Rural COOPERATIVESCOOPERATIVESUSDA / Rural Development November/December 2008 Rewards of Local Ownership Page 4 Commentary Co-ops and the future of rural America he future for rural America is a bright one, channel investments into worthwhile projects. In order to studded with new economic opportunities. fully capitalize on the new demand, the traditional cooperative Many of those opportunities stem from the model is being complemented by other concepts, such as T rapid development of renewable energy and “new-generation” cooperatives which provide greater liquidity other value-added products from basic through tradable delivery rights. These co-ops also promote agricultural materials, using both proven and formation of partnerships with outside entities and other innovative, cutting-edge technologies. provisions that enable greater outside investment, along with While we have seen a significant increase in research, transparency, liquidity, transferability of ownership interest development and production of value-added products in and equal appreciation of asset value. recent years, the best is yet to come. New concepts are Where should rural Americans turn for the capital needed evolving at a rapidly escalating pace. Promising new to buy into these opportunities? An obvious investment source technologies are on the drawing board, while others are just in for agricultural producers is their farm equity, which now the conceptual stage. exceeds $2 trillion. By leveraging the value of their land, But the reality is that all will require investment capital. producers can raise the investment capital they need to America’s cooperatives have a unique opportunity to play a participate in the new rural economy, not only for energy significant role in developing this growing economic sector. development but for other value-added ventures that use new In the energy arena — because of site selection and technologies — such as broadband Internet — to market feedstock requirements — wind, solar, ethanol, biodiesel and processed goods directly to consumers. Responsible and geothermal are primarily rural resources. Expansion of this transparent leveraging of land and other assets will assist in sector offers the opportunity to harvest an increasing amount providing the equity needed to develop new high-value of energy from renewable, inexhaustible sources. opportunities which are of greater value than basic Vast stretches of the American rural landscape are ripe for commodities. solar projects. Wind energy is emerging as a potentially What does this mean for the 60 million people who call significant source of electricity in much of the country. rural America home? It presents them with the unprecedented Biofuels derived from corn and soybeans (and coming soon chance to generate wealth, job opportunities and a self- from cellulosic sources, such as switchgrass) augment energy supporting rural economy that provides a high standard of refined from petroleum. There is no question that renewable living. But in order for that to happen, a large subset of rural sources of power will continue to play an expanding role in residents will need the opportunity to participate — to America’s energy picture for generations to come. become owner-investors, providing the capital to encourage Other exciting value-added opportunities are developing as development and then reaping a share of the profits to be well, ranging from agri-tourism to production of foodstuffs realized from the sale of high-value products. that are in growing demand by consumers. Cooperatives are one potential investment vehicle available A good example of an investor-owned entity is the to rural Americans, but they’re not the only vehicle. To Plymouth Energy Ethanol Plant and Plymouth Oil in Merrill, maintain and increase market share in a rapidly changing rural Iowa. Now under construction, the ethanol plant will soon environment, cooperative managers and members need to be produce 50 million gallons of ethanol from corn each year. flexible, adaptable and willing to re-examine their business The plant has more than 300 local investors, mostly farmers. models and change them as needed. Located near the ethanol plant is Plymouth Oil, which will In the dynamic marketplace that is rural America, use byproducts from ethanol production to manufacture about investment will occur, whether through cooperatives or other 80 tons of corn oil per day for human consumption. It will sources. In that light, it is important that our cooperatives — also produce feedstock for cattle. Most of the corn will come which have served rural America for so long — position from fields within 60 miles of the two plants. The oil plant themselves to participate fully in the new rural economy. This was financed with a bank loan guaranteed by USDA Rural will benefit not just the members, but will improve the Development. economic vitality of rural America as a whole. As consumer demand grows for high-value products, such as energy and processed food, America’s cooperatives must — By Thomas Dorr, Under Secretary serve not just as an outlet for production, but as vehicles to USDA Rural Development ■ 2 November/December / Rural Cooperatives Rural November/DecemberCOOPERATIVES 2008 Volume 75 Number 6 FEATURES 4 Rewards of Ownership Community-based renewable energy projects can produce big benefits By Julie Curti and Justin Goetz 10 Carbon Credits for Farmers Rural Cooperatives (1088-8845) is published p. 4 bimonthly by USDA Rural Development, 1400 Co-ops can play role for members managing dairy waste with digesters Independence Ave. SW, Stop 0705, Washington, DC. By K. Charles Ling & Carolyn Liebrand 20250-0705. The Secretary of Agriculture has determined that 13 Vermont dairy farm turns manure into publication of this periodical is necessary in the transaction of public business required by law of renewable energy the Department. Periodicals postage paid at By Lisa Halvorsen Washington, DC. and additional mailing offices. p. 13 Copies may be obtained from the Superintendent of Documents, Government Printing Office, 16 Grain industry must evolve, adjust to a new Washington, DC, 20402, at $23 per year. Postmaster: market paradigm send address change to: Rural Cooperatives, USDA/RBS, Stop 3255, Wash., DC 20250-3255. Maintaining strong capital base critical for country elevators By Phil DiPofi Mention in Rural Cooperatives of company and brand names does not signify endorsement over other companies’ products and services. p. 16 18 Co-ops ring up additional $14 billion in sales Unless otherwise stated, contents of this publication via other ownership structures are not copyrighted and may be reprinted freely. For By E. Eldon Eversull noncopyrighted articles, mention of source will be appreciated but is not required. The U.S. Department of Agriculture (USDA) prohibits 20 Sky’s the Limit! discrimination in all its programs and activities on Housing co-op opens doors for first-time ownership the basis of race, color, national origin, age, disabili- By Dan Campbell ty, and where applicable, sex, marital status, familial p. 20 status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or 26 CCA salutes top co-op communicators because all or part of an individual’s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons 28 CDF’s multi-pronged efforts support co-op with disabilities who require alternative means for communication of program information (Braille, mission in America and abroad large print, audiotape, etc.) should contact USDA’s By Steven Thomas TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence DEPARTMENTS Avenue, S.W., Washington, D.C. 20250-9410, or call (800) 795-3272 (voice), or (202) 720-6382 (TDD). USDA 2 COMMENTARY is an equal opportunity provider and employer. 8 FOCUS ON Ed Schafer, Secretary of Agriculture 14 CO-OP DEVELOPMENT ACTION 22 UTILITY CO-OP CONNECTION Thomas C. Dorr, Under Secretary, USDA Rural Development 24 MANAGEMENT TIP Dan Campbell, Editor 30 NEWSLINE 37 ANNUAL ARTICLE INDEX Vision Integrated Marketing/KOTA, Design Have a cooperative-related question? Call (202) 720-6483, or On the Cover: Fax (202) 720-4641 On the cover: Wind turbine installation was a round-the-clock job at This publication was printed with vegetable oil-based ink. the Westmill Wind Farm Cooperative, in Oxfordshire, England. The co- op is owned by more than 2,300 members of the local community. See page 4. Photo by Martin Phelps, courtesy Westmill Wind Farm Co-op Rural Cooperatives / November/December 2008 3 Rewards of Ownership Community-based renewable energy projects can produce big benefits By Julie Curti and Justin Goetz Editor’s note: Curti and Goetz are both Truman-Albright Fellows who have been working with the Cooperative Programs of USDA Rural Development. ike many communities around the country, the school district in Wray, L Colo., faced a sharply growing electricity bill, feasibility study and carry out the renewable energy projects on tribal coupled with state budget cuts and project. lands and family farms in rural areas. declining student enrollment. To make The community rallied around the Since the company’s founding in 2000, up for the shortfall, in 2002 a vocational project, with donations, a bond project it has sold renewable energy credits and and agricultural technology teacher at and in-kind support providing the carbon offsets to businesses and the high school suggested a creative school district with funds for the 900- individuals. Revenue from these sales solution: build a wind turbine. killowatt (kW), 335-foot-tall turbine. are then used to finance renewable Not only would the turbine bring a An innovative company, NativeEnergy, energy projects. new source of revenue, but it also provided the final funding boost by “NativeEnergy is committed to would provide hands-on opportunities purchasing the carbon benefits the solving the climate crisis by helping for students to learn about renewable turbine has been generating since it indigenous groups and at-risk energy.