibits By Anthony Crooks discrimination in all its programs and activities on the basis of race, color, national origin, age, disabili- ty, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual’s income is derived from any public assistance program. (Not p. 30 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 DEPARTMENTS TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, 2 COMMENTARY Director, Office of Civil Rights, 1400 Independence 15 IN THE SPOTLIGHT Avenue, S.W., Washington, D.C. 20250-9410, or call (800) 795-3272 (voice), or (202) 720-6382 (TDD). USDA 17 FOCUS ON... is an equal opportunity provider and employer. 22 CO-OP DEVELOPMENT ACTION 24 UTILITY CO-OP CONNECTION Mike Johanns, Secretary of Agriculture 26 VALUE-ADDED CORNER Thomas C. Dorr, Under Secretary, 33 USDA Rural Development NEWSLINE 38 PAGE FROM THE PAST Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question? On the Cover: Call (202) 720-6483, or Fax (202) 720-4641 The Southern Plains Cooperative elevator in Greensburg, Kan., was This publication was printed with vegetable oil-based ink. one of the few structures still standing after the town was hit by a 1.7-mile-wide tornado on May 4. See page 4 for a look at how the co- op and town are striving to recover from the tragedy. USDA photo by Stephen Thompson

Rural Cooperatives / July/August 2007 3 Greensburg, Kansas, was a thriving farming town of 1,500 souls prior to May 4. It had a co-op grain elevator, a successful farm equipment dealership, grocery and hardware stores, and just about everything else a rural community needs to be a good place to live. But after that day, the town resembled nothing so much as the aftermath of a nuclear blast. A monster of a tornado raged through Greensburg’s pleasant tree-lined streets at 10 p.m., killing 14 people. The tornado’s funnel was 1.7 miles wide, with winds exceeding 200 miles per hour. It smashed most of the town to matchsticks, crumpled cars and trucks like soda cans and ripped the leaves, branches and even bark from hundreds of trees. “Rural Cooperatives” visited Greensburg six weeks after the disaster to see how the recovery was progressing.

“The house shook, the earth shook, and we could hear Greensburg disappearing...” Co-op Salvages Hope Amid Ruins

Southern Plains takes a licking, but keeps on ticking

By Stephen Thompson, supply/service cooperative, out of running in a week.” Assistant editor business. The co-op lost ten vehicles, That was good news for co-op [email protected] including two expensive fertilizer members who were preparing for the applicators and its dry fertilizer facility. wheat harvest when Rural Cooperatives e’re still here!” says The twister also destroyed the co-op’s visited. “In an agricultural community, Danny McLarty, feed mill and a 60’ x 100’ steel we’ve got to take care of the growers,” “ manager of Southern maintenance shed. Its office building says McLarty. “Because the rest of the W Plains Co-op’s was destroyed, its grain drier shredded community depends on their revenue.” Greensburg operation, and a retail outlet flattened. One of its The cooperative is one of the largest when asked how things are going. steel buildings was picked up and and most important business in the “We’re serving our customers,” he adds, wrapped around a grove of trees. Only small agricultural town of Greensburg. with pride in his voice. the concrete elevator, the truck scale With most of the town having to start The May 4 Greensburg mega- and the liquid fertilizer facility could be again from scratch, the co-op’s tornado did its best to put Southern salvaged. continued operation may make the Plains, a local grain and farm Still, says McLarty, “We were up and difference between the community’s

6 July/August 2007 / Rural Cooperatives future prosperity or a painful decline. ammonia leak was another story: neatly filed in cardboard boxes. It took workers were unable to get close another day to obtain and set up a Employees rise to occasion enough to effect repairs. portable generator to power the The co-op’s resurrection was due in Luckily, the wind was blowing the elevator machinery. In the interim, the large part to the efforts of cooperative dangerous gas away from the town. elevator’s windows and doors — blown employees, some of whom had lost Before they could seal the leak, says out in the storm — had to be replaced, their own homes in the storm. McLarty, “We just had to wait until the as well as some of its heavy steel Alan Allison, who runs the elevator, pressure drop froze the ammonia in the inspection hatches that had been sucked saw his own house and his parents’ tank.” away by the twister. One of the legs, or home destroyed. But soon after the Co-op workers spent the weekend chutes, of the elevator also needed to be storm was over, he was at the co-op site, picking through the ruins of the office. replaced, having been mangled when an working to contain the damage. Three The roof of the small, one-story airborne car apparently hit it 120 feet other co-op employees also lost their building was gone and its walls above the ground. houses. Workers from the co-op’s other collapsed, but the crew was able to Once the power was on, the contents facility, in nearby Lewis, hurried over to recover vital records and some of the bins were turned over to ensure help without any prompting. They equipment. A portable building was against moisture damage. The liquid worked from 11 p.m. until about 6:30 ordered to serve as a temporary fertilizer facility, consisting mostly of the next morning, and then returned replacement, and plans to replace the wind-resistant steel tanks and pipes, was after only an hour of rest. destroyed facilities were set in motion. quickly restored to working order, as well.

Merger brought critical resources Luck played a part in the facility’s revival. With the Kansas wheat harvest only weeks away, the survival of the elevator and the truck scale meant that they would be ready to handle members’ grain on schedule. And member farmers need access to supplies of liquid fertilizer to avoid damage to the irrigated corn prevalent in the area. The other facilities aren’t as critical. Another stroke of good fortune, it turned out, was the decision two years before to merge the Greensburg cooperative, then called Farmers Grain and Supply Inc., with the larger Lewis Cooperative, 25 miles away. Board member Scott Brown believes the resources made available by the merger may well make the difference between failure and recovery. “If the merger hadn’t gone through, it could have been the last nail in our coffin,” he declares. Brown says that the cooperative Co-op Manager Danny McLarty, far right, discusses plans for repairs with employees in the co-op’s temporary office in Greensburg. Opposite page: Denuded tree trunks are spirit governs the relationship between all that remain of what was once a residential neighborhood. USDA photos by Stephen the members of the two branches of the Thompson co-op. “The merged co-op was run as a single family from the beginning,” he says, which removed a potentially Of immediate concern were leaks By Wednesday (five days after the serious source of conflict. With such from anhydrous ammonia and propane storm), the temporary office building extensive damage and a majority of the gas tanks, which had valves knocked off had been installed and the vital truck directors from the other location, they by flying debris. The propane leak was scale was back in operation. The could have chosen to cut their losses dealt with fairly quickly, but the salvaged customer records are now and shut the damaged facility down.

Rural Cooperatives / July/August 2007 7 “It would have been easy to just take deserve a lot of credit for helping us get a while. The office building is already the insurance check and move back on our feet. The company framed and roofed, but it won’t be everything to Lewis,” says Brown. “But providing the replacement chemical ready for use until about Sept. 1. The the board voted unanimously to replace building, for example, usually takes chemical warehouse was scheduled for and upgrade. There wasn’t any eight to ten weeks to deliver an order. completion July 15, and the dry hesitation.” But for us they moved it up to six.” fertilizer building was scheduled for Workers from the Lewis branch of Gruber is especially complimentary completion by the end of August. The the co-op have also been a great help in of the Julian Lumber Co. of Antlers, co-op’s “Crop Shop,” a retail outlet, will getting things back together, says Okla., which, he says, besides their not be completed until sometime next McLarty. “Whenever things are a little responsiveness to the co-op’s needs, winter. The feed mill will not be rebuilt slow over there, they come over here to sent up truckloads of fence posts and due to high costs imposed by new see if there’s anything they can do.” made them available free of charge to building codes. Co-op president Ron Gruber joins anyone who needed them. Even some Some debris still needed to be McLarty in having nothing but praise neighboring cooperatives, normally removed or salvaged when Rural for the efforts of the co-op’s employees. competitors, sent help, which Gruber Cooperatives visited the town six weeks “They really went all out, day and said is also greatly appreciated. after the storm. Facilities and night, to put us back in business,” he equipment such as the elevator’s grain says. He also praises their suppliers. Long way to go drier, destroyed vehicles and dozens of “They’ve all been excellent. They The work won’t be finished for quite smaller, less critical items still needed to

Co-op people weather the storm

The night the tornado came to Greensburg, Tom Doherty tive board member Scott Brown was driving toward town and his wife took refuge in their basement minutes before it when he heard the tornado warning on the radio. He pulled hit. As the wind built up to a deafening shriek, the basement over about three-quarters of a mile out of town and peered windows blew open, letting in a blast of rain. “I tried to close through the rain and hail hammering his windshield, looking them, but they blew back in my face,” he remembers. for the telltale funnel cloud. That may have saved their lives, because if the windows “Everything was just black,” he recalls. “But every now had been closed, the twister’s terrific suction might have and then there was a flash of lightning.” The flashes illuminat- ripped away the floor above their heads. As it was, the drop in ed what looked like a broad air pressure was so strong, he says, “It felt like your head wall of rain passing in front of was just going to split!” him. Brown thought he was When the terrifying roar of the storm tapered off, Doherty, witnessing only a rather a long-time employee of Farmers Cooperative Co. in nearby heavy thunderstorm. In fact, Haviland, looked up to find that the outside entrance to his he was looking at the tornado basement had been ripped away. He stuck his head outside to itself. find most of his house destroyed as well. But he had little time After the rain and hail had to think about it: this tornado was so huge — later determined ended, Brown drove into to be 1.7 miles wide — that it had a calm center, like the eye town, completely unprepared of a hurricane. So it wasn’t long before the wind began to for the devastation he found. blow again as the leeward side of the storm slammed through “It was the worst ‘rain’ I’d town. ever seen,” he says wryly. When it was finally over, almost everything Tom Doherty With all electric power owned — house, vehicles, and the personal mementos and gone and a thick layer of possessions accumulated in 62 years of life — had been cloud cover, the night was destroyed or simply vanished. pitch black. An eerie silence hung over the town, as peo- Hard rain, wall of black Haviland Co-op member ple began to emerge from A few miles west of Greensburg, Southern Plains Coopera- Kenny Keen lost his home to their basements and storm the storm.

8 July/August 2007 / Rural Cooperatives Amid piles of building rubble, traffic again flows through the main road intersection in Greensburg.

The drop in air pressure sage. The ambulance took Mrs. Voltz to a hospital in Dodge City, 50 miles away. Unfortunately, her injuries were too severe, was so severe that it “felt and she died soon afterward. like your head was just Along its 22-mile path of destruction, the tornado took 14 lives. But its toll could have been much worse. It hit at about 10 going to split!” p.m. on a Friday night, and most people were home watching television when the warning sirens sounded, thus receiving shelters. Most were in a state of shock. Says another witness: plenty of notice that the storm was about to hit and giving them “It was like one of those zombie movies. People were just time to seek shelter. If the tornado had hit earlier in the day, stumbling around with this blank look on their faces.” with people out and about, or, especially, later at night, with Doherty tells of one victim who ran up to people pleading for everybody sleeping, deaths might have numbered in the hun- help to get his family out of their basement. When rescuers dreds. hurried to the scene, they found the door to the shelter opened easily, the interior was intact, and those inside were safe and Heeding the alarm sound. In his farmhouse several miles north of town, 70-year-old Other people sobbed quietly or picked listlessly through the Kenny Keen, a member of Haviland’s Farmers Cooperative Co., rubble. Southern Plains employee Alan Allison remembers that heard the tornado warnings on TV. He sought refuge with his the emergency flashers of many of the smashed and crumpled wife in the basement at 10:15, after predictions that the tornado cars were blinking silently, adding to the creepy atmosphere. would pass nearby at 10:34. “By 10:34 it wasn’t here,” he Brown picked his way through the rubble to the house of his remembers. “And every time another minute went by, I’d say friend Norman Voltz, to find that Voltz and his wife, Bev, had ‘It’s gonna miss us.’” been injured when their house collapsed. Bev was seriously After a while, Keen decided it was a false alarm. “I’m gonna hurt; they used duct tape to strap her to a door, put her in the go to bed!” he told his wife. But she was more cautious. “She back of a pickup and went looking for one of the ambulances said, ‘Don’t you go up there ‘til 11… wait a minute. My ears are they were told was waiting in the center of town. popping!” He shakes his head. “Then, boom! The roof came off.” On the way, they picked up two young men, who helped hold The twister destroyed the house, a horse stable and uproot- the injured woman and cleared rubble for the vehicle’s pas- continued on page 10

Rural Cooperatives / July/August 2007 9 be replaced or repaired. Luckily, says insurance provider. McLarty, the grain received by the co- Some problems are more frustrating op usually has a low moisture content than others, Gruber says. “The and doesn’t need drying. Alan Allison infrastructure here is just a wreck,” he says salvaging equipment can be says. Water service was finally restored discouraging. “You look at something to the co-op a month and a half after and think, ‘Maybe we can save this.’ But the storm, and electrical service was still you look at it again and, nope, it’s bent.” pending. Gruber notes that the Meanwhile, income is down due to municipal power company required the lost feed and fuel sales, and grain co-op to purchase its own transformer. revenue has been affected by the The electric cooperatives it deals with inconvenience of making deliveries by at other locations supply transformers Southern Plains President Ron Gruber truck through streets often blocked by as part of their service. The co-op says neighboring co-ops have been generous with their support. cleanup efforts. Gruber has been wants municipal power so it can reopen discussing the shortfalls with the co-op’s its service station, now being rebuilt,

Co-op people suffering from lack of water, giving farmers time to get their irrigation systems repaired. continued from page 9 Gamble is grateful that he didn’t lose more. “I don’t want to seem like I’m complaining,” he’s quick to say, “especially ed or destroyed a number of trees. Keen’s two horses, howev- when some people lost everything.” He also praises the help er, survived unscathed. Three weeks later, as he was saddling he has received from the Kansas Farm Bureau, with which he one of the horses, he looked down and spotted a brand-new, was insured. $100 bill he had put under his wife’s jewelry box, intended as a gift for his grandson’s high-school graduation. “If the horse Helping each other hadn’t backed up, I’d never have seen it,” he chuckles. Around the area, people quickly and generously came to A little closer to town, Southern Plains member Ki Gamble, each other’s aid. his wife Kim and their two small children had a stroke of luck. About 10 miles east of Greensburg in Haviland, employees “The house shook, the earth shook and we could hear Greensburg disappearing,” he says. However, their 100-year- old farm house — built with extra reinforcement against high winds — survived the storm almost intact. The rest of their durable assets didn’t do so well. Their grain bins, outbuildings — including a large barn — two pick- ups, two semi-tractors, two trailers and a bull wagon were all totaled. Ironically, their combine, which was being serviced in town, survived the devastation. “It’s ugly, but it still runs,” says Gamble. “This was shaping up to be a good year,” muses Gamble. Corn prices were high, and the wheat crop was looking good. Then came the storm, which not only damaged buildings and equipment, but was part of a weather pattern bringing too much rain. The excess moisture has made it difficult cultivate corn and delayed the wheat harvest, in some cases leading to degradation of the crop. The tornado also knocked over or destroyed 420 irrigation pivots, each costing about $50,000. Gamble says the one good Ki and Kim Gamble lost their barn, outbuildings and thing about the wet weather was that it has kept corn from equipment, but their 100-year-old house survived the storm.

10 July/August 2007 / Rural Cooperatives providing a much-needed fuel source to with state and local government Southern Plains instead chose to the community. officials, and is working to make sure renew its commitment to a community Ironically, one of the biggest the co-op’s needs are accommodated. that will need many years to recover potential problems facing the from a crippling disaster, because its cooperative stems from the rebuilding The co-op difference directors see serving that community as effort. Government officials want to use The decision to rebuild and improve part of its mission. the opportunity to improve the traffic the Greensburg facility illustrates an That commitment will mean pattern through the town. important difference between the rural spending about $1 million over and Unfortunately, the proposed traffic plan cooperative culture and that of many above the insurance payout, leaving the would cause serious difficulties for other businesses. A business run solely co-op with a substantial debt. “But the trucks using the elevator and truck for the profit of investors, faced with farmers are still going to be here,” says scales, forcing them to make long the same circumstances, might well Brown. “We knew we’d be serving the detours and making it difficult for them have decided to cut costs by shutting same number of acres we always served. to make turns entering and exiting the down its damaged facility and That made the decision easier.” facility. Gruber has been conferring consolidating its operations. ■

of Farmers Coopera- Brown was preparing to move into his “dream house” in tive Co. jumped into Greensburg, bought only days before the storm. “I lost it,” he action. Some immedi- says, “but at least I had my other house to go home to.” That ately drove to the site house, in a nearby village, is also temporarily sheltering two of the disaster to help families put out by the storm. any way they could. People in Greensburg are especially complimentary of The manager of the organizations such as the Red Cross and Salvation Army, co-op’s newly both of which were quickly on the scene and are still provid- acquired service sta- ing vital services. And a number of smaller groups have tion opened the facili- showed up to help with the gargantuan cleanup effort, which ty at midnight, ready will take many months. Many of their members stand out to serve any vehicles because of the brightly colored tee shirts they wear. that might need fuel. Some doubt that the town can make a full recovery from Alan Allison recalls the eerie sight of The co-op also loaded the damage. Brown points out that most of the low-income emergency flashers still blinking on and sent a tanker housing won’t be available even after rebuilding, although a crumpled cars. trunk to Greensburg to USDA Rural Development-funded multi-family housing facility provide fuel for vehi- survived the storm and was repaired with agency funds. “We cles involved in the rescue effort. might lose half our population because of that,” he says. A friend of the Keens offered them an empty furnished “And then, would the grocery store come back?” house, saying they could stay there as long as they liked. Doherty now stays with his son in Bucklin, about 20 miles Many others in the area have taken storm victims into their to the west. He says the co-op he works for “has been won- homes, in many cases people they’d never met. Local church derful,” with financial and other help. But, he says, “the groups have organized much of the aid, offering shelter and worst thing is not knowing what I’m going to do.” His wife food to whoever needs it, and the Kansas Cooperative Coun- worked at the local ALCO variety store, which was destroyed cil set up an emergency aid fund. by the storm, and it’s not known if it will be rebuilt. Scott Brown owns a real estate and auction business on Worst of all, he says, his house insurance covered only the eastern edge of town, in a narrow strip that was what he owed on the mortgage, and plans to put in a traffic untouched by the tornado. He’s put in 20 new telephone lines bypass call for his property to be condemned. “I guess I’ll and offered free space to any local business that needs it. just have to take whatever they’ll give me for it,” he says rue- Two young children play in his office. They belong to one of fully. “I’m starting all over again with nothing. I’m back at 18 his employees, who has nowhere else to keep them during years old, only I’m 62. working hours. ■

Rural Cooperatives / July/August 2007 11 Upstate Niagara Goes Uptown

Team effort provides financing for modern, $35 million dairy plant

hen Upstate Niagara Cooperative Inc. “We needed financial partners who could either lend us decided in 2004 to build a new dairy the money or reduce our costs,” Luongo remembers. “And W processing plant to replace its century-old we found both.” facility in Buffalo, N.Y., hundreds of member dairy farmers and the local community Financing partners welcomed the news. Chief among Upstate Niagara’s financing partners were Building a larger, more modern dairy plant in West three Farm Credit System institutions: CoBank, which served Seneca, N.Y., about 20 minutes outside of Buffalo, promised as the lead bank, and two Farm Credit associations, Farm to position the prominent Northeast co-op for greater Credit of Western New York and First Pioneer Farm Credit. production and market growth. It would keep one of the co- In addition, much of the new plant’s equipment is leased op’s processing operations in the area, giving local dairies a through Farm Credit Leasing, a CoBank subsidiary. home — and added value — for their milk. And it would CoBank specializes in financing U.S. agribusinesses boost the employment base. (particularly cooperatives), as well as rural communications But the plant’s estimated $35 million cost meant and energy systems and agricultural exports. Although it’s significant capital expansion in costly New York State, posing based in Denver, Colo., CoBank has other offices around the a “big risk” for the cooperative, says Ed Luongo, Upstate country, including the Springfield, Mass., banking center that Niagara’s chief financial officer. While the co-op’s 430 dairy worked with Upstate Niagara. producer-members do a stellar job of producing milk — to “CoBank really stepped up to the plate and was willing to the tune of 1.6 billion pounds annually — they weren’t in a take the risk with us,” Luongo says. position to write checks to cover the multi-million-dollar To help fund the $30 million that Upstate Niagara sought price tag for the new plant’s construction. to borrow, CoBank turned to the two Farm Credit affiliates

12 July/August 2007 / Rural Cooperatives “By creating a more efficient facility, we’re a tougher competitor,” says Upstate Niagara’s CFO Ed Luongo (above, right) with Dan Dunn, the plant manager (center) and Lawrence Webster, the co-op's chief operating officer. Opposite page: Dave Tillotson is one of the co-op’s 430 dairy producer-members who generate 1.6 billion pounds of milk annually. About 665 million pounds of member milk is processed by Upstate Niagara annually. Photos by Larry Laszlo

with New York branches and decades of experience in Adding tax breaks to the deal capitalizing agricultural businesses. Farm Credit of Western Besides borrowing money outright, Upstate Niagara New York is based in Batavia, N.Y., about an hour’s drive east looked for ways to reduce the costs of its new capital of Buffalo. First Pioneer Farm Credit has nine branch offices expansion. Community support for the plant investment in New York State. seemed feasible. After all, not many $35 million projects pop The funding partnership among the three reflects a up in Western New York. In West Seneca (population about growing trend in the nationwide, federally chartered Farm 45,000), the Upstate Niagara plant would bolster the Credit System, which has been around since 1916. employment base and generate additional property taxes to Increasingly, System members like CoBank are partnering help pay for schools and other public services. with other Farm Credit institutions, and even with As hoped, Upstate Niagara soon found a cost-saving commercial banks, to provide the sizable funding that today’s opportunity through the Erie County Industrial agribusinesses need. Development Agency (ECIDA). “Some might say that combining three lending institutions ECIDA is the economic development corporation for Erie on a single transaction might have been easier not to do,” County. The New York State Legislature created the agency says Tom Cosgrove, the CoBank relationship manager who in 1970 to provide economic incentives, such as tax worked closely on the Upstate Niagara deal. “But we all abatements and grants, to private-sector companies worked hard to make it happen.” undertaking capital expansion in Erie County. The agency is To meet Upstate Niagara’s funding need, CoBank lent $20 self-funded; 90 percent of its budget comes from fees. million, with the two Farm Credit affiliates each adding $5 “Upstate Niagara was considering other sites for its new million. The resulting $30 million meant Upstate Niagara was on plant, and we wanted to make Erie County as attractive as its way to building its new plant. But the co-op didn’t stop there. possible,” says ECIDA’s Dave Kerchoff.

Rural Cooperatives / July/August 2007 13 Because of Upstate Niagara’s Upstate Niagara processes stack 50 cases per minute for “significant capital investment in shipping. New technology in the West Seneca,” Kerchoff says, and packages 275 products plant has allowed the co-op to ECIDA provided the co-op with extend the shelf life of its yogurt a package of tax incentives and and markets its branded products from 45 days to 90 days. abatements that will save the co- The plant’s efficiencies and op $6 million over 15 years. foods in all 50 states. newly increased product lines The package included a sales- “will pay for the plant over the tax reduction on building next eight years,” says Luongo. materials and non-processing equipment, such as forklifts and Sold on the plant computers. A property tax That’s good news to co-op abatement, worth $3.5 million, members such as Dan Wolf, was also part of the overall chairman of the board of Upstate package. Niagara. His 300-cow Holstein Upstate Niagara found dairy near Lyons, N.Y., has another financing partner in the produced milk for the co-op for New York State Energy Research decades. and Development Authority. The “We decided to move agency provided a subsidized forward with the new plant loan to the co-op for installing because we saw an exciting, energy-saving equipment in the bright future for our products,” plant. says Wolf. “We also knew that if As promised, Upstate you’re going to grow, you can Niagara’s manufacturing expect an increase in debt. You investment empowered the West just have to concentrate on Seneca community, using local making the business work.” vendors and companies to build the plant. The co-op’s old What sold the project, Wolf says, was a series of meetings plant even took on a new life when it was sold as a local car with members to explain the process of building the $35 museum. million plant and marketing its new products. “Not one member voiced opposition to the plan,” he recalls. Delivering the goods The new plant “is performing beyond expectations,” both Since the new plant produced its first container of yogurt financially and with the products it creates, says Wolf. in May 2006, it has more than met Upstate Niagara’s Today, the plant’s 142 employees produce the quality expectations. The facility processes 110 million pounds of yogurt, cottage cheese, sour cream and dips that have earned raw milk annually, twice the old plant’s capacity. As a result, the co-op strong brand recognition in the market. the co-op has nearly doubled the capacity of its cultured At its three other plants in Niagara Falls, Buffalo and products line, jumping from 50 million pounds to 90 million Rochester, the co-op processes fluid milk and produces juice, pounds a year. Sales rose to almost $500 million last year, up iced tea, lemonade and eggnog. The co-op also owns 86 by about 9 percent. percent of the O-AT-KA processing plant in nearby Batavia. “By creating a more efficient facility, we’re a tougher In all, Upstate Niagara markets its dairy products and competitor,” says Luongo. beverages to all 50 states under its Upstate Farms, Bison and A post-plant merger with neighboring Niagara Milk Intense brands. Cooperative also helped Upstate Farms strengthen its market As Wolf and Luongo see it, Upstate Niagara’s major plant position. Upstate Niagara now ranks among the top 20 U.S. undertaking proved to be a win-win situation for the co-op dairy cooperatives. and the region it calls home. “By strengthening our At 205,000 square feet, the new plant is twice the size of competitive position, we’ve helped ensure that jobs stay in the old facility, which stood three stories tall. The new western New York,” Luongo says. Moreover, he adds, “the facility stands only one story tall, but its high ceiling allows new plant will allow us to capture our next generation of for “better utilization of space,” Luongo says. In the plant’s customers.” modern cooler warehouse, workers can stack five pallets of ■ finished products atop each other to reach 35 feet high. A computerized inventory system helps with stocking and Editor’s note: This article is an expanded version of one which distribution of the plant’s 275 products. Trucks can unload originally appeared in CoBank’s 2006 annual report. Learn more 330 gallons of milk per minute at two bays. Two robots can about Upstate Niagara at: www.upstatefarms.com.

14 July/August 2007 / Rural Cooperatives IN THE SPOTLIGHT Jim Erickson Southern States Cooperative, Richmond, Va.

im Erickson is director of corporate J communications, member relations and public affairs at Southern States Cooperative, a regional farm supply and services operation based in Richmond, Va. Erickson recently announced plans to retire, ending a nearly four-decade career working with a number of co-ops involved in activities ranging from grain and milk marketing to food processing and farm credit. He’s a recipient of the Cooperative Communicators “An organization earns credibility and the support of stakeholders by how it Association’s Klinefelter Award for communicates when the times are bad, not when they’re good,” says Jim Erickson career achievement. (right), checking the inventory at a Southern States co-op store. Photo courtesy After his Aug. 31 retirement, Southern States Erickson plans to return to the Midwest and will live in the St. Louis, Mo., area. MMPA had great people who would responsibilities, the workshops in He plans to remain active in the teach me whatever I needed and wanted board-management relations I’ve cooperative and agribusiness arenas to know. I ultimately took that job and conducted for co-op directors, business because, as he puts it, “After all these learned he was absolutely right. Jack writing classes for co-op employees, and years, I can’t imagine walking away Barnes and Glenn Lake, then the manager seminars on workplace from co-ops cold turkey.” general manager and board president, communications have been equally . respectively, were the best teachers and enjoyable. Q. How did you first become aware of mentors anyone could ever hope to cooperatives and start working with have. Q. Why did you choose to devote so them? much of your life to working with co- A. A friend from my days of working at Q. What positions have you held ops? a daily newspaper in Illinois called me during your co-op career? A. That’s easy: the people. First, one day in 1969 to ask if I was A. In addition to member and corporate farmers are absolutely great people to interested in taking his place as director communications, I’ve worked in work with. In addition, people who of information at Michigan Milk governmental affairs and member work with cooperatives and enjoy Producers Association (MMPA), a milk relations. I’ve had those responsibilities working with farmers have a lot in marketing co-op based in the Detroit at several different types of co-ops – common. I’ve also enjoyed the mental area. He was planning to leave, and the including MMPA, the Farm Credit challenge. Agriculture is technology- people there had asked him for System, what is now CHS, Inc., and driven and changes occur regularly. recommendations on a successor. My Southern States. As a result, I’ve Staying current with all that, along with response was I knew very little about learned a lot more about co-ops and all the complexities of business dairy farming and nothing about milk agriculture than I ever would have operations in general, keeps you on marketing and cooperatives. He said if I imagined growing up as a city kid. your toes. were interested and willing to learn, Although never part of my formal

Rural Cooperatives / July/August 2007 15 Q. How have co-ops changed during getting what we hoped would be a plane crash the night he won his your career and how has the dramatic nighttime farm photos for an party’s primary election to run for the communicator’s job adjusted to those introduction to an audiovisual U.S. Senate in 1976, I’m convinced he changes? presentation. Trying to get the best one day would have been a presidential A. As with most businesses, co-op angle for a shot of new dairy facilities at candidate. operations have become much more the farm, I jumped from a large Most challenging — Those involving complex. The pace of those operations concrete pad (where cattle were held member, employee and news media also has increased considerably, and before milking) into what I thought was communications when the co-op is there’s much more riding on every a grassy area. The lights from the new facing a major issue, especially financial decision made. Those general trends building didn’t enable me to see the problems. My personal philosophy is have affected everyone in cooperatives ground, but I knew it wasn’t more than that an organization earns credibility, to a greater or lesser extent. But I can’t two or three feet down. and ultimately the support of its think of anyone whose job has changed I was right about that…but instead stakeholders, by how it communicates more than the communicator’s. of landing in a grassy area, I went up to when times are bad, not when they’re Consider the impact of the personal my knees in manure. One of my shoes good. computer on the communicator’s daily came off as I struggled to get out and I work activities, for example. My opted not to go digging for it. When I Q. What is the greatest opportunity co- primary tools for getting the job done finally climbed out, Jim and the farm ops are missing when it comes to more than 38 years ago were a phone owner took me into the milk house and communications? and an electric typewriter. hosed me off, which wasn’t easy, A. As I just mentioned, any The phone still is important but my because they were laughing hysterically organization, including a co-op, can phone today is linked to my computer. at the time. react in different ways when facing a That computer also has software for e- The hosing down did a decent job tough problem or issue. One is to mail, word processing, graphic design but couldn’t remove all the remnants batten down the communications and publication layout, photo editing, (read, odor) of my plight. In self- hatches in the belief that what we don’t producing and using visual aids, making defense, Jim had his head out the car say can’t hurt us. If the problem is and keeping track of my departmental window in the frigid air during much of financial and costs must be cut, another budget, keeping a data base of names the 90-mile trip home. reaction is to consider communications and addresses, and on and on. In short, Most rewarding – The success expendable. I would argue that today’s communicator is much more Southern States had last year in getting communications take on added productive because of the technology the Kentucky legislature to exempt importance and value when the co-op available. That’s good news when you cooperatives from a new alternative has problems. Failure to communicate consider the greater contributions a minimum tax, a levy that eliminated the when the issue or problem is difficult communicator can make to any long-held principle of taxing co-op leaves a vacuum that something organization. But, depending on the earnings only at the member level. That inevitably will fill. If the organization communicator’s career goals, it can be a impact on co-ops was an unintended directly involved — co-op or otherwise mixed blessing. If communicators have consequence of a major tax/budget — isn’t proactive in its communications, the interest and abilities to take on package, and we were lucky even to it’s a safe bet that rumors, innuendo and other management roles, they may find spot it in what was a lengthy bill. Had other negative information will fill the such opportunities limited if they’re we not been successful, the tax would vacuum. That’s not only harmful in the viewed primarily as “techies.” have affected the bottom line and short term, it also chips away at the patronage returns of all co-ops doing organization’s credibility. Longer term, Q. What’s your most memorable business in Kentucky. More important loss of credibility is even more serious. experience working for co-ops? was the fact the tax concept easily could A. It’s hard to limit a response to one. have spread to other states and affected Q. Any advice for co-op communicators Let me list several: many other co-ops. that would help them do their job Most stressful — Dealing with Most thought-provoking — Meeting better? communications, member relations and and getting well acquainted with the A. Build your own credibility not only public policy issues associated with the late Jerry Litton, the U.S. represent- by communicating in a professional dairy feed contamination disaster that ative from northwest Missouri, who manner, but also by learning the ins and hit the Michigan dairy industry in the convinced me early in my career of the outs of the co-op and its members. 1970s. benefits the FFA organization provides Communicators are in a unique Funniest — The dark, cold December to young people. He was an position to be a “go-to” person in a co- evening in southern Kansas when my extraordinary example of those benefits. op if they prepare properly for that colleague Jim Brownlee and I were Had he and his family not been killed in role. ■

16 July/August 2007 / Rural Cooperatives FOCUS ON... High Desert Milk Inc. Burley, Idaho

hat is High Desert a reliable, local market for members’ their own money for a 20 percent down Milk Inc.? milk. Ground breaking was held June 4 payment, with the balance being W High Desert Milk is a for the multi-million-dollar milk financed by Northwest Farm Credit. producer-owned processing plant at 1033 Idaho Street in The co-op has also received grants from cooperative formed in Burley. The plant should be completed the state of Idaho. 2001 by six progressive dairymen who by April 2008, and will process 2 had a desire to increase the return on million pounds of milk daily, with an Overview of co-op operations and their milk and create a more stable milk annual output of 65 million pounds of marketing: market. The co-op owners milk 22,000 dried milk. The product will be sold About 80 percent of High Desert milk cows and farm 30,000 acres in Cassia under the co-op’s own High Desert will be marketed domestically, while the and Twin Falls counties in southern Milk label. The plant will hire 30 other 20 percent will be sold on foreign Idaho. Burley is close to the Snake workers in its first phase, with more to markets. High Desert Milk will operate River, about 150 miles from Boise. be hired as two subsequent phases of with four separate divisions: Another goal of the co-op owners is to plant expansion are completed on the • Pharmaceutical and Supplies — make Burley a better community in co-op’s vertically integrated business. will sell supplies needed for dairy which to raise their children and “Because this was considered a and livestock operations. grandchildren, says co-op President • Milk Marketing — the co-op Dan Ward, who farms with his father, markets milk to various processing Glenn Ward. plants in the area. • Plant Manufacturing and Milk Profile of a typical member: Processing — the co-op will All co-op members are second- process milk at its own plant, now generation farmers and dairyman. All under construction. graduated from a local high school and • Organic Milk Production and returned to the Burley area to dairy Marketing — Currently, one farm and raise their families. The member is producing organic milk largest co-op owner milks 10,000 cows Plant manager Karl Nelson (left) is in one barn, with two more organic congratulated by Roger Madsen, Idaho’s and farms 10,000 acres. The smallest barns under construction. director of labor, at the groundbreaking. owner milks 700 cows and farms 1,000 Thousands of acres have been acres. certified for raising organic feed. historic day for the dairy industry in Major project now before the co-op: southern Idaho, and even the entire What has been the biggest challenge Simplot closed a potato processing state, the event was turned into a facing the co-op? plant here in 2003, costing the area community celebration,” says President “The biggest challenge was deciding to about 700 jobs, and a Kraft plant also Dan Ward. Attendees included Idaho build a plant on our own without the closed earlier this year (although Gov. C.L. “Butch” Otter, among many help of outside investors,” says Ward. another company has since opened a other state and community leaders. “The second main challenge is smaller operation in that plant). “But Afterwards, United Dairymen of Idaho developing a management team to make this has been making all farmers sponsored an old-fashioned ice cream our dreams come true.” nervous about their future markets,” social for the entire community. says High Desert Milk General Contact: Karl Nelson, General Manager Karl Nelson. So the co-op is How is the plant being financed? Manager, at: (208) 878-6455, or building a new milk plant to help create Owners of High Desert Milk are using [email protected] ■

Rural Cooperatives / July/August 2007 17 Wired for Success Broadband co-op helping southern Virginia attract new information technology jobs

By Dan Campbell, Editor Building a backbone The conclusion reached that day was that the lost s David Hudgins looked at the 22 other faces industries were not coming back. The challenge, then, was to gathered around the conference table, speed the evolution of the region from a resource-based someone said: “Anyone who has a better idea, economy to a knowledge-based economy. A put it on the table.” The response was dead “The question was: how could we help Southside Virginia silence. become part of the new economy?” says Tad Deriso, now the None of the federal, state and local government general manager of the Mid-Atlantic Broadband Cooperative representatives or economic development officers who had but at the time a consultant to ODEC. “We needed to show gathered that day seven years ago in Chatham, Va., could that we were open and ready for new, technologically think of anything more important than building a broadband advanced business.” network to bring new jobs to southern Virginia. New jobs To attract these new industries, it was agreed that the were desperately needed to help offset a wave of layoffs that region must have access to fiber-optic broadband service had swept over the largely rural region of Virginia along the (although at the time, the talk was of “high-speed North Carolina border (often referred to as Southside connectivity,” rather than “broadband,” Hudgins recalls). Virginia). The Regional Backbone Initiative for Southside Virginia Any doubt that the region was being battered by the was launched as a marketing effort to “re-brand” southern economic tsunami of globalization had been laid to rest Virginia to the business community. during the three months before the meeting, says Hudgins, But as is often the case in rural America, the big telecoms director of economic development for Old Dominion weren’t interested in the high overhead cost and relatively Electric Cooperative (ODEC). A rash of textile and furniture small profits that would be generated from building a manufacturing plant closures had thrown at least 10,000 broadband network to serve a low-density rural region. They southern Virginians out on the street. And the region’s other were not of a mind to “build it and see if they would come.” mainstay industries — tobacco and coal — were following So Old Dominion Electric Cooperative, a generating and textiles and furniture manufacturing down the slippery slope. transmission co-op headquartered in Glen Allen, Va., took “The whole underpinning of the natural resources-based the lead role in the effort, first pursuing it as a for-profit economy of Southern Virginia was collapsing,” says Hudgins. subsidiary of the co-op. “But then the telecom market fell “Every one of those industries had been dramatically apart,” says Hudgins. So the effort shifted to Richmond and a impacted by government action, whether it was anti-tobacco proposal to create a Rural Broadband Authority. But that legislation or trade agreements that hastened the loss of our drew protest from the telecom industry, and the effort failed textile and furniture industries. These were the pillars of our in the state’s General Assembly. economy; without them, our whole way of life in southern It was then that Hudgins started thinking co-op, and he Virginia was changing.” soon got the support of ODEC’s CEO Jack Reasor and the

18 July/August 2007 / Rural Cooperatives senior management team to pursue creation of a broadband hundreds of people and are willing to spend $800 to $1,000 cooperative. “It seemed that a bottom-up, grassroots co-op per month for service,” Hudgins says. The network was not would be the only way to cut across the rivalries of working designed for residential or very small businesses. with all of these local political jurisdictions: 20 counties, four “As a co-op, our telecom members will share in our cities and two towns,” he says. success in the form of capital credits,” Deriso says. But the ODEC gave Hudgins approval to have its attorneys start concept of a co-op drew funny looks at first from some of the working up the legal papers needed to set up an independent larger businesses approached about becoming members. broadband co-op. In November 2003, the Mid-Atlantic “New York attorneys would say, ‘what the heck is a co-op?’ Broadband Cooperative (MBC) was born, with offices in Deriso recalls. “So we talked about becoming a member and Danville and Richmond. Hudgins now serves as vice how you paid a one-time, $500 membership fee [for a Class A chairman. membership; there are four other classes of membership “ODEC got the various partners involved and convinced requiring higher fees] and about capital credits. ‘What’s the them of the feasibility and necessity for it,” says Deriso. catch?’ they asked. We told them there was no catch, and “They said ‘you must put aside your petty political explained how a co-op has a different mindset than a for- differences and work together in this co-op if you want to get profit company — how we’re not trying to make millions of it done.’ They got everyone looking at the big picture, dollars for stockholders, but rather to serve our members, realizing that now was the time to get it built. Otherwise, we create jobs and boost the region’s economy.” would all still be squabbling for the next 10 years and would Today, MBC has more than 30 private-sector telecom providers as members and has been adding an average of two members per month since the network went into operation last October. These members range from large, international businesses, such as Hibernia Atlantic (a Dublin, Ireland-based firm that provides European and U.S. customers with direct, trans-Atlantic connectivity and support services) to relatively small, local Internet service providers.

Financing the co-op Raising the money to launch the network proved challenging, although ultimately MBC got the spark it needed via a $6 million grant from the U.S. Department of Commerce’s Economic Development Administration (EDA). Hudgins felt he was getting nowhere at first with EDA, but one of its directors eventually handed him three or four pages of questions about the project, telling Hudgins to “go do your homework, then come back and see me.” Hudgins soon answered every question, describing both the need and the practicality of the proposed broadband co- op. That was the turning point, and EDA awarded the co-op the $6 million grant, which was soon matched by the Virginia never be able to dig ourselves out of this economic hole.” Tobacco Commission (VTC). The Commission, which awards funds received from tobacco litigation for economic Co-op builds 700-mile network stimulus projects, eventually invested $34 million in the co- The goal for the new co-op was to build 700 miles of op. Hudgins says leadership came from State Senator and broadband cable through southern Virginia, providing service VTC Chairman Charles Hawkins and State Delegate Clark to businesses that need a large amount of bandwidth and Hogan, chairman of the VTC technology committee. which create a lot of jobs. “With Tad Deriso’s guidance and The network was built on time and under budget, using a commitment, we installed a 144-fiber, world-class fiber-optic contractor (the co-op itself operates with only three cable,” says Hudgins. “The core is OC-192 capable, with employees). Hudgins says the co-op is on track to begin redundancy and self-healing rings and with all Nortel carrier- breaking even in the spring of 2008, and is expanding the grade electronics.” network with new laterals. “It’s a mile here, three miles there As a broadband wholesaler, MBC’s membership is – like a spider web that just keeps growing incrementally,” primarily made up of telecom and Internet service providers says Hudgins. and phone co-ops. These members, in turn, serve the retail Long-haul cable routes are also being built, connecting broadband business market. southern Virginia to Atlanta, D.C. and the Hampton “The users are the type of companies that often hire Roads/Norfolk area. “Those aren’t rural markets. But from

Rural Cooperatives / July/August 2007 19 an economic development perspective, it allows us to Virginia, Noyes says. provision circuits from major research and development hubs “There is nothing more important than workforce and connect them with Southside Virginia,” says Hudgins. initiatives that build the skills and knowledge workers need to “Our customers can now open an office in Southside compete on a level field with metro areas,” he says. Noyes Virginia — with its lower taxes, affordable housing and a credits Virginia Tech for providing research on the motivated workforce — and still connect to a broadband importance of broadband for economic diversification of the network as good or better as they would get in metro-D.C. region, and for technical guidance in how to get it done. or most other metro areas, and using Infiniria” says Deriso. “Connectivity is an essential part of the long-term strategy for the economic revitalization of southern Virginia,” New businesses opening There are signs that the strategy is working. In Russell County, two new data centers have opened, representing investment in excess of $23 million and 300 jobs. Northrop Grumman Corp. is building a backup data center in the Russell County community of Lebanon, a $30 million project that will create about 433 jobs. “Overall, that’s a combined investment of more than $50 million and more than 700 jobs created,” notes Hudgins. Larry Carr, executive director with Cumberland Plateau Co., a nonprofit dedicated to business and economic development in southwest Virginia, says broadband availability was essential to attracting Northrop Grumman and CGI, a software engineering firm with 375 jobs. “There would have been no way to attract businesses like that says Noyes, a member of the Virginia Tobacco Commission. without broadband,” he says. The new jobs coming to the region “would not have been Lebanon has traditionally been dependent on the coal possible absent very-high capacity, redundant broadband,” he industry and manufacturing jobs associated with coal. And says, citing the example of Holston Medical Group, which while the coal industry has made something of a comeback performs record management for hospitals and clinics, and is there in recent years, it still creates far fewer jobs than in the building a facility in Duffield in Scott County. past. Carr says five Fortune 500 companies will now have While the network was not built to serve the residential facilities in the town, and the new, Southwest Technological market, some large new residential developments are tapping Development Center is also being established in a into it. Just outside South Boston, the first 18 units of a refurbished strip mall, where it will be used by several higher planned, 100-unit, “smart-wired” town home development education institutions to help train software engineers. have been built by general contractor John Cannon. Each The furniture industry has even bounced back a bit, with a home has state-of-the-art broadband service that will new 2-million-square-foot Ikea furniture manufacturing plant especially appeal to anyone who wants to work out of a home being built in Danville, the first such plant built in the office, Cannon says. United States for the giant Swedish furniture maker/retailer. With gasoline prices soaring and the roads in many major In South Boston, Va., Lindstrand Industries has opened a cities facing rush-hour gridlock, Cannon believes the “home plant that makes helium dirigibles and military surveillance sourcing” movement is going to grow rapidly in the years equipment under contract to the Department of Defense. ahead. For example, he points to a major U.S. airline that Before the development of a broadband backbone in now allows all of its reservation clerks to work out of their southern Virginia, “we weren’t even getting a second look homes. from business,” says Neal Noyes, an EDA director who not Cannon worked with MBC and his local Internet service only helped secure the initial grant for MBC, but also helped provider, Gamewood in Danville, to bring high-speed direct a previous $1.5 million grant to develop broadband in connectivity to his Edgewood Town Homes development. southwest Virginia and who has supported many other The work paid off, and each of his town homes boasts CAT- investments for industrial parks and utilities in the region. 5E telephone cable (going in and out), as well as RG-6 coaxial cable to each outlet, all of which are connected to a Promoting distance learning smart-wire panel, and from there to the MBC fiber-optic The new broadband backbone also links to educational cable. institutions, making distance learning more readily available The monthly homeowner’s association dues include 1 to support both higher education endeavors and the needs of megabit of service, which Cannon says is more than enough industry. Even doctoral and masters degrees can now be for most people. But for an extra fee they can increase their pursued via distance learning without leaving southern capacity as much as they want.

20 July/August 2007 / Rural Cooperatives “MBC is the type of partner rural Virginia needs to The broadband connection is just one of many reasons compete in the 21st century.” Cannon says. Clarksville is being considered by EDS, Hudgins stresses. The Commonwealth of Virginia, Virginia Tobacco Fast train to Clarksville Commission, Mecklenburg County and the Town of Hopes were also high as of this writing (in late June) that Clarksville have gone all out to offer a plethora of incentives, Clarksville, Va., will be selected this summer for a $600 and Mecklenburg Electric Co-op, with the cooperation of million data center to be operated by Electronic Data Dominion Virginia Power, will provide a direct feed from a Systems (EDS), of Plano, Texas, which provides data services power station. This is needed so that in the event of a to the federal government. The facility would create 125 jobs catastrophic, total power grid failure, the EDS facility is guaranteed to have power.

Concept spreading “We got them 10 The broadband concept is spreading to Maryland, where another broadband co-op is being formed. MBC was recently megabits of Ethernet contacted by a group in southern Ohio interested in forming a broadband co-op. access in 37 days. We No surprise then that Deriso says he is more convinced than ever that the co-op business model is ideal for bringing blew their socks off!” broadband to rural America. “At the end of the day, the co- op model fit us best because of the co-op principles of local ownership and having concern for your community. It is all about bringing a metro pricing structure to rural areas to level the playing field between metro and rural.” “I don’t see any other way for rural America to survive in a global economy,” adds Hudgins. Looking back over the seven years of work to make the broadband co-op a reality, Deriso says he is glad he jumped when offered the chance to manage the co-op. “To take an idea from the concept stage to a business plan, and then get it built and to make it work – and to be held accountable if it doesn’t work – that’s fun,” Deriso says, crediting Hudgins as the “guy who made it all happen.” The biggest frustration has been “dealing with the politics – local, state and federal,” Hudgins says. And there The availability of broadband service helped Clarksville, Va., have been many headaches over who gets to claim credit for become a finalist for a $600 million data center. Seen here at the what. “As they say, failure is an orphan, but success has many facility in Clarksville are MBC General Manager Tad Deriso (left) mothers.” and David Hudgins of Old Dominion Electric Cooperative. Photo His experiences working to make southern Virginia more by Valerie Garrison economically viable have also brought home to Hudgins the need for a clearer national broadband policy and strategy, and in the next two years. a commitment to invest more in it. “The EDS guys from Northern Virginia didn’t even know “Korea is the most wired country in the world. We rank where Clarksville was, but when they saw the plant site, they 18th in the world for broadband penetration, and we are loved it,” Hudgins says. However, EDS said it had to have a dropping another spot or two every year,” Hudgins says with fiber-optic connection, and made plans for a formal site a note of chagrin in his voice. inspection two months later. “To make this project happen took a combined effort at So the race was on to get it connected. One major telecom every level of government, the private sector and educational firm was contacted, but it required a two-year service institutions. Fiber is the way to get your economy moving contract and wanted money up front to extend fiber into the forward. But too many old-style politicians still just don’t get Clarksville facility, Hudgins recalls. “So the contractor came that globalization is here and it is very real. There is no going to us, and 37 days later we had a mile and half of fiber built back to the good old days of doing business with the same from our closest access point to the plant,” Hudgins says. tools and strategies and hope it all works out. Failure is “That included getting railroad crossing permits, which alone simply not an option.” ■ can normally take six months. We got them 10 megabits of Ethernet access in 37 days. We blew their socks off!”

Rural Cooperatives / July/August 2007 21 CO-OP DEVELOPMENT ACTION

Future of Local Food

By Jane Livingston, op is part of an overall market development effort to CooperationWorks! aggregate the 'local eaters' for the local farmers and food processors." Cooperative specialists helped the Chester he last supermarket moved out of the city of steering committee learn how to develop a successful Chester, Pa., 16 years ago, after industrial consumer-owned cooperative enterprise, assisting them with T flight led to a decline in the town’s strategic planning, marketing and feasibility studies, business prosperity. That means residents have had to plan development and obtaining funding. travel, often by public transportation, to find the food they want. Even then, the best quality, locally Co-op expanding inventory produced food is often out of their price range. The co-op incorporated and has 170 members, who have In 2006, a group of Chester residents who had lived, each paid $250 to join ($200 is refundable if they leave the worked, worshipped and volunteered alongside one another co-op). Local produce is for many years decided to being sold twice a week at a address the situation by mid-city, outdoor market forming a steering site. The co-op plans to committee to create expand its inventory this Chester's Community summer to include other Grocery Co-op. locally produced items, From the outset, this such as bakery products. group was dedicated to Under the direction of a providing food at fair prices, newly elected board, the with a strong focus on co-op is negotiating for a linking food to health and store site and organizing an catering to the needs and equity drive. The goal is to tastes of community open a full-service, 8,000- members, four-fifths of 10,000 square-foot whom are African supermarket by the end of American. In addition to The Chester Community Grocery Co-op is holding twice- the year. opening a grocery store, weekly outdoor markets while its board works to establish the Johnson plans include establishing a first full-service grocery store in Chester in 16 years. emphasizes that the co-op business incubator- offers area producers what demonstration kitchen and they most need to move space for other community-support endeavors. away from selling primarily to the wealthiest consumers at The project was already under way when Chester native the highest prices they can get: the security of numbers. Tina Johnson attended a Sustainable Business Network "They have to pull in the needs of the urban communities to meeting, where she met Kate Smith, executive director of the create a sustainable system," she says, but admits this is a Keystone Development Center (KDC). difficult conversation to have. "We want to support our "Meeting Kate was like finding a goldmine because she family farmers, they are the linchpin in the sustainable food provided us with insights into the co-op development process network model." that were essential for us to set the tone and pace we wanted Johnson, who spoke at last year's Farm Aid gathering, to move our efforts in," Johnson says. acknowledges that family farmers are faced with enormous KDC's Smith elaborates: "Our work with the Chester co- challenges as commercial agricultural operations continue to

22 July/August 2007 / Rural Cooperatives grow ever larger. Yet, as the demand for natural and organic tomato once for nine dollars, but I won't go back to that foods keeps racing up the charts, so does the price for the vendor." food itself. But by forming a consumers' cooperative, Johnson That is not the way to develop and maintain sustainable explains, "We can create the market. We can create the lines food systems. It's not the way supply and demand is supposed of distribution. We can even come to pick up the food from to work, she gently points out. the farm. I know that farmers' time is so expensive. But the "The farmers need to know we think their commodity is farmers also need to integrate our efforts – to bring local valuable, but it can't be out of reach or they'll never create a food into the city at fair prices – into their farm operations." sustainable food network," she says. "I may buy an heirloom ■

Kentucky co-op feeds the Queen

Street Sense wasn't the only winner at the 133rd Ken- pressures of — and changes within —their industry were tucky Derby this year. When Chef Gil Logan, official caterer enormous. Tensions within the group, and constant chal- to Churchill Downs, was asked what he would be serving lenges from without, threatened its future. Queen Elizabeth when she attended the nation's most By the summer of 2005, "The train was coming into the famous horse race, he replied, "The Queen has requested station and it was time for the people who wanted to get off an authentic Derby menu, which means she will enjoy many to take the opportunity,” Givens says. “So they did, and we of the same foods as everyone else… The beef will be from had new members come on board." This transition infused the Green River Cattle Co. [along with] all the other great the group with new energy and optimism. Shortly after that, local and organic Kentucky Proud products that are farm Givens and Snell met. raised." As a result of their meeting, KCARD conducted a busi- Despite this majestic ness management and moment, Green River Cat- operations audit for the tle Co. (GRCC) co-owner producers. Brent Lack- David Givens marks 2006, ey recalls, "We worked not 2007, as the turning with the owners and point in the life of this management for two small LLC which operates weeks and made sever- on cooperative principles. al recommendations, That's the year GRCC most of them centered started working with the on the co-op's need for Kentucky Center for Agri- more planning, espe- cultural and Rural Devel- cially with respect to opment (KCARD). marketing." "Working with KCARD In addition, KCARD has been a wonderful helped GRCC's man- experience," Givens agers create three says. The six-year-old When Britain’s Queen Elizabeth II attended the Kentucky Derby this teams to address cost company, owned by a year, she was served beef supplied by Green River Cattle Co., a reductions, marketing producer-owned LLC. Flanked by the famous steeples of Churchill small group of beef and improvements and Downs, Chef Gil Logan (right) meets with the beef producers. tobacco farmers looking pricing strategy. Lack- for alternatives to tobac- ey says the new mar- co production, was floundering when Givens had a chance keting strategy will increase the value of their co-op’s beef encounter with KCARD's Larry Snell. by 20 percent. Followthrough has included helping GRCC forge relation- Going the distance ships with the likes of Foothills Country Meats and Allied A couple of years prior to this, GRCC had undertaken a Food Marketer. The latter is a connection that led them all marketing study that indicated they should develop a brand the way to the winner's circle at Churchill Downs. (For around locally grown and finished beef products. But as more on this story see Kara Keeton's article in The Farmer’s they moved toward this goal, they found themselves ham- Pride, May 16, 2007.) ■ pered by a lack of staff as well as other resources. The

Rural Cooperatives / July/August 2007 23 UTILITY CO-OP CONNECTION Georgia alternative energy plant to be fueled by wood & poultry waste

By Anne Mayberry USDA Rural Development Utilities Programs [email protected]

ombine four parts leftover wood scraps with one part chicken C litter, add equipment and chemistry, and you have one of the most innovative sources of alternative energy in the nation. That’s the idea behind Plant Carl, which will convert poultry litter and wood waste into electricity. Construction on Plant Carl is scheduled to begin this summer, with the help of a $28 million loan from USDA Rural Development’s Utilities Program office to Earth Resources Inc., located near Carnesville, Ga. Designed to generate clean energy by converting poultry litter and woody biomass into electricity, the plant is viewed as a potential state-of-the art model that can be duplicated in other areas. Plant Carl is named in memory of Carl Dinsmore of Dinsmore Grading, a site development company that has worked with Georgia Power and Atlanta Gas Light on projects in North and South Carolina and Alabama. “There is plenty of fuel for this plant, with more than 3,600 poultry houses within “We want to be part of Plant Carl’s a 20-mile radius of the site. Plant Carl will require litter from only one-half of exciting and unique concept,” says Jim those,” says Michael Whiteside, president of Green Power EMC and CEO of Andrew, administrator of USDA’s Rural Cowetta-Fayette EMC. Photo courtesy Cowetta Fayette EMC Development Utilities Programs, which is providing the loan for the new facility. change, the price of oil and the cost of great promise. If these new sources of Andrew says funding more building new plants to meet the power can help meet our power needs renewable energy projects is a major growing demands for electricity mean while making contributions to clean up goal of USDA. “The impact of climate that alternative sources of energy show the environment, we want to see these

24 July/August 2007 / Rural Cooperatives operations expand to other places.” with over 3,600 poultry houses within a only did the rural electric cooperative The fact that Plant Carl is 20-mile radius of the site. Plant Carl utilities show strong interest in generating interest is in part because it will require litter from only one-half of renewable energy, but recommended deviates from traditional sources of those. Hopefully, we will be a partner in federal financing, Jones notes. power generation. It supports President replicating similar plants across “It was through the EMCs that we George W. Bush’s renewable energy Georgia.” learned about USDA Rural initiatives, meeting new policies of Besides supplying 20 megawatts of Development’s long-term financing finding alternatives to fossil fuels. electrical power, Plant Carl will process,” says Jones. “Have you ever mitigate the impact of poultry farms on tried to get a loan for nearly $30 Georgia EMCs support project the environment. “Plant Carl is a good million? It’s breathtaking.” Jones credits The support of Georgia’s rural addition to Green Power,” Whiteside Rural Development Utilities Programs electric cooperatives and the growth of says. expertise with “guiding us through the its poultry industry have also been key Billy Jones, operations manager for detailed process.” Plant operations will benefit the poultry industry. “This year, Georgia is experiencing the longest drought ever recorded,” Jones says. “Under these conditions, chicken litter will burn land. Several years ago we had too much rain, and the runoff from the rain presents other environmental challenges.” Use

Poultry wastes will be one of the primary fuels used in Plant Carl. USDA Photo

factors that have helped Plant Carl Plant Carl, emphasized that extensive move from a pilot project five years ago environmental review was among the Electrical plants in Georgia (above) to where it is today. requirements he and plant owner and Kansas are being disassembled Michael Whiteside is president of Charles “Sonny” Dinsmore (Carl’s son) and moved to Carnesville, Ga., where Georgia’s first renewable energy had to meet to qualify for the loan from the parts will be used to build Plant program, Green Power Electric USDA. Other requirements included Carl. Photo by Billy Jones Membership Corporation (EMC), and private equity capital to support the president and CEO of Cowetta-Fayette operations, use of commercial EMC, an electric cooperative utility technologies and a viable business of woody biomass will keep additional that has been serving members since model to support the servicing of the debris from moving to Georgia’s 1945, and one of the participants in loan. landfills. Green Power. Georgia’s rural electric Chicken production is a $17 cooperative utilities are interested in Meeting growing demand billion industry, currently growing at 3 Plant Carl. Georgia EMCs became aware of the percent. This growth explains the “Green Power EMC supports pilot project and liked what it saw, reaction from the community to Plant development of renewables,” Whiteside according to Jones. “They knew energy Carl. “We have the support of the says. “Because forecasts anticipate that was there, and they knew they would community — this is chicken country,” our energy requirements will double need to act to meet growing demands. Jones says. “About 90 percent of the over the next 12 years, renewables are More homes are being built in Georgia. people in this area are in the chicken expected to play a small part in our Rural electric cooperatives wanted to business. They’re looking at the long energy portfolio. The good news is that entertain the use of renewables, so they term. Plant Carl is an advantage.” there is plenty of fuel for this plant, will purchase power for 20 years.” Not ■

Rural Cooperatives / July/August 2007 25 V ALUE-ADDED CORNER

Olive Oil Council expanding markets with help of VAPG

California olive trees are producing fruit for olive oil that now equals the quality of European olive oils. Photos courtesy Gail Della Nina

By Anne Todd, a wide range of methods: from “The funds we received from USDA USDA Rural Development traditional, labor-intensive hand- Rural Development have been great for [email protected] harvesting to new methods that rely on our growers,” says COOC Executive highly mechanized harvesting. Director Patricia Darragh. “We have Editor’s note: For more information about Olive producers in Central been able to put forth a comprehensive the Value-Added Producer Grant program, California are using new techniques marketing campaign, something we visit the USDA Rural Development Web that help control production costs, would not have been able to accomplish site: http://www.rurdev.usda.gov/. improving their ability to compete in without the VAPG.” the global marketplace. Some growers The mission of COOC, a nonprofit he olive first arrived in are planting “super high-density” trade and marketing association California in the late orchards, in which trees are planted founded in 1992, is to promote growing T 1700s when Spanish closer to one another and heavily olives and the production of olive oil in missionaries settled in pruned. Mechanized harvesting cuts the California. It provides education to 21 areas between San Diego and costs of labor. Because more trees are growers, producers and consumers. Sonoma, planting olive trees at each planted on less acreage than was The Council takes part in meetings location. By the mid 1800s, the olive oil traditionally required, the land costs are and trade events that focus on industry in California was thriving. also reduced. everything from marketing olive oil to The industry stalled, however, and managing orchards. Membership is struggled to right itself throughout VAPG helps expand demand extended to all olive oil producers who most of the 20th century. It was only The California Olive Oil Council agree to abide by COOC’s quality and recently that a new generation of (COOC) is using a $241,000 Value- labeling standards, regardless of the size health-conscious Americans Added Producer Grant for marketing of their operation or amount of sales. rediscovered the flavor and benefits of activities that will increase demand for olive oil. Many older olive orchards this healthy food. Value-Added Web site key to marketing effort have been rejuvenated and new Producer Grants (or VAPG) are Thanks to the grant and matching orchards are again being planted, awarded annually by USDA Rural funds provided by COOC, the Council signaling a rebirth of the California Development to eligible cooperatives has been able to completely redesign its olive oil industry. and other agricultural organizations and Web site to better meet the needs of its Today, the California industry is individual producers for use in planning members, consumers and retailers. For again a vital part of the global olive oil activities and for working capital to help consumers, the site contains all-new arena. California oils are produced from market value-added products made information about the health benefits of a large number of olive varieties, using from crops or livestock they raise. olive oil in their diet, recipes and lists

26 July/August 2007 / Rural Cooperatives retail outlets that sell olive oil. It also the three-day Miami event, COOC had provides locations where groups can about 3,000 visitors to its booth. taste different varieties and tour olive On par with Europe’s finest COOC supports certified olive oil standards and administers a certified quality control program that exceeds the strict international standards for extra virgin olive oil. Under COOC’s seal-certification requirements, olive oils must:

• Be mechanically extracted without chemicals or excessive heat; • Contain less than one-half percent free eleic acid; • Contain positive taste elements and no taste defects, as determined during a blind tasting. Through the seal-certification program, Darragh says COOC helps everyone, from home cooks to professional chefs, find guaranteed groves and mills. extra virgin olive oils for their kitchens. For producers, the site has contact information for California growers, U.S. olive industry expanding comprehensive resources to help them Ninety-nine percent of the olive oil as they cultivate their crop, information produced in the United States comes about COOC’s certification standards from California, and 10,000 acres of and a secure site for members that California farmland is dedicated to olive provides access to exclusive marketing groves. Currently, less than half of that opportunities and other members-only acreage is in production, the main information. The redesigned site now reason being that trees require about draws 5,000 to 6,000 visitors each three years to mature and bear viable month. fruit. However, over the next couple of COOC also has produced new years, more and more acreage is promotional materials, including an expected to go into production. By educational DVD (it comes in 10- 2008, it is estimated that U.S. olive oil minute and three-minute versions), production will outpace that of France. which members can use at trade shows Domestic sales of olive oil have or while meeting with retailers. increased well over 20 percent each year The grant has also allowed COOC for the last five years. In addition to the to take part in more trade events to guaranteed quality of olive oil produced showcase the California industry and its by COOC members/growers and the members’ products. These include the varieties available, another key benefit National Association for the Specialty for consumers is its freshness. COOC Food Trade (NASFT) Specialty Food growers can bring olive oils to U.S. Show in Chicago and the South Beach customers immediately after harvest, at Wine and Food Festival in Miami. The the peak of freshness. For these reasons, most recent Miami trade show marked the popularity of California olive oil the first time the Council staff had been and growth in sales is expected to able to tap into the southeastern continue. market. As a result, COOC had an This fall, COOC will be opportunity to market California olive participating in many more events to oils to major industry leaders. During promote the benefits of California olive oil. For instance, in September COOC COOC represents more than 200 marketing. will take part in a tasting seminar in growers/producers and, including To learn more about the Council’s Sacramento. In October COOC supporting members, has more than mission and activities, visit: representatives will attend the San 350 members, and membership is http://www.cooc.com, or e-mail: Diego Chefs Association conference. growing. [email protected]. The Council can Although COOC is a small The Council plans to pursue a also be contacted at: (888) 718-9830. organization in terms of the size of its second VAPG in hope of further ■ support staff, its mission is large. boosting the industry through

California growers champion Tuscan olives

Gail Della Nina and her husband Don wanted to get Support and guidance from then-COOC Board President away from the stresses of urban life and live in a rural area. Bruce Golino helped the Della Ninas kick-start their opera- So, in 1984, they bought a small farm and relocated to tion. Golino, owner of the Santa Cruz Olive Tree nursery in Byron, Calif., known for its famous hot springs and resort. Watsonville, introduced them to olive production tech- Although Don’s family is involved in agricultural production, niques and helped them acquire starter trees. Gail and Don neither he nor Gail had any direct farming experience when opted for young Mediterranean varietals (two- to three- they started out. year-old trees) that were shipped from a nursery in Tus- Working with a local crop advisor and staff at the Uni- cany, Italy. The Della Ninas planted the trees in September 2003 and, although the trees were young, they produced olives that same October. The Della Ninas harvested and pressed 10 gallons of olives that season. The “Olio Bello d’Olivo” (which translates as “beautiful oil from the olive”) brand was born. Gail and Don have been members of the California Olive Oil Council (COOC) since they started their orchard and say they have reaped many benefits from that association. “Anyone who’s a serious olive oil producer would be a fool not to use them [COOC],” says Gail. COOC alerts the Della Ninas about every upcoming event where they can mar- ket their olive oil. Additional- ly, when Council staff attend a marketing event, they bring samples of Olio Bello Olives are harvested at the Della Nina orchard. d’Olivo for people to taste. Olive oil tasting in gourmet food shops (right) is Gail reports that member- one marketing tool being used to expand ship in COOC has brought demand. Photos courtesy Gail Della Nina them many new customers from all over the country. versity of California at Davis, their farm began Olives from their to take shape. Because their soil had high lev- orchard, the only one in els of boron, they were encouraged to grow alfalfa to help Byron, are hand picked and cold pressed into both filtered replenish the soil with needed nutrients. They produced and unfiltered extra virgin olive oil. In 2006, their orchard alfalfa for their first five years on the farm. produced 500 gallons of oil, which carries the COOC seal. In 2003, because of low yields, it was clear that the alfal- Olio Bello d’Olivo has won many awards. In 2006 alone, it fa’s development cycle had waned, and it was time to start won five awards, including two silver medals and a bronze a new crop. Gail and Don knew that olive trees fared well in medal at the International Olive Oils of the World competi- the region and were suited to their farm’s boron-rich soil. tion. It won two gold medals at the San Diego Wine and Don’s Italian-American heritage also influenced their deci- Food Festival. sion to grow olives. — By Anne Todd ■

28 July/August 2007 / Rural Cooperatives Mica, Abernathy, Ditsch named top co-op communicators

hree of the nation’s guy.” It involves innovative top practitioners in messaging, “guerilla-marketing” T the art of cooperative techniques, social media (such as communications — YouTube), traditional advertising including the leader and direct communication with of the nation’s credit union sector, a lawmakers. veteran co-op editor and a dynamic Mica has supported CUNA’s young communicator — were full-day national advocacy training presented in June with the top awards program for credit union leaders, of the Cooperative Communicators half of which focuses on working Association (CCA). with the media to deliver key For his dedication to co-op messages about cooperatives and communications, Daniel A. Mica, credit unions. CUNA is the nation’s president since 1996 of Credit Union largest credit union trade group, National Association (CUNA), which representing more than 90 percent serves nearly one third of the nation’s of the country’s 8,300 state and consumers, was named CEO federally chartered credit unions Communicator of the Year at the which together serve some 90 CCA Communications Institute in million Americans. Williamsburg, Va. CCA News editor Donna Foster Media savvy winner Abernathy’s more than two decades of Abernathy began her excellence in cooperative cooperative career with Tennessee communications earned her the 49th Farmers Cooperative, moved into annual H.E. Klinefelter Award, which advertising and later started her recognizes career achievement and own freelance marketing “dedication to improving the communications business, DLF standards of cooperative commun- Communication Services, from her ication.” Teri Ditsch, communications home in Murfreesboro, Tenn. director for AMAROK, an Arizona- Abernathy became CCA News editor based building supply purchasing in 2000, moving the publication to cooperative, took home the Graznak a Web- and e-mail-based Award, recognizing her as one of the distribution. nation’s outstanding young (under the She was described as “highly age of 36) co-op communicators. creative, professional and savvy in Mica, a former Florida co-op and media realities – an congressman, was saluted for being “a exceptional communicator who visible and effective voice for credit employs only the best writing, unions and cooperatives in the photography, graphic and editing national media.” Under his CUNA’s Daniel A. Mica was named CEO skills.” As editor of CCA News, leadership, CUNA has launched a Communicator of the Year; Donna Foster Abernathy has made the newsletter Abernathy (bottom photo, left) won the strategic communications plan to a must read for those seeking to be Klinefelter Award for career achievement, and “change the conversation” on on the cutting edge of cooperative Teri Ditsch won the Graznak Award, recognizing Capitol Hill about credit unions. her as one of the nation’s outstanding young co- communications practices. The campaign emphasizes how op communicators. Photos courtesy CCA Ditsch was praised for her credit unions “look out for the little continued on page 37

Rural Cooperatives / July/August 2007 29 Evolving technology may generate profit from biodiesel glycerin glut

By Anthony Crooks, Ag Economist odorless, viscous and nontoxic liquid 30-million-gallon-per-year plant will USDA Rural Development with a sweet taste and literally generate about 12,700 tons annually of thousands of uses – at least for pure 99.9 percent pure glycerin. Along with lycerin (glycerin, glycerin. The biodiesel glycerin co- the 600 million gallons of biodiesel glycerol) is the main product is in crude form. Once soon to be added to the nation’s G co-product resulting separated from the soaps, lye and other production capacity will come about from biodiesel byproducts, however, this glycerin has 315,000 tons of glycerin. With an production. The name significant market value. expected U.S. production of 1.4 billion comes from the Greek word glykys, Every gallon of biodiesel produced pounds of glycerin between 2006 and meaning sweet. It is a colorless, generates 1.05 pounds of glycerin. So a 2015, North American glycerin markets

30 July/August 2007 / Rural Cooperatives Asia, all are adding to the world's glycerol. The U.S. Department of glycerin surplus. Biodiesel production is Energy recently identified succinic acid now the most important determinate in as one of the top 12 biorefinery the supply of glycerin. chemicals to be derived from biomass. The nation’s synthetic glycerin The USDA Agricultural Research market has also felt the effects. Dow Service's Environmental Quality Chemical, once the only synthetic Laboratory in Beltsville, Md., producer of glycerin in the United discovered that glycerin from biodiesel States, recently closed its Freeport, production and citric acid can be Texas, plant, saying that the flood of chemically combined to produce glycerin from U.S. biodiesel plants was biodegradable polymers, which could be at least partially responsible. used to produce packaging and other Like biodiesel itself, glycerin quality products. An important feature of the is a concern for refiners. Crude glycerin process is the use of unrefined glycerol quality may be as varied as the process specifically from biodiesel production. technology used to produce biodiesel. Citric acid is reacted with various Typically, the large, professionally alcohols, or hydroxyl-containing engineered plants have a more materials such as glycerol, to obtain a consistent glycerin because more polyester polymer that is biodegradable, attention is paid to refining the co- edible, biocompatible and useful in the product. Smaller, self-designed facilities making of films, sheets, plastics and gel- are more often just trying to get like coatings. Because it is biodiesel produced and pay less biodegradable, the material holds attention to glycerin quality. significant promise for use in packaging materials. Useful molecule While some community-based Soy Oil-glycerin products explored biodiesel producers tout soap-making The Ohio Soybean Council and the or aerobic composting as potential Battelle Memorial Institute are working solutions, that’s hardly sufficient for together to pioneer new uses for commercial-scale operations. The most soybean oil and glycerin in the likely use for glycerin will be to replace development of polyols, which are used petroleum-based chemicals. Within five to make polyurethane foams, polyester, years, glycerin is expected to become a adhesives and other goods. Glycerin developmental platform from which an and soybean oil can be chemically array of chemical applications will modified (using ozone treatment and/or spring as a replacement of a selective oxidation) to make soya- petrochemical equivalent. polyols that are competitive with the An often discussed idea is to convert petroleum-based products. glycerin to antifreeze. Researchers at The U.S. polyol market is nearly 1 the University of Missouri and the billion pounds and represents a Columbia, Mo.-based Renewable significant value-added opportunity for USDA photo illustration by Stephen Thompson Alternatives LLC have completed the the biodiesel co-ops and other first phase of a project using producers to pursue. Because of what is hydrogenation to convert glycerin to called “low reactivity,” however, soy- will be significantly affected by industry propylene glycol. The process turns based polyols need to be blended with growth. glycerin and hydrogen into equal parts petroleum counterparts, just as A glutted glycerin market is more propylene glycol and water. Plans are biodiesel is blended with petroleum than a concern for the farmer-owned underway to scale-up the process for diesel, to make specialty products. co-ops and limited liability corporations commercialization. Battelle’s business strategy is to (LLC) and other producers of biodiesel. Researchers at Washington State license technology to interested The European glycerin supply is University's Biological Systems companies. Ideally, the new technology already in over supply. When combined Engineering Department are studying will alter a biodiesel plant into a multi- with fatty acid production from palm how to develop omega-3 fatty acids, faceted biorefinery with multiple kernel oil and coconut oil in Southeast succinic acid and succinate salts from product streams, just as with a

Rural Cooperatives / July/August 2007 31 petroleum refinery. A 100-million- an energy source. For example, successfully convert the biodiesel by- gallon biodiesel refinery generates from distillers grains produced as a byproduct product glycerin into electricity. The 60 to 75 million pounds of glycerin, or of the ethanol industry can be used as a facilities, according to researchers, will about 200 million pounds of polyols per supplemental energy source. Of course, provide substantial economic growth year. At the current price of about $1 burning distillers grains and glycerin is for biodiesel plants while turning per pound, polyols can add another a last resort and is best avoided, because glycerin into productive renewable $200 million in revenue to a biodiesel glycerin typically doesn't burn well, and energy. plant’s bottom line. crude glycerin gives off toxic fumes The glycerin is burned in specially Battelle’s vision is for these refineries when burned, limiting its energy adapted engines to produce electricity. Stable and virtually maintenance-free, eTEC’s units consist of a glycerin processing module, a combustion engine with a generator and a control unit that is compatible with any biodiesel plant. With the unit’s low malfunction rate and compact design, it can be integrated into a transfer encasement, making it easy to be transported, assembled and moved from one biodiesel plant to another, if desired. Because electricity is expensive in Europe, biodiesel producers will be able to create their own electrical energy using eTEC’s technology to help offset Researchers at Battelle in Columbus, Ohio, are working to find new uses for soybean feedstock cost. In addition, heat is byproducts. Such work is funded in part by Soybean Checkoff dollars, contributed by producers. Photo courtesy Ohio Soybean Council simultaneously released during the electricity conversion process, which can be used for heating the plant’s tank to produce biodiesel for transportation potential. facilities. eTEC also has plans to fuel, and to invest in the process to However, Virent Energy Systems reconvert heat back into electricity. manufacture polyols for the plastics and and the University of Wisconsin- Unused electricity can also be fed into polymers industries as a springboard to Madison Department of Chemical and the main supply grid for use at the multiple processes, products and Biological Engineering believe that European sponsored eco-electricity revenue streams. Ultimately, every glycerol can be an energy source rates. Having this kind of ‘green’ product stream from the plant will through aqueous phase reforming electricity is supported by the local become a value-added revenue source. (APR). APR generates hydrogen from states in the EU, so it is quite profitable Battelle isn’t alone in the aqueous solutions of oxygenated for biodiesel projects. development of polyols. Cargill Inc. compounds in a single-step reactor recently announced that it had won a process. Biogas, methane digester technology award from the Alliance for Low-grade crude glycerin is A Belgian biogas firm, Organic the Polyurethanes Industry for its especially favored because it is cheaper Waste Systems (OWS), is building a BiOH bio-based brand of polyols. and readily converts to hydrogen. Its methane digester system that uses crude ADM plans to produce propylene sodium hydroxide, methanol and the glycerin and resulting biogas from a glycol and other “large-volume” high pH levels actually help the process. commercial-scale biodiesel facility to chemicals from glycerin. Many people About 10 pounds of glycerin can be power the plant itself. Such an are aware that propylene glycol is used converted to 1.5 pounds of hydrogen in integrated, closed-loop system has for antifreeze/deicer, but it is also used Virent's process for less than $2 per many benefits and makes the biodiesel for fiberglass resins, personal care kilogram. production process “greener.” Glycerin products and cosmetics. is reported to increase biogas yields Electricity considerably, provided the right Alternative energy source Researchers at eTEC Business microbial populations are used. The “floor value” of any material, Development Ltd., a biofuels research The Agricultural Utilization including glycerin, can be determined company based in Vienna, Austria, have Research Institute (AURI) in Marshall, by the point at which it can be used as devised mobile facilities that continued on page 37

32 July/August 2007 / Rural Cooperatives NEWSLINE

Send items to: [email protected]

CountryMark expanding based ethanol were purchased by the Peshastin Hi-Up is a grower-owned refinery; rebranding Midwest co-op in 2006 and blended into cooperative that has a long history of fuel stations CountryMark's premium diesel and growing premium pears in the upper CountryMark Cooperative is gasoline products. Nearly 80 percent of Wenatchee River Valley. The co-op, investing $20 million to upgrade and the diesel CountryMark distributes which only ships pears, grew and expand its refinery in Mt. Vernon, Ind. through local cooperatives is a blend of packed about 750,000 cases of pears in The project, announced at the co-op’s soy biodiesel. 2006. The majority are d'Anjou and most recent annual meeting, is expected In 2006, the co-op completed work Bartlett pears, while other pear varieties to be completed in 2008 and will boost on a $44 million advanced diesel fuel round out the program. refining capacity by 45 million gallons processing unit, which enables it to “Stemilt and Hi-Up will gain per year, or roughly 12 percent of produce premium, ultra-low sulfur efficiencies through collaboration in not current production. diesel fuel that is more environmentally only marketing but also in packing, The additional production at its friendly and meets new EPA clean air storage, packaging, ripening programs, Indiana refinery comes at a time when a mandates. Known throughout the years transportation and logistics. This will national gas shortage, combined with a as an agricultural co-op, CountryMark be a complete go-to-market strategy," 2-percent increase in U.S. fuel demand, is now focused exclusively on energy. says Stemilt vice president of sales and has forced energy prices upward, says marketing Mike Taylor. Stemilt is CountryMark CEO Charlie Smith. In privately owned by the Mathison family, NW pear shippers addition to increasing refinery yields, which has farmed in Central to combine CountryMark also has announced plans Washington since the early 1900s. marketing to invest in the reliability of the refinery Stemilt shipped approximately 1 million and fuel distribution facilities. boxes of pears in 2006. The co-op has also announced that its EnergyPlus 24 retail fuel stations are GROWMARK to acquire energy being rebranded with the CountryMark firm; teams with FB on risk name and image. The look has been management updated to reflect the stations’ identity GROWMARK Inc. is seeking to as CountryMark fuel stations. The 90 Two familiar premium Northwest acquire 100 percent of STAR Energy fuel stations across Indiana, Ohio and pear shippers have combined LLC (STAR), Manson, Iowa. STAR is a Michigan will continue to have fuel operational and marketing relations to retail energy company serving available 24 hours, and many also offer become one of the largest premium northwest Iowa with $60 million in convenience store products and pear shippers in North America. Stemilt sales last year. services. The stations are operated by Growers Inc. will market 100 percent of STAR, currently owned by 21 independent local cooperatives, all of Peshastin Hi-Up Growers pears GROWMARK, West Central which are based in Indiana. starting in August. Under a previous Cooperative and NEW Cooperative Nearly half of the profits made by agreement, Stemilt marketed a large Inc., primarily serves rural markets. It CountryMark in 2006 were returned to percentage of Peshastin’s crop. delivers gasoline, distillates, propane, member cooperatives through "Stemilt’s marketing channels for and lubricants and operates unattended patronage refunds. In the past two premium fruit are a perfect fit with our fueling locations. years, CountryMark has sent $43.3 operations,” says Peshastin Hi-Up West Central Cooperative CEO Jeff million back to its member general manager Ken Hemberry. The Stroburg says the transaction will allow cooperatives. collaboration makes the two West Central to focus more on its Some 5 million gallons of soy organizations the largest Washington strategic businesses. STAR Energy and biodiesel and 6 million gallons of corn- supplier of Concorde, Taylor's Gold West Central have many common and organic pears. customers and plan to continue to

Rural Cooperatives / July/August 2007 33 support each other in the marketplace, “The dairy farmers of Cass-Clay are increased food prices and other he notes. proud to be the newest AMPI owners,” consumer-related inflation. Instead, In other GROWMARK news, the says David Glawe, chairman of the Urbanchuk's new statistical research co-op is forming a joint venture with Cass-Clay and a Detroit Lakes, Minn., shows that escalating energy costs are Illinois Farm Bureau called AgriVisor dairy farmer. He is one of nearly 200 the real culprit behind the recent run- LLC. The venture brings together the cooperative owners who unanimously up in retail food and beverage prices. organizations’ grain and livestock voted to authorize the transfer of Cass- The study arrives amidst a growing marketing analysis and contract Clay Creamery assets to AMPI. debate over the expansion of the U.S. execution functions in an effort to offer The Cass-Clay brand and product ethanol industry. Many critics blame farmers the best marketing tools line complements products ethanol and corn producers for available. manufactured at AMPI plants across the everything from shortages of Mexican “Uniting our efforts to provide Midwest. AMPI is a private-label tortillas to higher prices for corn flakes farmers with risk management manufacturer of consumer-packaged and soft drinks. alternatives that maximize their cheese, butter, instant milk and shelf- Urbanchuk's study – The Relative profitability is a logical step for two stable dairy products. With the Impact of Corn and Energy Prices in the organizations committed to serving the acquisition, the 4,000 dairy farmer- Grocery Aisle – was commissioned by the best interests of our farmer-members owners of AMPI now operate 15 plants Renewable Fuels Association. The full and owners,” says Larry Keene, and annually market more than $1 report and corresponding tables can be GROWMARK director of grain risk found at: http://www.rippmedia.com/ management and value-enhanced products. LECG-JU-Ethanol.doc. According to the Urbanchuk report, Co-op development class rising energy prices have had twice the Applications are being accepted for impact on the Consumer Price Index Session II of The Art & Science of for food as has the price of corn. He Cooperative Development, a training examines CPI data from 2002 through program for new and established co-op May of this year to make his point. development practitioners. The "While it may be more sensational to program is produced by lay the blame for rising food costs on CooperationWorks!, a nationwide corn prices, the facts don’t support that service co-op for cooperative conclusion,” says Urbanchuk. “By a development centers and individual factor of two-to-one, energy prices are practitioners. This five-day, intensive the chief factor determining what training takes place in Madison, Wis., This processing plant in Fargo, N.D., will American families pay at the grocery Sept. 10-14. Session I is not a now be part of AMPI, but will continue store.” prerequisite for Session II. For more to produce foods under the Cass-Clay Moreover, he notes, "Retail food information, contact Audrey Malan, brand. prices are not likely to accelerate (307) 655-9162 or [email protected]. significantly in 2008 and beyond, even billion of dairy products regionally and as ethanol production continues to AMPI acquires Cass-Clay nationally. expand. In fact, consumers will be more Associated Milk Producers Inc. “This acquisition reflects the severely affected by rising gasoline and (AMPI), New Ulm, Minn., has cooperative’s long-term commitment to energy prices than by increases in corn completed the acquisition of Cass-Clay Midwest dairy farmers,” says Paul Toft, prices." Creamery Inc. The North Dakota- AMPI board chairman and a dairy based cooperative is now operating as a farmer from Rice Lake, Wis. “It allows A&N Electric Co-op to division of AMPI. us to optimize our farmer-owned milk acquire Delmarva Power The Cass-Clay division includes a manufacturing facilities.” A&N Electric Cooperative’s (ANEC) fluid milk bottling plant in Fargo, N.D., board has voted to acquire the electric and a specialty cheese plant in Hoven, Study: ethanol not main distribution service territory of S.D. Products manufactured at the factor in higher food costs Delmarva Power in Accomack and Fargo facility will continue to be A new study by agricultural Northampton counties on Virginia’s marketed under the Cass-Clay® brand, economist John Urbanchuk of LECG Eastern Shore. The purchase recognized in the upper Midwest for throws a bucket of cold water on the agreement, which is subject to approval quality fluid milk, ice cream and popular argument that the rising cost of by the Virginia State Corporation cultured products such as yogurt and corn – prompted by the increasing Commission (SCC), will mean that sour cream. production of ethanol – is the cause of ANEC will become the electricity

34 July/August 2007 / Rural Cooperatives FCS boosts lending to young, beginning and small producers

The Farm Credit System (FCS, or System) is increasing its loans worth $5.5 billion were made to young farmers, or 17 financing of young, beginning and small (YBS) farmers and percent of all new loans made during the year and 10.5 ranchers, according to a recent report. The overall trend for percent of the new-loan dollar volume. lending to each of the three YBS borrower categories FCS holds 189,223 loans, worth $25.4 billion, made to continues to be positive, with solid gains in 2006 loan volume beginning farmers — those with 10 or fewer years of farming from 2005 levels, according to the report prepared for the Farm experience. During 2006, 57,838 new loans worth $9.3 billion Credit Administration, which oversees the nation’s producer- were made to beginning farmers, representing 21.2 percent of owned FCS. all new loans and 17.8 percent of new-loan dollar volume. The number of new loans was up for beginning and young FCS institutions had 465,951 loans outstanding worth $36.3 farmers and was flat for small farmers in 2006. However, the billion to small farmers — those with gross annual sales of growth rate in the YBS categories as a percentage of the less than $250,000 — at the end of 2006. During 2006, 148,025 System’s total new-loan dollars was down slightly for 2006. new loans worth $11.6 billion were made to small farmers. Small farmers continued to receive the largest share — 54 New loans to small farmers represented 54.3 percent of all percent — of the System’s new loans during the year. new loans and 22.2 percent of new loan volume. Although the The report, prepared by Office of Regulatory Policy, is part number of new loans made during 2006 was essentially of the FCA’s continuing effort to ensure that the FCS responds unchanged from 2005, the volume of new loans increased 6 to the credit needs of these percent. farmers and ranchers. In Economic and March 2004, the FCA board demographic factors have approved a regulation led to a decline in the strengthening YBS programs number of small and young and policies at System banks farmers in the farming and associations. Congress population. As a result, the established the YBS mission System’s potential YBS in the 1980 amendments to lending market has declined. the Farm Credit Act. To encourage lending to In 2006, the System held these farmers, many 140,209 loans worth $15.4 associations are using billion made to young special underwriting farmers, age 35 or younger, standards, lower interest up 11 percent from 2005. The Farm Credit System is striving to provide financing to more rates or other programs During 2006, 46,459 new young and beginning producers, such as Matt and Stacy aimed at YBS borrowers. ■ Stevenson of Maryland. Photo courtesy Mid Atlantic Farm Credit provider for the approximately 22,000 Te rms of the purchase agreement purchased by A&N. Old Dominion customers of Delmarva Power located will be released to the public once a Electric Cooperative, based in Glen in Virginia. formal application has been filed with Allen, Va., is a wholesale power supply ANEC currently serves more than the SCC. cooperative that provides electricity to 11,000 consumers in portions of A&N Electric Cooperative’s 12 member distribution cooperatives Accomack and Northampton Counties wholesale power supplier, Old Domin- across Virginia, Maryland and Delaware. in Virginia and Somerset County, Md. ion Electric Cooperative, will purchase With the addition of consumers now and operate the majority of Delmarva CHS building three served by Delmarva Power, ANEC will Power’s 69 kV transmission facilities in pipeline terminals be the distributor of electric service for Virginia, a transaction that will CHS Inc. is constructing two new all residents of Virginia’s Eastern Shore. complement the distribution system Montana petroleum terminals and

Rural Cooperatives / July/August 2007 35 planning a third for eastern Washington to maximize supply efficiency for customers of its Cenex® brand refined fuels products. The terminals under construction are located at Logan and Missoula, Mont., along the Yellowstone Pipeline. A location is being sought for Small farmers learn ways a planned terminal in the Moses Lake, Wash., area. at conference to add value The three terminals will supply CHS customers with a wide range of products for bulk distribution from the The 20th annual California Farm Conference in Monterey, Calif., in company's refinery at Laurel, Mont., March, was attended by 375 farmers, ranchers, ag students, educators, including gasolines, diesel fuels and farmers’ market managers and other professionals. They learned marketing ethanol-blended gasolines. The practices that will help them increase their profits and grow their terminals are designed to accommodate businesses. biodiesel blends in the future. The conference theme was “The Time Is Ripe,” and workshops were designed to meet the mission of the conference: to address timely topics Conference to gauge true relevant to family farming, direct marketing and agricultural sustainability. value of co-op businesses Conference topic tracks included: “Growing Your Business,” “Making Cooperatives are facing many Your Market Successful,” New Frontiers in Specialty Crops,” “After the strategic dilemmas as they continue to Harvest: Value-Added Strategies,” “Hot Topics in California,” “Marketing: If adapt to a changing business landscape. I Grow it; Will They Come?” and “New Ideas in Production.” Understanding the true value of the At a session titled “Financing Value-Added Projects,” speaker Rhonda cooperative business is critical to Motil of the Monterey County Vintners and Growers Assoc., spoke about meeting these challenges. the success the organization has had using Value-Added Producer Grants “Valuing the Cooperative Business (VAPG) from USDA Rural Development. Karen Firestein, cooperative in the 21st Century” is the theme of specialist for USDA Rural Development in California, provided detailed this year’s annual farmer Cooperative information about applying for a VAPG. Conference, which will help address In attendance were scholarship recipients as part of a program funded these issues. by USDA. They included small-scale farm operators with limited means as The conference, now in its 10th year, well as agriculture students and farmers’ market managers. In the past five will be held Nov. 5-6 in St. Paul, Minn., conferences, the California Farm Conference has targeted its outreach and at the Crowne Plaza Hotel. The event successfully increased the diversity of attendees. is sponsored by the University of In 2007, with the assistance of USDA, scholarships went to 90 small- scale farmers, of whom 38 percent were Hispanic, 6 percent African- American and 28 percent Asian or Pacific Islanders. About 38 percent were women, 4 percent Native American and 4 percent were persons with disabilities. In addition, 15 farmers’ market managers and 15 students were Wisconsin Center for Cooperatives. awarded scholarships. Topics will include: USDA Rural Development provided a $72,000 Rural Business Enterprise • measuring the value of cooperatives; Grant to help cover the costs. For more information about the conference, • the economic impact of cooperatives visit: http://www.californiafarmconference. The 2008 California Farm ■ on the U.S. economy; Conference will be held Feb. 24-26 in Visalia, Calif. • financial benchmarks for cooperatives; • business structure strategies and choices: the cooperative versus the South Dakota co-ops merging Farmers’ patrons and 89 percent of investor owned firm. Tw o South Dakota co-ops — Fremar Fremar patrons approved the merger, Updates on the conference and Farmers Cooperative, based in Marion, according to the Associated Press. registration information will be posted and Central Farmers Cooperative, Central Farmers has operations in on the University of Wisconsin Center based in Salem — have voted to merge, Montrose, Canova and Rumpus Ridge. for Cooperatives Web site: effective Aug. 1. The new cooperative Its services include fuel, propane, tires, www.uwcc.wisc.edu. Or contact: Lynn will be called Central Farmers oil, feed, lumber, agronomy and grain Pitman at (608) 261-1355, or Cooperative and will be based in services to customers in a 35-mile [email protected]. Marion. About 78 percent of Central radius of Salem. Fremar is based in

36 July/August 2007 / Rural Cooperatives Marion and has additional facilities in largest producer-owned ethanol projects completed by the end of 2007. US Freeman and Dimock. Its services in South Dakota. Construction on BioEnergy has announced a plan to include agronomy, grain and feed. Millennium Ethanol, a 100-million- acquire the plant. Fremar has developed one of the gallon ethanol plant, is expected to be ■

Top Co-op Communicators was one of CCA’s founders and an Other awards won by Rural continued from page 29 employee of what today is MFA Inc. Cooperatives staff or contributors Michael Graznak was a talented included: Anne Todd, first place success in raising the communications communicator with Farmland featurette for an article about a co-op program at her co-op to a new level Industries. He died at age 51 of a heart for housecleaners; Catherine Merlo, since joining it in 2001. She serves as attack while on an assignment for the first place serious/investigative feature editor of her co-op’s magazine and co-op. for “Left Behind,” about grain co-ops newsletter, is responsible for special that have lost business due to biofuels event planning, advertising, media Other top awards development; Dan Campbell, second relations, Web site maintenance, CCA awarded its other top honors place for serious/investigative features photography and a variety of other to: for “The Natural,” about a natural beef marketing and communication projects. • Photographer of the Year — David cooperative, and third place in the Ditsch, who just assumed the CCA Lundquist of CHS Inc./Land cooperative education category for an presidency, was called “one of the O’Lakes; article on the 80th anniversary of the nation’s most creative, talented and • Publication of the Year — Sara Cooperative Marketing Act; Assistant detailed communicators.” She Dorman of West Central Editor Stephen Thompson, third place “consistently demonstrates the seven Cooperative; in the news category for coverage of a principles of cooperatives in all that she • Special Projects/Programs, Best of renewable energy conference. The does. Because her work always displays Class — Morriah Morris of the magazine was awarded third place for a high level of professionalism, many Wisconsin Milk Marketing Board; best overall use of photos in a other purchasing co-ops borrow her • Writer of the Year— Dan Campbell, publication. talent and follow her lead.” editor of USDA’s Rural Cooperatives ■ H.E. Klinefelter, who died in 1957, magazine.

Biodiesel Glycerin Glut develop a high-density feed with pellet durability greater than continued from page 32 95 percent, making it ideal for high-volume transportation and extending the product’s shelf life. Minn., has studied the possibility of using glycerin as a fuel or fuel supplement. One study tested glycerin in wood pellets Poultry feed fueling a wood-burning stove. But analysis show no real A more recent animal feed trial using glycerin has received significant improvement with the glycerin mixture. national attention. Researchers at the University of Arkansas’ Center of Excellence for Poultry Science recently studied Animal feed glycerin as a dietary supplement in growing broiler chickens. AURI also works with Minnesota biodiesel producer Although strictly preliminary, the study showed that as much FUMPA Biofuels to combine feather meal and glycerin for as 10 percent glycerin could be fed to chicks up to 16 days of use in beef and dairy diets. Because glycerin produced at the age in battery brooders. Battery brooders are brooding boxes plant is about 85 percent pure, pH neutral and free of soaps with wire floors stacked on top of each other to conserve and methanol, FUMPA has a unique product opportunity space. and is able to capitalize on the synergy between its biodiesel A 5-percent glycerin inclusion in pelleted feed showed no and animal feed divisions. adverse effect on bodyweight, feed intake, feed conversion or FUMPA has developed an animal feed consisting of a mortality. However, 10-percent glycerin inclusion reduced blend of Central Bi Products' hydrolyzed feather meal with body weight due to reduced feed-flow rate. glycerin. Gro Mor Hi-Torque, as the product is branded, was A second study will determine the effects of a 2- to 2.5- developed in part through the Agricultural Utilization percent glycerin inclusion to more accurately represent real- Research Institute's (AURI) co-product utilization lab in world market conditions. The typical poultry operation mixes Waseca, Minn., where AURI developed a method for making 4,000 tons of feed per week and would require a commercial- pellets from the mixture. scale biodiesel plant to have enough glycerin for even a 1- Various blends of glycerin and feather meal were tested to percent inclusion. ■

Rural Cooperatives / July/August 2007 37 PAGE FROM THE PAST

From the archives of Rural Cooperatives and its predecessor magazines

50 Years Ago... market, open Wednesdays and Saturdays, typically sells about $3,000 of farm-produced food on a Saturday. From the July & August 1957 issues of News for Farmer Cooperatives “From tent to tent in 25 years,” smiled one co-op member, Concentrated fresh milk stirs far-flung markets thinking of the day the market first Fresh concentrated milk in one-third quarts has aroused started with women selling interest from coast to coast, and as far away as Central and products from their own farm South America. The Pure Milk Association (PMA), Chicago, kitchens in a tent. Now, with their Ill., began selling the milk in February. Almost as soon as the own building on a valuable piece milk hit the market, newspapers began carrying stories about of land, they again put up a tent it. Altogether, 18 weekly and nine daily newspapers, including on the same site – but this time to the Wall Street Journal, featured coverage about the milk. serve punch, coffee and cookies to Radio and television stations also broadcast the event. visitors who came to help them In six weeks, PMA’s wholesale distribution of the milk celebrate their birthday. increased about 30 percent over The market now has 60 the first two weeks’ average. About active sellers, many of them selling on the same spot for many 100 retail food stores in Southeast years. Nellie C. Hargett, one of the earliest members, joined Wisconsin are on the list to buy in 1933 and has since missed fewer than 10 market days, and the concentrate. Later the co-op only then because of illness in the family. will expand into new areas in southern Wisconsin and in Illinois, and may look into export markets. PMA’s Kansasville, Wis., 30 Years Ago... plant makes, packages and stores From the July & August 1977 issues of Farmer Cooperatives the concentrated fresh milk. The plant also makes 93-score butter, Oregon co-op using shrimp, crab shells as fertilizer skim milk powder and ice cream Twenty farmers have formed the first cooperative in mix. It receives both can and bulk farm milk. The plant is Oregon to use shrimp and crab shells as fertilizer. At the same adding processing equipment to ensure uniform milk product time, the cooperative is resolving an ecological problem for quality. To satisfy requests of many grocers and consumers, the Newport seafood processing industry. the co-op may increase the size of the milk container to a The cooperative, Coastal Farmers Cooperative, has one-quart paper carton. contracted to remove shells from two of the half-dozen seafood processors in Yaquina Bay. Women’s co-op market celebrates 25th year (cover article) The co-op expects to use 1,500 to The silver anniversary of the Montgomery Farm Women’s 3,000 tons of shells annually from Cooperative Market, Bethesda, Md., drew about 2,000 visitors the two contracts. from Washington, D.C., and nearby areas in late May. Among The co-op pays a refuse those present were some of the pioneers whose hard work and collector to haul and dump the clear vision in the early days helped get the market started. shells onto farms. The member This women’s market, set in the heart of suburban farmers then spread the shells over Bethesda, has long given its farm women ready cash for their their pastures and fields and plow products: home baked bread, beans, hams, fresh eggs and them into the ground to poultry, home canned fruits and vegetables, and crafts. The decompose. Preliminary testing

38 July/August 2007 / Rural Cooperatives indicates a ton of shells provides 28 pounds of nitrogen, 10 Since the early 1970s, many farm groups, including farmer pounds of phosphorous and 160 pounds of calcium. cooperatives, have been studying the economic possibilities of Paul Keady, a cattle producer and president of the producing ethanol, methane and cooperative, says he would rather use the shells than a oil/fat-based fuels. A number of commercial fertilizer. He said the cost is slightly less and the representative organizations have shells have the added benefit of promoting soil bacteria that been formed to encourage the use release nitrogen and other nutrients from sterile coastal soils. of “renewable fuels” and to Seafood processors have been placed under orders by the promote policies that would state’s Department of Environmental Quality to stop dumping provide an economic climate shells into water. Keady explains, “The processors pay us $6 a suitable for the industry’s growth. ton to haul away their shells and we sell the shells for the Currently, a number of new same amount.” The cooperative then pays the hauling costs. ethanol refining facilities are in operation, under construction or in Global co-op collaboration needed the planning stage. They offer great More experiments in international collaboration between potential to add economic value to corn and other feedstocks cooperatives are needed, according to a committee of the through the production and marketing of fuel ethanol. International Federation of Despite the general enthusiasm for renewable energy from Agricultural Producers (IFAP). the heartland, loan analysts from several banks for The Standing Committee on cooperatives remain cautious. For example, the St. Paul Bank Agricultural Cooperation of IFAP for Cooperatives, which has been assessing the viability of took this position after voicing ethanol projects for more than 15 years, has chosen to finance concern for farmers’ interests in very few. Government tax credits and exhaust emission the face of growing multinational regulations, among others, are major areas of concern to the agrifood companies. emerging ethanol industry. “Since 1960, there has been a The sunsetting of the federal excise tax reimbursement in substantial acceleration in the the year 2000 creates an aura of uncertainty around the multinational character of industry and especially any new fuel ethanol production companies both upstream and venture. Even though it is a subsidized industry still in its downstream,” the committee wrote. “Upstream concentration infancy, ethanol has passed some significant milestones in the is particularly strong and cooperatives are very weak in the U.S. fuel marketplace. Recent recognition of ethanol and fertilizer industry, in farm machinery and in feeds at the ethyl-tertiary butyl ether (ETBE) as high quality fuel additives production stage. Downstream it would seem that capable of delivering significant environmental, economic and multinational companies currently supply 40 percent of energy benefits to the consumer has spurred industry processed food products at the world level.” production to record levels. IFAP is a federation of agricultural cooperative Co-ops are major players in providing energy products for organizations that are representative of the primary producers farm production, having a 41-percent market share in 1993. within a country. That year, more than 2,500 cooperatives sold $5.2 billion of energy products to rural America. Around 29 percent of the gasoline sold by cooperatives contained ethanol. To date, 11 farmer-owned ethanol production facilities are 10 Years Ago... in operation, and 14 are in the planning stages. When From the July/August 1997 issue of Rural Cooperatives completed, these plants are expected to comprise 38 percent of the ethanol production capacity in the United States. Co-op involvement in ethanol industry grows despite Thousands of farmers have collectively invested more than $1 uncertainty billion to build ethanol facilities. Many thousands more co-op Over the past decade, the production of energy from members already produce feedstocks that can be used for renewable resources has commanded considerable discussion ethanol production. and excitement. Various programs at the state and federal level Although the economic landscape of this industry is fraught have provided subsidies to start businesses in this industry. with uncertainty, profit opportunities may still exist given the Simultaneously, technological advances have lowered right set of circumstances of low corn prices and higher production costs and the promise of economically viable ethanol and distillers dried grain prices. production continues to be “just around the corner.” ■

Rural Cooperatives / July/August 2007 39 United States Department of Agriculture Washington, DC 20250 Periodicals Postage Paid U.S. Department of Agriculture OFFICIAL BUSINESS

Penalty for private use, $300

NOTICE: ❏ Check here to stop receiving this publication, and mail this sheet to the address below. ❏ NEW ADDRESS. Send mailing label on this page and changes to:

USDA/Rural Business–Cooperative Service Stop 0705 Washington, D. C. 20250-3255

40 July/August 2007 / Rural Cooperatives