Rural COOPERAUSDAUSDA // RuralRural DevelopmentDevelopment TIVESMarch/April 2001 Co-opsCo-ops copecope withwith powerpower crisiscrisis COMMENTARY Research key to expanding co-op knowledge and understanding Research on cooperatives has dimin- identifying keys to successful opera- basic nature of cooperatives. What ished, as noted in the article by legal tion of cooperatives and understand- may appear to be the idea of the scholar James Baarda on page 21. New ing the causes of cooperative failures. moment or just “keeping up with the efforts are needed to invigorate It is also important to shedding light Joneses” can end up costing members thought and understanding about on how changes in various means of their equity and market presence. Just major forces impacting the operations observe what has happened to Tri- of cooperatives and how they adapt Valley Growers and the Saskatchewan structurally and functionally to them. Wheat Pool. Could unwise courses of Baarda shows the opportunity to draw Research is action have been averted by better on new, cutting-edge developments in understanding the nature of the coop- disciplines such as legal theory, eco- erative business itself? nomics, sociology, political science and important for USDA’s cooperative research pro- behavior management and how to gram involves in-house efforts and apply them to cooperatives. Such an coordination with university scholars interdisciplinary approach to address- identifying keys through agreements that augment ing these issues has the potential to work on mutually agreed-upon pro- enrich understanding of the role coop- jects. This effort needs to be elevated eratives play and better promote coop- to successful to meet the critical needs identified in erative development in the United the Baarda article and to avert a crisis States and worldwide. operation of in cooperative knowledge. Results can Sound far-fetched? Building intel- assist cooperative boards of directors lectual capital about cooperative and management in strategic planning, methods of operation, practices and cooperatives and identification of best practices, and principles is one of the missions of shed light on issues inherent in the USDA’s Cooperative Services pro- increasingly complex organizations gram, first authorized in the Cooper- understanding required for responding to global com- ative Marketing Act of 1926. At a petition. They can also assist producers time of increasing concentration in the causes of and other rural residents with food manufacturing and distribution, economies in transition from central- cooperative approaches to marketing ized government to more democrati- are being looked to increasingly by cooperative cally run and market-oriented ones. Congress as a means for farmers and The opportunity for application of other rural residents to access markets the cooperative idea and its use has and to gain a modicum of control in failures. never been greater. It is through the market chain, rather than being research and education that the coop- subservient to outside interests. It is erative idea expands and is nurtured. ironic that – at a time of renewed finance can affect member control interest in value-added marketing and and influence in their cooperatively Randall Torgerson, Deputy Administrator improved rules for negotiated pricing owned businesses. Seldom do long- USDA Rural Business-Cooperative Service over contract terms – research sup- term consequences of deviations from port for work on these important conventional cooperative practices areas is lacking. merit the in-depth assessment Such research is important for required to determine if they alter the 2 March/April 2001 / Rural Cooperatives Rural March/AprilCOOPERA 2001 TIVESVolume 68 Number 2 Rural COOPERATIVES (1088-8845) is published bimonthly by Rural Business–Cooperative Service, U.S. Department of Agriculture, 1400 Independence FEATURES Ave. SW, Stop 0705, Washington, DC. 20250-0705. The Secretary of Agriculture has determined that publication of this periodical is necessary in the transaction of public business required by law of 4 On the sea of grass the Department. Periodicals postage paid at Colorado ranchers band together to cut cattle-grazing costs Washington, DC. and additional mailing offices. Copies may be obtained from the Superintendent of By Coleman Cornelius ZDocuments, Government Printing Office, Washington, DC, 20402, at $3.50 domestic, $4.38 for- eign; or by annual subscription at $15.00 domestic, 6 Earnings, sales dip for local cooperatives $18.75 foreign. Postmaster: send address change to: Rural Cooperatives, USDA/RBS, Stop 3255, Wash., By Beverly L. Rotan DC 20250-3255. Mention in Rural COOPERATIVES of company and 8 Minnesota leads nation in co-op business volume brand names does not signify endorsement over other companies’ products and services. By Charles A. Kraenzle Unless otherwise stated, contents of this publication are not copyrighted and may be reprinted freely. For 12 Power in peril noncopyrighted articles, mention of source will be appreciated but is not required. California co-ops struggle to cope with the state’s energy crisis The United States Department of Agriculture (USDA) By Catherine Merlo prohibits discrimination in all its programs and activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual 17 Neighborhoods warm to bargaining power orientation, and marital or family status. (Not all prohibited bases apply to all programs). Persons of co-ops with disabilities who require alternative means for By Tux Turkel communication of program information (braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). 19 Keep the co-op candle burning To file a complaint of discrimination, write USDA, Effective member relations essential to keeping co-op spirit alive Director, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, By James Wadsworth Washington, D.C. 20250-9410, or call (202) 720-5964 (voice or TDD). USDA is an equal opportunity provider and employer. 21 Critical need seen to broaden, invigorate Ann Veneman, Secretary of Agriculture current approach to cooperative research Randall Torgerson, Deputy Administrator, USDA By James Baarda Rural Business-Cooperative Service Dan Campbell, Managing Editor Pamela J. Karg, Field Editor DEPARTMENTS Vision 2000/KOTA, Design 2 COMMENTARY 11 IN THE SPOTLIGHT Have a cooperative-related question? Call (202) 720-6483, or 25 A CLOSER LOOK Fax (202) 720-4641, Information Director, 26 NEWSLINE This publication was printed with vegetable oil-based ink. On the Cover: Alan Pierson contemplates the grim energy picture facing California as he stands outside milk- storage silos at the Land O’ Lakes processing plant in Tulare. The plant has experienced numerous power outages, forcing some United States Department of Agriculture members to divert milk to animal feed. Story on page 12. Photo by Josh Yoshimoto Rural Cooperatives / March/April 2001 3 On the sea of grass Colorado ranchers band together to cut cattle-grazing costs By Coleman Cornelius, Strength in unity Denver Post The Logan County group formed in Northern Colorado Bureau 1965 with a simple idea: by pooling their money, small-scale farmers and Copyright Denver Post; reprinted ranchers could buy more land for cattle by permission grazing than they could afford individ- ually, giving each a firmer financial ogan County, Colo. — foothold. The sprawling prairie The grazing association is the owned by the Chimney largest of its kind in the state and is the L Canyon Grazing Associa- biggest landowner in Logan County, tion harbors all of human according to county assessors. history on the Eastern Plains. The group owns nearly 32,000 This arid landscape — where cattle acres in northwestern Logan County; grazing is managed at a ratio of just one with additional holdings in adjacent animal per 15 acres — has its own deso- Weld County, the ranchers control late beauty, and many of its features about 37,000 acres. The northern have remained unchanged over time. Colorado property amounts to about Atop a sweeping mesa, there are tepee 58 square miles. rings left from Plains Indian ceremonies. “In order for the small farmer to com- From here, native people could see for- pete, he had to get organized with other bidding canyons coursing through dis- small farmers. That way we could buy tant chalk cliffs, the canyons for which land, because large-unit costs were a lot the grazing association is named. less,” said Joe Cucarola, 80, the group’s A stone-buttressed dugout, not founder and an ongoing member. much bigger than desktop, hints at the The association has allowed the hardships of an early homesteader who small farmer to be more diversified, sought meager shelter on the land and through diversification, they were where he staked claim. able to stay in business, said Cucarola, A collection of immaculately pre- who lives near Sterling. served stone buildings and barns is all The idea of a grazing cooperative that’s left of a ranch once controlled by retains its appeal for many strug- John W. Iliff, one of Colorado’s leg- gling in an agricultural economy endary cattle kings in the late 1800s, that is almost perpetually in the pits. whose family later founded the Iliff In this economy — where produc- School of Theology in Denver. tion costs routinely outstrip com- In the Iliff tradition, the Chimney modity prices — the Chimney Canyon Grazing Associations’ 35 Canyon Grazing Association has members — 31 men and four women afforded its members a measure of — make a living raising crops and cat- financial stability, and has even for 100 cows today? It’s almost tle. They banded together to improve helped some to dramatically expand unheard of,” said Jerry Meisner, the their chances of success in a harsh their operations, members say. group’s secretary-treasurer. “I don’t landscape, in a harsh economic climate. “How would you go buy acreage think a grazing association can be beat 4 March/April 2001 / Rural Cooperatives for a smaller operator.” their private land.