Rural COOPERATIVESUSDA / Rural Development May/June 2001 ALL BOGGED DOWN: Cranberry industry struggles to find balance COMMENTARY New USDA program supports growth of value-added ventures There is always great interest around the mium Beef, he said the co-op probably country when a new federal, state or local would have collapsed during the rough grant program is announced. The Agri- first year of operation. These are words cultural Risk Protection Act of 2000, that should be heeded carefully by any- signed into law in June 2000, includes a one starting a cooperative. section that provides $20 million in fed- Other presentations were made at eral grants during 2001 for market devel- the Outlook Conference by Minnesota opment of value-added agricultural prod- pork producer Jim Lewis, representing ucts. The program was announced in the Pork America, Wyoming sheep grower Federal Register on March 6. Pat O’Toole, and Iowa Turkey Grow- Rural Development’s Rural Busi- ers Cooperative CEO Ken Rutledge. ness-Cooperative Service (RBS) was Their comments yielded valuable given responsibility for administering insights regarding how to launch a new the program. By the April 25 deadline cooperative. Similar investments are for the first round of $10 million in Randall Torgerson sorts through some of the being made in the aquaculture, crop grants, the agency had received 211 211 applications for valued-added market and forestry sectors. applications requesting a total of more development grants received by USDA Rural Why are these well-planned efforts than $56 million. This is an indication Development. USDA PHOTO BY KEN HAMMOND meeting with success? Lee Egerstrom, of the soaring interest among producer Knight-Ridder business/farm reporter groups in value-added businesses. believing that grants are a substitute for and contributor to the book “A Cooper- Grants of up to $500,000 can be producers putting their own capital at ative Approach to Local Economic used for defraying costs of feasibility risk. They have sought grant after grant, Development,” says value-added, new- studies for value- added projects, for and when the source of grant funds generation cooperatives will spread developing business plans and for ini- dried up, the cooperatives collapsed. because farmers can invest in them at a tial working capital. They cannot be View a grant as an early boost, not fraction of the cost of spreading hori- used for “bricks and mortar,” nor for a crutch. zontally by buying out neighbors’ farms. engineering studies. A dollar-for-dollar USDA’s Agricultural Outlook Furthermore, this expansion vertically match is required. Applications are Forum 2001, held in February, featured in the market buys farmers a measure of reviewed and scored competitively. a session on new value-added coopera- risk-management protection. Investing Applications for the second round of tive development in the livestock and horizontally in more land does not $10 million in grants are due on June poultry industries. An article highlight- reduce a producer’s risk exposure. 27 (for more information, e-mail: ing presentations at that session is These reasons, along with the fact [email protected]). found on page 14 of this issue. Steve that farmers retain their independence Lessons learned from previous expe- Hunt, CEO of U.S. Premium Beef, and have more control over their eco- rience gained by USDA/RBS co-op discusses the achievements of this new nomic destiny through cooperative own- technical assistance staff suggest that cooperative and credits much of its ership, suggest that these new value- producer groups should judiciously use success to members’ willingness to step added efforts are assured of a future that grant money. Over-reliance on grants up to the plate with up-front equity will continue to merit the support of the has been fatal for a number of new investments in their cooperative. In public and Congress. cooperatives. They are not a be-all and Hunt’s words, “true commitment to a end-all to the cooperative development cooperative only comes about through Randall Torgerson, Deputy Administrator process. In the past, some producer ownership.” Had members not made a USDA Rural Business-Cooperative groups have fallen into the trap of major financial investment in U.S. Pre- Service 2 May/June 2001 / Rural Cooperatives Rural May/JuneCOOPERATIVES 2001 Volume 68 Number 3 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 All ag, all the time the Department. Periodicals postage paid at Farmer-owned radio station has served rural Nebraska Washington, DC. and additional mailing offices. Copies may be obtained from the Superintendent of for 50 years ZDocuments, Government Printing Office, By Paul Hammel Washington, DC, 20402, at $3.50 domestic, $4.38 for- eign; or by annual subscription at $15.00 domestic, $18.75 foreign. Postmaster: send address change to: Rural Cooperatives, USDA/RBS, Stop 3255, Wash., DC 20250-3255. 6 All bogged down Mention in Rural COOPERATIVES of company and Record cranberry crops, soft markets force industry to eye brand names does not signify endorsement over other companies’ products and services. marketing order Unless otherwise stated, contents of this publication By Pamela J. Karg are not copyrighted and may be reprinted freely. For noncopyrighted articles, mention of source will be appreciated but is not required. The United States Department of Agriculture (USDA) 11 Local co-ops embrace high-tech agronomy systems prohibits discrimination in all its programs and By E. Eldon Eversull activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means for communication of program information (braille, large 14 Hang on to the ranch print, audiotape, etc.) should contact USDA’s TARGET Young livestock and poultry co-ops share goal to strengthen Center at (202) 720-2600 (voice and TDD). producers’ role in marketplace. To file a complaint of discrimination, write USDA, By Dan Campbell Director, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, Washington, D.C. 20250-9410, or call (202) 720-5964 (voice or TDD). USDA is an equal opportunity provider and employer. 23 Local cooperatives’ role in identity-preserved Ann Veneman, Secretary of Agriculture grain industry Randall Torgerson, Deputy Administrator, USDA By Julie A. Hogeland Rural Business-Cooperative Service Dan Campbell, Managing Editor Vision 2000/KOTA, Design DEPARTMENTS Have a cooperative-related question? 2 COMMENTARY Call (202) 720-6483, or 21 MANAGEMENT TIP Fax (202) 720-4641, Information Director, 25 NEWSLINE This publication was printed with vegetable oil-based ink. On the Cover: The surging size of the U.S. cranberry crop has caused prices to plummet. Growers hope new product development and a new marketing order will bring the industry back into balance. Here the crop is harvested in Washington. See article on page 6. USDA PHOTO United States Department of Agriculture Rural Cooperatives / May/June 2001 3 All ag, all the time Farmer-owned radio station has served rural Nebraska for 50 years By Paul Hammel, KRVN—it would take away time for was worth a lot,” said Gov. Mike World-Herald Staff Writer constant news about pork bellies and Johanns during a special broadcast on Copyright Omaha World Herald; corn futures, black baldie calves and Feb. 1 to celebrate the station’s 50th reprinted by permission farm legislation. anniversary. “It’s all ag, all the time,” said Pro- KRVN has been able to stick to its exington, Neb.—Folks gram Manager Craig Larson. “We mission of serving farmers and ranch- said it would be a cold joke that some stations have a ‘song of ers because of its unique ownership and day when a bunch of the day.’ Well, we really have a song of mission, said Eric Brown, the station’s L farmers started a radio the day.” general manager since 1979 and Max station. Built with donations of as little as Brown’s son. They were right: It was about 20 $10—each solicited over kitchen tables “We’re not like other commercial degrees below zero on the frigid Feb- across Nebraska—KRVN stands as the stations. I don’t have to have a 30 per- ruary day in 1951 when the “Rural nation’s only farmer- and rancher- cent return on investment in this quar- Voice of Nebraska”—KRVN—crackled owned radio station. ter,” Eric Brown said. “We say that to life. With its sister stations, KNEB in people get their dividends when they “People didn’t think we’d last a Scottsbluff and KTIC in West Point, turn on the radio.” year,” said Max Brown, the station’s KRVN is the only Nebraska station The station was born of necessity. first general manager. with a statewide reach during daytime Farmers and ranchers felt they weren’t Now, 50 years later, that unique hours. At night, KRVN’s signal is getting enough news about the live- farmer/rancher ownership has built a pointed west. The signal regularly stock and grain prices to make smart station with an unmatched focus on the reaches former Nebraskans eating decisions on where to sell. business of agriculture and one that has breakfast in California and Arizona. There were no statewide weather avoided the topsy-turvy trends and KRVN listeners can recite the date forecasts 50 years ago, leaving folks whims of commercial radio. and circumstances when their initials vulnerable to bad weather.