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COOPERATIVES
USDA / Rural Development
September / October 2012
Gearing Up
the Co-op Economy
RECORD SALES YEAR
FOR CO-OPS / page 4
TOP 100 AG CO-OPS
FOR 2011 / page 8
CO-OP MONTH SPECIAL
SECTION / page 20
Commentary
October is National Cooperative Month. In support of the occasion, Agriculture
Secretary Tom Vilsack has signed this proclamation, which is on display at a
number of locations around USDA's headquarters in Washington, D.C.
2 September/October 2012 / Rural Cooperatives
Features
Volume 79, Number 5
September/October 2012
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p. 4
04
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p. 40
Farm co-ops set sales, income records
Number of full-time jobs up 1,800
08
Top 100 ag co-ops eclipse previous sales record by $18 billion
By Sarah Ali and David Chesnick
Mention in Rural Cooperatives of
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Unless otherwise stated, articles in this
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employees.
p. 18
20
Gearing Up the Co-op Economy
CO-OP MONTH SPECIAL SECTION
37
Use of joint ventures by ag co-ops on rise
By Bruce J. Reynolds
40
‘The pillar of my home’
Coffee co-ops brew better quality of life for Ethiopian farm families
By Anja Tranovich
Departments
Tom Vilsack, Secretary of Agriculture
Dallas Tonsager, Under Secretary,
USDA Rural Development
Dan Campbell, Editor
Stephen Hall / KOTA, Design
Have a cooperative-related question?
Call (202) 720-6483, or email:
coopinfo@wdc.usda.gov
This publication was printed with vegetable oil-based ink.
02
18
44
COMMENTARY
MANAGEMENT TIP
NEWSLINE
ON THE COVER: The nation’s nearly 2,300 agricultural cooperatives
set new records for both sales and income in 2011, besting the previous
sales record by more than $10 billion. Also in this issue is our annual
look at the nation’s 100 largest ag co-ops, which also set records, thanks
in large part to higher commodity prices in most sectors. See pages 4
and 8.
Rural Cooperatives / September/October 2012 3
Farm co-ops set sales, income records
Number of full-time jobs up 1,800
4 September/October 2012 / Rural Cooperatives
Editor’s note: Information for this
article was compiled by the Cooperative
Programs statistics staff of USDA Rural
Development: Sarah Ali, Jacqueline E.
Penn and E. Eldon Eversull.
rancher and
F armer,
fishery cooperatives
posted record sales
and income in 2011,
surpassing the
previous record sales of 2008 by $10
billion while besting the old income
record by $500 million. Employment
levels remained strong, with
cooperatives employing 184,000 fulltime, part-time and seasonal
workers, up slightly from 2010.
The year saw double-digit increases
in prices for dairy products, cotton,
livestock and grains and oilseeds.
Farm production expenses also had
double-digit increases in 2011, with
feed, fertilizer and fuel prices leading
the upward trend. The 2,285
surveyed cooperatives had sales of
$213 billion, exceeding 2010 sales by
more than $40 billion (table 1).
“These new cooperative sales and
income records for 2011 underscore
the strength and productivity of the
nation’s farmer- and rancher-owned
cooperatives and the vital role they
play in the nation’s economy,” says
Dallas Tonsager, under secretary for
USDA Rural Development. “Prices
are expected to remain strong in
2012, but production may be
dampened, with almost two-thirds of
the contiguous U.S. experiencing
drought.”
Grain and oilseed sales by
cooperatives climbed by almost $14
billion, while dairy product
marketings increased $8 billion
(table 2). Cotton sales increased
more than $1.5 billion while
livestock and sugar sales both gained
over $600 million. Sales of farm
supplies increased by $10 billion,
Table 1
U.S. cooperatives, comparison of 2011 and 2010
Item
2011
2010
Number
Sales (Gross, Billion $)
Marketing
Supplies
Service
Total
Change
Percent
128.0
80.9
4.5
213.4
103.0
63.8
4.9
171.8
24.27
26.72
-9.69
24.21
78.5
50.6
27.9
78.5
65.0
39.2
25.9
65.0
20.68
29.11
7.90
20.68
Income Statement (Billion $)
Sales (Gross)
Patronage income
Net income before taxes
213.4
0.6
5.4
171.8
0.7
4.3
24.21
-11.42
25.53
Employees (Thousand)
Full-time
Part-time, seasonal
Total
130.9
52.8
183.6
129.0
54.4
183.4
1.43
-2.95
0.13
Membership (Million)
2.3
2.2
1.83
Balance sheet (Billion $)
Assets
Liabilities
Equity
Liabilities and net worth
Cooperatives (Number)
2,285
2,314
-1.25
Rural Cooperatives / September/October 2012 5
Figure 1 — Cooperatives’ Gross and Net Business Volumes, 1979 –2011
Billion dollars
225
Gross1
200
Net2
175
150
125
100
75
50
25
0
1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
1
Includes inter -cooperative business.
2
Excludes inter -cooperative business.
Photo courtesy AGP Inc.
6 September/October 2012 / Rural Cooperatives
primarily due to increasing energy
prices. Farm supply co-ops recorded
gains of more than $3 billion for
petroleum products, while sales were
up by $1 billion for fertilizer, feed
and crop protectants.
Net income before taxes for
agricultural co-ops was a record $5.4
billion, eclipsing the previous high of
$4.9 billion, set in 2008. Net income
was up more than 25 percent, or $1
billion, from 2010.
Marketing of food, fiber,
renewable fuels and farm supplies by
cooperatives experienced 24-percent
increases over the previous year
(table 1), according to the annual
survey conducted by the Cooperative
Programs office of USDA Rural
Development. Gross business
volume of $213 billion was the
largest ever, as was net income
Figure 2 — Cooperatives’ Assets, Liabilities, and Net Worth, 2002 – 2011
Billion dollars
80
Assets
70
60
Liabilities
50
40
30
Net worth
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Table 2
U.S. cooperatives net business volume, 2011 and 2010
Item
2011
2010
$ billions
Products marketed:
Bean and pea (dry edible)
Cotton
Dairy
Fish
Fruit and vegetable
Grain and oilseed
Livestock
Nut
Poultry
Rice
Sugar
Tobacco
Wool and mohair
Other marketing
Total marketing
Supplies purchased:
Crop protectants
Feed
Fertilizer
Petroleum
Seed
Other supplies
Total supplies
Services and other income
Total business
Change
Percent
0.151
3.971
39.140
0.251
5.562
53.923
4.231
0.907
1.302
1.536
4.737
0.251
0.005
5.817
121.784
0.160
2.294
31.126
0.225
5.451
40.489
3.539
0.905
1.179
1.518
4.101
0.243
0.005
4.522
95.756
-5.9
73.1
25.7
11.6
2.0
33.2
19.6
0.2
10.4
1.2
15.5
3.4
3.2
28.6
27.2
6.494
10.531
11.681
20.092
2.831
5.692
57.322
5.641
8.599
9.371
16.468
2.626
4.413
47.118
15.1
22.5
24.7
22.0
7.8
29.0
21.7
4.453
4.930
-9.7
183.559
147.805
24.2
before taxes (figure 1).
The value of cooperative
assets in 2011 grew by about $13
billion, with liabilities increasing
by $11 billion and owner equity
gaining $2 billion. Equity capital
remains low but is clearly
showing an upward trend, with
an 8-percent increase over the
previous year (figure 2).
Patronage income (refunds
from other cooperatives due to
sales between cooperatives) fell
by more than 11 percent, to
$613 million, down from $674
million in 2010.
Farmer, rancher and fishery
cooperatives remain one of the
largest employers in many rural
communities and also provide
jobs in many cities. The total
farm co-op workforce of 184,000
was up slightly from 2010.
While full-time jobs at co-ops
increased by 1,800, the number
of part-time and seasonal
employees declined by 1,600.
There was a continued
downward trend in farm
numbers, with USDA counting
2.2 million farms in 2011, down
about 10,000 from 2010. The
number of farmer cooperatives
continues to decline; there are
now 2,285 farmer, rancher and
fishery cooperatives, down from
2,314 in 2010. Mergers account
for most of the drop, resulting in
larger cooperatives.
Producers held 2.3 million
memberships in cooperatives in
2011, up 2 percent from 2010.
The number of U.S. farms and
cooperative memberships are
now about equal. This does not
mean that every producer is a
member of an agricultural
cooperative. Previous studies
have found that many farmers
and ranchers are members of up
to three cooperatives, so farm
numbers and cooperative
memberships are not strictly
comparable. n
Rural Cooperatives / September/October 2012 7
Top
ag co-ops eclipse previous
sales record by $18 billion
A stainless steel cheese vat is installed at the AMPI dairy plant in Jim Falls, Wis. The co-op’s investment in state-of-the-art cheese technology
has led to the production of more and better cheese from the same volume of milk. Photo courtesy AMPI
8 September/October 2012 / Rural Cooperatives
By Sarah Ali and David Chesnick
Agricultural Economists
Cooperative Programs
USDA Rural Development
he nation's 100 largest
agricultural cooperatives reported record
sales revenue of $148
billion in 2011, an
increase of almost 30 percent over
2010, when revenue totaled $113 billion
(table 1). Net income for the 100 top
co-ops also set a new record in 2011,
reaching $3.17 billion, up from $2.35
billion in 2010. The previous records
were $130 billion for sales and $2.42
billion for income, both marks set in
2008.
All seven function areas showed
higher sales in 2011. Leading the
increase were the mixed grain and farm
supply cooperatives, with total sales
increasing 37 percent. These
cooperatives accounted for nearly onehalf of the total increase in sales. Those
cooperatives selling farm supplies saw
sales of farm supplies increase by $12
billion, or 36 percent.
op — was once again the nation’s
largest ag co-op, with $36.9 billion in
revenue in 2011. It was followed by
Dairy Farmers of America, Kansas City,
Mo., with $12.9 billion in revenue. It
traded places from 2010 with third
ranked Land O’ Lakes Inc., St. Paul,
Minn., a dairy food and farm supply coop, with $12.8 billion in revenue.
Iowa is home to 14 of the top 100 ag
co-ops, the most of any state. It is
followed by Minnesota with 13,
Nebraska with 10, California with 6 and
Wisconsin with 5 top 100 ag co-ops.
The biggest upward jumps on the list
were made by cotton cooperatives, due
primarily to sharply higher cotton
prices in 2011. Carolinas Cotton
Growers Cooperative, Garner, N.C.,
made the largest upward jump, rising
from 129 in 2010 to 71 on the 2011 list.
It was followed by Calcot Ltd.,
Bakersfield, Calif., which climbed from
131 to 85 in 2011.
The next eight biggest gainers on the
list were all grain or mixed (grain and
farm supply) co-ops, again due largely
to high grain prices.
vegetables, cotton, sugar and grain coops — the cost of goods sold usually
represent payments to members for
their product.
Gross margins increased by 18
percent, to $12 billion. However, gross
margin as a percent of total sales
declined from 9 percent in 2010 to 8
percent in 2011.
Service revenues were down 15
percent, to $1.4 billion in 2011, with
grain and mixed grain co-ops
accounting for most of the decline.
Total expenses for the top 100 ag coops increased by 7 percent from 2010 to
2011. The largest cost increase was
labor expense, which increased by
nearly $300 million in 2011, to $5
billion. Dairy and mixed grain/farm
supply cooperatives were the main
cause of this increase.
While cooperatives are considered
“not for profit”, they do generate net
margins and pay taxes. The top 100
cooperatives paid 21 percent higher
taxes in 2011. Farm supply cooperatives
paid almost $100 million more in taxes
in 2011 than 2010, which accounted for
the bulk of the increase.
Cost of goods sold rises
Saint Paul home to
two of top three co-ops
CHS Inc., Saint Paul, Minn. — an
energy, farm supply, grain and food co-
Cost of goods sold was also up 31
percent over 2011, mirroring the
increase in total sales. With marketing
cooperatives — such as dairy, fruit and
Figure 1—Total Business Volume, Top 100 Ag Co-ops
Net margins climb $800 million
Net margins increased by more than
$800 million in 2011. Most of the
increase came within the mixed
Figure 2—Net Income, Top 100 Ag Co-ops
($ billions)
3.5
3.3
3.1
2.9
2.7
2.5
2.3
2.1
1.9
1.7
1.5
($ billions)
160
140
120
100
80
2006
2007
2008
2009
2010
2011
2006
2007
2008
2009
2010
2011
Rural Cooperatives / September/October 2012 9
Figure 3—Sales Revenue of Cooperatives by Function, 2011
Dairy
23%
Supply
16%
Fruit & Vegetable
4%
Grain
5%
Sugar 3%
Other 6%
Mixed (Grain & Supply)
43%
Figure 4—Assets of Cooperatives by Function, 2011
Dairy
15%
Supply
16%
Fruit & Vegetable
6%
Grain
6.0%
Sugar
5%
Other
5%
grain/farm supply and farm supply cooperatives. Dairy and
fruit and vegetable cooperatives had lower net margins
compared to 2010. However, both groups still returned solid
net margins in 2011 ($339 million and $467 million,
respectively).
The asset base for the top 100 grew by $9.6 billion
between 2010 and 2011. Seventy-seven percent of the
increase was due to mixed grain/farm supply and farm
supply cooperatives. Total assets in 2011 were $49.5 billion
(table 2).
Current assets accounted for nearly 90 percent of that
increase; the largest 100 cooperatives ended 2011 with $32.6
billion in current assets. Mixed grain and farm supply
cooperatives, which include some of the largest farmer
cooperatives, accounted for 50 percent of total amount of
current assets.
Fixed assets also showed an increase of $934 million,
pushing the total for the top 100 co-ops to $10.7 billion.
Current liabilities increased by more than $6.4 billion for
the largest 100 ag co-ops. At the end of 2011, total current
liabilities for the largest 100 ag co-ops were $23.6 billion.
Total liabilities increased by $9.6 billion, ending the year at
$33.7 billion.
Equity allocated to members jumped 2 percent in 2011,
to $11 billion. Retained earnings also showed a substantial
increase of 29 percent, ending the year at $4.7 billion. Based
on the combined balance sheet, it would appear that
throughout the recession, cooperatives have relied more
heavily on member financing than borrowed funds.
However, looking at the average performance ratios shows a
different result.
Table 3 illustrates the performance measures for the
largest 100 ag co-ops. These ratios are the average values
for all 100 co-ops. This provides a more accurate reflection
of the performance for all the co-ops and is not influenced
by the largest of the group. For example, the largest five coops represent 50 percent of total business volume.
Therefore, they will have more influence on the combined
values in table 1 and 2.
Debt-to-asset ratio rises
Mixed (Grain & Supply)
47%
10 September/October 2012 / Rural Cooperatives
The debt-to-asset ratio illustrates what percentage of the
businesses assets are financed by debt. In 2011, the ratio
rose from 0.63 to 0.67. This shows that, on average, the
largest ag co-ops are financing their assets with higher
amounts of debt. Only the fruit/vegetable co-op sector had
lower overall debt financing.
The current ratio provides a comparison of how a
business’ most liquid assets can cover its current liabilities.
Between 2010 and 2011, the current ratio fell from 1.46 to
1.41. This would indicate that a majority of the co-ops were
less liquid in 2011 than in 2010. The dairy and
fruit/vegetable co-ops were the only sectors to have, on
average, a higher current ratio in 2011.
Long-term debt and equity are generally used to finance
a business’ long-term assets. The longterm debt-to-equity ratio focuses on
this long-term financing. The ratio
jumped from 0.66 in 2010 to 0.73 in
2011. The higher long-term debt
financing was caused mostly by the
dairy, mixed grain/farm supply and
sugar co-op sectors.
More reliance on debt
Overall, the top 100 ag co-ops used
more debt in 2011. Some sectors —
such as grain, farm supply and the
“other” sector co-ops — used relatively
more short-term debt to finance
operations while dairy, mixed and sugar
co-ops relied more on long-term debt
for financing. Fruit/vegetable co-ops
were the only sector to lower the
amount of debt used.
The times-interest-earned ratio
shows how much a business can cover
its interest expense on a pre-tax basis.
The higher the ratio the better, as a
low value could indicate trouble paying
obligations. In 2011, the average value
dropped from 17.4 times to 13.1 times.
However, revenue before interest and
taxes of 13.1 times more than interest
expense is considered a strong position.
All co-op sectors averaged interest
coverage of over five times.
Efficiency ratios examine how well a
business uses its assets in its operations.
For example, fixed asset turnover
measures the ability to generate sales
from a business’ fixed assets. While
there is no standard ratio to compare,
looking at the change over time helps.
This ratio increased from 31.7 to 36.9.
As a general rule, those co-ops with
high amounts of fixed capital, such as
processing co-ops, will have a lower
fixed-asset-turnover ratio than some of
those that provide mostly marketing
services.
Profitability ratios
less key for co-ops
Profitability ratios are important for
any business, as an unprofitable
business will obviously soon be out of
business. However, co-ops are in a
unique position in that they try to
operate as close to cost as possible. For
Table 1
Top 100 Ag Co-ops, Combined Operating Statement
Item
Total sales
Cost of goods sold
Gross margins
2011
2010
Difference
............... $ billions .........................
Change
Percent
147.59
135.57
12.03
113.60
103.39
10.20
34.00
32.17
1.82
29.9%
31.1%
17.9%
Service revenue
1.42
1.68
-0.26
-15.4%
Wages
Depreciation
Interest expense
Other expenses
Total expenses
5.05
1.22
0.58
3.64
10.50
4.75
1.15
0.48
3.42
9.81
0.30
0.08
0.10
0.22
0.69
6.2%
6.7%
20.2%
6.4%
7.0%
2.95
0.18
2.08
0.19
0.87
-0.01
42.1%
-7.2%
0.23
3.36
0.19
3.17
0.24
2.51
0.16
2.35
-0.01
0.85
0.03
0.82
-3.1%
33.9%
20.9%
34.8%
Net operating margins
Patronage refunds received
Non-operating
revenue/expenses
Net margins before taxes
Taxes
Net margins
Table 2
Top 100 Ag Co-ops, Combined Balance Sheet
Item
2011
2010
Difference
............... $ billions .........................
Change
Percent
Current assets
32.56
23.84
8.72
36.6%
Investment in other co-ops
Plant, property &equipment
Other assets
Total assets
1.55
10.69
4.67
49.47
1.46
9.76
4.83
39.89
0.09
0.93
-0.16
9.59
6.3%
9.6%
-3.3%
24.0%
Current liabilites
Long-term liabilities
Total liabilities
23.65
10.02
33.67
17.20
8.19
25.39
6.45
1.83
8.28
37.5%
22.4%
32.6%
Allocated equity
Retained earnings
Total equity
11.06
4.74
15.80
10.83
3.66
14.49
0.23
1.08
1.31
2.1%
29.4%
9.0%
Total liabilities and equity
49.47
39.89
9.59
24.0%
Rural Cooperatives / September/October 2012 11
Figure 5—Distribution of Cooperatives by Function, 2011
Supply
10%
Other
10%
Fruit & Vegetable
10%
Mixed
29%
Sugar
7%
Dairy
22%
Grain
14%
Table 3
Combined Average Ratios, Top 100 Ag Co-ps
Item
2011
2010
Current ratio
Debt to assets
Long-term debt-to-equity
Times interest earned
Fixed asset turnover
Gross profit margin
Net operating margin
Return on total assets
Return on member equity
1.41
0.67
0.73
13.08
36.88
0.10
0.02
0.08
0.17
1.46
0.63
0.66
16.99
31.65
0.11
0.02
0.08
0.19
example, gross margins will tend to be
lower than for a non-cooperative business
in the same field.
Between 2010 and 2011, the gross profit
margin decreased slightly, from 11 to 10
percent. Net operating margins held steady
at 2 percent during the two years. There
was not much change between the co-op
sectors for either of these two ratios.
Return on total assets measures business
earnings before interest and taxes against
its total net assets. The average return on
total assets for the top 100 ag co-ops also
remain steady at 8 percent. Farm supply
co-ops had the highest returns at 12
percent while dairy co-ops had the lowest
at 6 percent. All the other co-op sectors
were around 7 percent in 2011.
Return on members’ equity measures
net earnings after taxes against total equity.
This examines the returns to members. In
2011, the return on members’ equity was
17 percent. This is down slightly from
2010 when it was at 19 percent.
About the tables and figures
In table 5, the rank, name, revenue and
assets are given for the nation’s 100 largest
agricultural cooperatives. Information for
the largest cooperatives has been
segmented into seven function areas as
defined in table 4. The functional areas
(and the number of cooperatives in each
continued on page 50
Table 4
Criteria used for sorting co-ops by segment
Type of cooperative
Cooperative defined
Supply
Derive at least 75% of their total revenue from farm supply sales.
Mixed
Derive between 25% and 75% of total revenue from farm supply sales; remainder from marketing.
Grain
Derive at least 75% of total revenue from grain marketing.
Dairy
Market members’ raw milk; some also manufacture products such as cheese and ice cream.
Sugar
Refine sugar beets and cane into sugar; market sugar and related by-products.
Fruit and Vegetable
Other
Generally further process and market fruits or vegetables, rather than marketing raw products.
Includes co-ops that market livestock, rice, cotton and nuts.
12 September/October 2012 / Rural Cooperatives
Table 5—Top 100 Largest Agriculture Cooperatives
Note: Names withheld by request for the cooperatives ranked: 7, 40 and 78.
2011 2010
RANK RANK
NAME
TYPE
2011
REVENUE
2010
REVENUE
2011
ASSETS
2010
ASSETS
$ million
1
1
CHS Inc.,
Saint Paul, Minn.
Mixed (Energy,
Supply, Food, Grain)
36,936
25,315
12,217
8,666
2
3
Dairy Farmers of America,
Kansas City, Mo.
Dairy
12,924
9,872
2,295
2,165
3
2
Land O'Lakes, Inc.,
Saint Paul, Minn.
Mixed (Supply,
Dairy, Food)
12,849
11,146
5,438
4,885
4
4
GROWMARK Inc.,
Bloomington, Ill.
Supply
8,742
6,154
2,631
1,876
5
5
Ag Processing Inc.,
Omaha, Neb.
Supply
4,372
3,302
1,332
1,187
6
6
California Dairies Inc.,
Artesia, Calif.
Dairy
3,657
2,963
809
676
United Sugars Corp.,
Bloomington, Minn.
Sugar
2,173
1,700
190
131
Northwest Dairy Association,
Seattle, Wash.
Dairy
2,071
1,650
579
496
Associated Milk Producers Inc.,
New Ulm, Minn.
Dairy
1,979
1,709
324
288
7
Name withheld by request.
8
8
9
10
10
7
11
13
United Suppliers Inc.,
Eldora, Iowa
Supply
1,949
1,387
887
662
12
25
Plains Cotton Cooperative Assoc.,
Lubbock, Texas
Other (Cotton)
1,843
1,008
265
187
13
14
Foremost Farms USA Cooperative,
Baraboo, Wis.
Dairy
1,666
1,374
466
398
14
11
Ocean Spray Cranberries Inc.,
Lakeville-Midddleboro, Mass.
Fruit & Vegetable
1,620
1,582
1,226
1,201
15
12
Prairie Farms Dairy Inc.,
Carlinville, Ill.
Dairy
1,612
1,518
715
684
16
20
Dairylea Cooperative Inc.,
Syracuse, N.Y.
Dairy
1,588
1,335
186
181
17
19
Countrymark Cooperative Holding
Corp., Indianapolis, Ind.
Supply
1,566
1,123
545
417
18
17
American Crystal Sugar Company,
Moorhead, Minn.
Sugar
1,544
1,197
878
788
19
16
United Producers Inc.,
Columbus, Ohio
Other (Livestock)
1,473
1,204
40
38
20
23
South Dakota Wheat Growers
Association, Aberdeen, S.D.
Mixed (Grain,
Supply)
1,376
1,047
584
473
Rural Cooperatives / September/October 2012 13
Table 5—Top 100 Largest Agriculture Cooperatives
2011 2010
RANK RANK
NAME
TYPE
2011
REVENUE
2010
REVENUE
2011
ASSETS
2010
ASSETS
$ million
21
21
MFA Incorporated,
Columbia, Mo.
Supply
1,366
1,051
408
358
22
15
Maryland & Virginia Milk Producers
Co-op Assoc., Reston, Va.
Dairy
1,356
1,221
159
158
23
22
MFA Oil Company,
Columbia, Mo.
Supply
1,307
1,047
381
338
24
27
Farmers Cooperative Co.,
Ames, Iowa
Mixed (Grain,
Supply)
1,243
842
546
330
25
26
Producers Livestock Marketing
Assoc. Omaha, Neb.
Other (Livestock)
1,153
908
115
122
26
18
Riceland Foods Inc.,
Stuttgart, Ark.
Other (Rice)
1,109
1,127
574
480
27
32
Co-Alliance, LLP,
Avon, Ind.
Supply
1,042
767
382
255
28
44
Innovative Ag Services Co.,
Monticello, Iowa
Grain
1,028
610
250
117
29
24
Sunkist Growers Inc.,
Sherman Oaks, Calif.
Fruit & Vegetable
1,019
1,013
183
190
30
38
Staple Cotton Cooperative Assoc.,
Greenwood, Miss.
Other (Cotton)
963
658
354
278
31
34
Heartland Co-op,
W. Des Moines, Iowa
Grain
962
710
483
199
32
30
Agri-Mark Inc.,
Methuen, Mass.
Dairy
899
782
316
268
33
43
Aurora Cooperative Elevator Co.,
Aurora, Neb.
Mixed (Grain,
Supply)
892
614
427
325
34
33
Select Milk Producers Inc.,
Artesia, N.M.
Dairy
888
727
107
91
35
36
Lone Star Milk Producers,
Windthorst, Texas
Dairy
879
688
97
64
36
28
Snake River Sugar Co.,
Boise, Idaho
Sugar
876
827
699
673
37
35
Michigan Milk Producers Assoc.,
Novi, Mich.
Dairy
871
699
167
161
38
42
United Dairymen of Arizona,
Tempe, Ariz.
Dairy
830
615
131
110
39
31
Blue Diamond Growers,
Sacramento, Calif.
Other (Nut)
825
775
297
276
40
Name withheld by request.
14 September/October 2012 / Rural Cooperatives
Table 5—Top 100 Largest Agriculture Cooperatives
2011 2010
RANK RANK
NAME
TYPE
2011
REVENUE
2010
REVENUE
2011
ASSETS
2010
ASSETS
$ million
41
46
Tennessee Farmers Cooperative,
La Vergne, Tenn.
Supply
726
581
278
211
42
41
Upstate Niagara Cooperative Inc.,
Buffalo, N.Y.
Dairy
722
619
217
203
43
40
Cooperative Regions of Organic
Producer Pools (CROPP), La Farge, Wis.
Dairy
716
620
180
160
44
45
Farmers Cooperative,
Dorchester, Neb.
Mixed (Grain,
Supply)
716
602
265
192
45
51
Trupointe Cooperative,
Piqua, Ohio
Mixed (Grain,
Supply)
713
512
229
168
46
39
Cooperative Producers Inc.,
Hastings, Neb.
Grain
695
639
361
241
47
53
Central Valley Ag Cooperative,
O’Neil, Neb.
Mixed (Supply,
Grain)
672
506
251
167
48
11
National Grape Co-operative Assoc.
Inc., Westfield, N.Y.
Fruit & Vegetable
640
660
362
364
49
54
NEW Cooperative Inc.,
Fort Dodge, Iowa
Grain
637
498
257
173
50
57
United Farmers Cooperative,
York, Neb.
Grain
633
450
213
156
51
47
Citrus World Inc. (Florida Natural
Growers), Lake Wales, Fla.
Fruit & Vegetable
615
577
313
296
52
52
Equity Cooperative Livestock Sales
Assoc., Baraboo, Wis.
Other (Livestock)
591
510
33
29
53
59
Heritage Cooperative, Inc.,
W. Mansfield, Ohio
Grain
583
443
170
114
54
59
Sunrise Cooperative Inc.,
Fremont, Ohio
Mixed (Grain,
Supply)
577
432
224
151
55
55
NFO Inc.,
Ames, Iowa
Dairy
568
492
35
32
56
68
Watonwan Farm Service Co.,
Truman, Minn.
Mixed (Grain,
Supply)
555
388
195
92
57
58
Michigan Sugar Co.,
Bay City, Mich.
Sugar
549
448
256
255
58
60
North Central Farmers Elevator,
Ipswich, S. D.
Mixed (Grain,
Supply)
529
442
201
137
59
56
Producers Rice Mill Inc.,
Stuttgart, Ark.
Other (Rice)
528
479
206
172
60
76
United Cooperative,
Beaver Dam, Wis.
Supply
525
326
365
332
Rural Cooperatives / September/October 2012 15
Table 5—Top 100 Largest Agriculture Cooperatives
2011 2010
RANK RANK
NAME
TYPE
2011
REVENUE
2010
REVENUE
2011
ASSETS
2010
REVENUE
$ million
61
61
Southern Minnesota Beet Sugar
Cooperative, Renville, Minn.
Sugar
510
440
360
319
62
50
Pacific Coast Producers,
Lodi, Calif.
Fruit & Vegetable
502
516
304
301
63
85
Landmark Services Cooperative,
Cottage Grove,Wis.
Mixed (Supply,
Grain)
500
295
166
155
64
63
Tillamook County Creamery
Association, Tillamook, Ore.
Dairy
479
426
295
264
65
67
First District Assoc.,
Litchfield, Minn.
Dairy
477
391
95
87
66
73
Key Cooperative,
Roland, Iowa
Mixed (Supply,
Grain)
474
350
116
110
67
48
Farmers Grain Terminal Inc.,
Greenville, Miss.
Grain
473
306
174
116
68
65
Alabama Farmers Cooperative Inc.,
Decatur, Ala.
Grain
463
415
232
198
69
49
West Central Cooperative,
Ralston, Iowa
Mixed (Grain,
Supply)
445
520
381
250
70
83
Premier Cooperative Inc.,
Champaign, Ill.
Grain
444
308
153
99
71
129
Carolinas Cotton Growers
Cooperative Inc., Garner, N.C.
Other (Cotton)
435
210
181
123
72
64
Frenchman Valley Farmers
Cooperative Inc., Imperial, Neb.
Mixed (Supply,
Grain)
432
419
287
153
73
77
Western Consolidated Cooperatives,
Holloway, Minn.
Mixed (Grain,
Supply)
431
343
199
201
74
75
River Valley Cooperative,
Davenport, Iowa
Mixed (Grain,
Supply)
424
346
155
84
75
102
Alliance Grain Co.
Gibson City, Ill.
Grain
405
274
112
60
76
92
Western Sugar Cooperative,
Denver, Colo.
Sugar
401
383
230
197
77
74
Swiss Valley Farms Cooperative,
Davenport, Iowa
Dairy
397
347
119
115
Name withheld by request.
78
79
105
Farmers Cooperative Society, Sioux
Center, Iowa
Mixed (Grain,
Supply)
394
167
182
127
80
104
Five Star Cooperative,
New Hampton, Iowa
Mixed (Grain,
Supply)
391
271
153
57
16 September/October 2012 / Rural Cooperatives
Table 5—Top 100 Largest Agriculture Cooperatives
2011 2010
RANK RANK
NAME
TYPE
2011
REVENUE
2010
REVENUE
2011
ASSETS
2010
ASSETS
$ million
81
86
Frontier Cooperative Inc.,
Brainard, Neb.
Mixed (Grain,
Supply)
389
294
167
121
82
106
New Vision Cooperative,
Brewster, Minn.
Mixed (Grain,
Supply)
387
266
125
89
83
78
Harvest Land Co-op,
Richmond, Ind.
Mixed (Supply,
Grain)
387
342
163
134
84
114
Horizon Resources,
Williston, N.D.
Mixed (Supply,
Grain)
385
245
116
103
85
131
Calcot Ltd.,
Bakersfield, Calif.
Other (Cotton)
385
206
133
123
86
79
Ray-Carroll County Grain Growers
Inc., Richmond, Mo.
Grain
381
332
103
90
87
71
Meadowland Farmers Cooperative,
Lamberton, Minn.
Mixed (Grain,
Supply)
381
357
179
129
88
96
Gold-Eagle Cooperative,
Goldfield, Iowa
Mixed
(Supply,Grain)
375
281
96
92
89
69
Tree Top Inc.,
Selah, Wash.
Fruit & Vegetable
371
365
292
277
90
134
Clifford Farmers Co-op Elevator Co.,
Clifford, N.D.
Mixed (Grain,
Supply)
370
196
76
58
91
90
Ag Valley Cooperative Non-Stock,
Edison, Neb.
Grain
369
307
237
126
92
100
Bongards Creameries,
Bongards, Minn.
Dairy
367
339
91
70
93
88
Saint Albans Cooperative Creamery
Inc., St. Albans, Vt.
Dairy
361
293
34
31
94
93
The Garden City Co-op Inc.,
Garden City, Kan.
Mixed (Grain,
Supply)
360
285
110
103
95
112
Farmers Cooperative Elevator Co.,
Hanley Falls, Minn.
Mixed (Grain,
Supply)
359
249
160
159
96
70
NORPAC Foods Inc.,
Stayton , Ore.
Fruit & Vegetable
356
359
249
247
97
80
Sun-Maid Growers of California,
Kingsburg, Calif.
Fruit & Vegetable
352
323
178
168
98
116
Minn-Dak Farmers Cooperative,
Whapeton, Minn.
Sugar
346
242
230
197
99
121
Western Iowa Cooperative,
Hornick, Iowa
Mixed (Grain,
Supply)
339
233
114
105
100
101
Producers Livestock Marketing
Assoc., North Salt Lake, Utah
Other (Livestock)
338
275
43
34
Rural Cooperatives / September/October 2012 17
Management Tip
Thoughtful succession planning keeps
families farming for generations
“You hate to think about it, but you need to plan [for the transfer of your estate],” says Lee
Watson, far left. He is in the process of transferring shares in the family farming corporation to
the family of his son, Dusten (right). Photo courtesy Farm Credit. Larry and Jenny Black (below,
right) hope that their children will someday take over the citrus operation. Although decades
away from retirement, they are doing estate planning now. Photo by Ron O’Connor, courtesy Farm
Credit
By Andrew Zenk
Editor’s note: Andrew Zenk is an
AgCountry Farm Credit Services
agribusiness consultant specializing in
succession and retirement planning.
bout 96 percent of U.S.
A farms are run by
families, farmer
partnerships or
cooperatives, but as
many as 89 percent of farmers don’t
have a farm-transfer plan, according to
USDA. That’s a staggering number, and
producers such as Lee Watson, a corn,
bean and wheat farmer in Bellevue,
Ohio, are doing something about it.
Watson, who has worked with Ag
Credit ACA for 19 years, is
transitioning his farming operation to
his son, Dusten, with a detailed
succession plan.
“You hate to think about it, but you
need to plan,” Watson says. “So about
three years ago, we started passing
shares of our farming corporation to
Dusten.” The goal is to have at least
half of the shares transferred by the
time the elder Watson retires.
A succession plan provides an
important opportunity to carefully
protect a family’s hard-earned
investment. This requires planning,
18 September/October 2012 / Rural Cooperatives
open lines of communication and
discipline. Family operations that
incorporate the following five practices
into their planning set themselves up
for success for generations to come:
1. BUILD good habits through
education: solid business plans lead
to effective succession plans.
It is never too early to begin
planning. Producers should already be
managing and planning for short- and
mid-term operational and financial
goals, which lay the foundation for a
solid succession plan. There are many
resources that help young and
beginning producers network and learn
the business side of agriculture.
Even the most seasoned producers
can benefit from programs that address
current market situations. Building
good habits early will help to preserve
Peace River in the family. The family is
a member of Farm Credit of Central
Florida, and Peace River is a customermember of CoBank, another Farm
Credit entity. Two years ago, The
Blacks were honored with the Young
Farmer and Rancher of the Year Award
from the Florida Farm Bureau,
recognizing their successful farming
operation and Larry’s extensive
community and industry involvement.
“I’m in constant pursuit of
improving my farming operation and
moving in a positive direction,” Larry
says, “and I hope that my young
children will also become farmers
someday.”
2. PREPARE to be a multigenerational farm before your
transition is complete.
While many families have long
Jimmy Carter, with son Jake, operate their thriving Georgia farm as a multi-generational
family-farm enterprise. Photo courtesy Farm Credit
your operation for the next generation
and maximize the contributions of the
current and previous generations.
Larry and Jenny Black, fifthgeneration citrus growers and memberowners of Peace River Packing, a citrus
growing and fresh fruit
packing/marketing cooperative, are
decades away from retirement, but they
already appreciate the value of keeping
envisioned a time when they pass the
family operation down to their sons or
daughters, making sufficient income to
enable younger generations to join the
family business before one generation
retires is a challenge for many.
Jimmy Carter, a sixth-generation
farmer and owner of Southern Belle,
and his son Jake, are thriving today by
embracing diversification and
innovation as two generations of
Carters work together on the family’s
200 acres in Georgia. Jake started
bringing new ideas to the farm soon
after college. He started a “pick-yourown” strawberries, blueberries and
blackberries operation and opened the
farm for agri-tourism in 2005, a
business that has grown to host several
thousand visitors in a single weekend.
In addition to hosting a petting zoo,
bike track and corn cannon, the Carters
create an intricate corn maze each year.
3. MAKE open, frequent
communication a priority.
It is often hard for people to separate
their family from their business partner,
and communication within a family can
be difficult regardless of a business
relationship. Open communication
about this reality and agreeing upon a
workable communication strategy are
important in the planning process.
Paul Rovey, owner and operator of a
2,000-cow dairy farm in Glendale,
Ariz., says his farm is all about family.
He works the farm with his five
children and took over the farm from
his father when he graduated from
college in 1978. “I’ve grown the
operation from 200 cows to 2,000. I
owe this success to my family; I
wouldn’t be here without them.”
4. PLAN for the “what ifs” in
life and your operation.
You need a plan that provides a roadmap in the event of a death, disability,
departure and other possibilities life
may bring. Having a mutual agreement
on an action plan for these “what ifs” is
crucial to succession of the farm.
Generally, these are handled with an
estate plan for all involved and a
collective agreement that is consistent
with the personal estate plan. The
contents of these plans are unique to
every family, and consulting with a
professional is a must.
5. LOOK to the experts for guidance.
continued on page 51
Rural Cooperatives / September/October 2012 19
CO-OP MONTH SPECIAL SECTION
Gearing Up
the Co-op Economy
A rainbow that seems to arc around the height-adjuster gear of a vintage cultivator symbolizes the promise of a
new crop of farmer co-ops. The photo was taken by Laurie Childs at Harlequin Organics Farm near Dixon, Mont.
At the time, she was a driver for Western Montana Growers Cooperative and was farming part time.
“Cooperative Enterprises Build a Better World” is the theme of 2012
International Year of Cooperatives, as designated by the United Nations. With
October also being Cooperative Month, it provides twice as much reason for
celebrating the many benefits that producer- and user-owned cooperatives
confer to their members. As U.S. Agriculture Secretary Tom Vilsack notes in
his proclamation of Co-op Month (see page 2), in America alone, more than
130 million Americans are members of a cooperative. These range from coops with many thousands of members (a few of which are listed on the
Fortune 500), to tiny co-ops serving the needs of a dozen or fewer members.
All that matters is that people have a common need that can be best met
through group action.
On the following pages, some of the nation’s co-op development centers
provide a glimpse at new and emerging co-ops and co-op endeavors that are
helping still more people to help themselves with cooperative businesses.
Northwest co-ops forge new links for local foods
By Meredith Rafferty, Northwest Co-op Development Center
ontana is known for its
M big, open spaces. “It is
the place we call home,
and we love it,” says
CO-OP MONTH Karl Sutton, program
manager of the Mission Mountain Food
Enterprise Center, a division of Lake
County Community Development in
Ronan, Mont. “But it is a challenge to
link any one farm to consumers when
the distances are so great.”
Co-ownership in a cooperative is a
way to aggregate volume, increase
capabilities and share costs, Sutton
explains. “There is value added, not
only value in the sense of dollars, but
also in the value of the relationships
that connect us all.”
The value of cooperatives to their
communities and to each other is the
theme of a Northwest regional
conference to be held October 5-6 in
Seattle. The conference, “Cultivating
NW Co-ops: Celebrating Our Food
Community,” will take a sixstate/regional look at co-ops and their
impacts upon communities and food
systems.
Every year, October is recognized as
Cooperative Month and this year, as a
special observance, 2012 has been
designated the International Year of the
Cooperative by the United Nations.
“It's timely to consider how cooperative
business models contribute to our local
and regional food systems,” explains
Diane Gasaway, executive director of
the Northwest Cooperative Development Center (NWCDC), a co-host of
the conference. “The regional
conference in Seattle will highlight
cooperatives in many lines of business
that form the links between farm and
table. Cooperatives that market and
distribute, provide financing and
operate retail stores will be
participating.
“The conference itself is an example
of collaboration,” Gasaway continues.
The co-hosts are the cooperative
development centers based in
Washington, Alaska and Montana,
along with CDS Consulting Co-op.
The conference’s broad-based steering
committee and sponsors include many
successful cooperatives.
Montana schools reap
benefits of co-op
Karl Sutton says the Western
Montana Growers Cooperative is
benefiting schools with deliveries of
local produce. The cooperative was
established to increase the scale of
production of fresh produce in the area
through aggregation, marketing and
distribution, he explains.
In a unique collaboration with
Montana’s Lake County Development
Rural Cooperatives / September/October 2012 21
Steve Dagger and Jane Kile check on crops
produced for Westerrn Montana Growers
Cooperative. Kile, a founding member, was
the driving force behind the launch of the coop 10 years ago. She died three years ago,
but the co-op continues to market the crops
of its members. Photo by Marti de Alva.
Center, the cooperative now has access
to a produce- and meat-processing
facility and is delivering local foods to
four schools and the University of
Montana campus through the USDA
Fresh Fruit and Vegetable program.
The cooperative had gross sales of
$750,000 in 2011.
The entire process from farm to
consumer is a value-added chain,
explains Sutton. Carrots from the field
need to be cleaned and transported.
When supplied to schools, they also
need to be cut, packaged and delivered
in refrigerated trucks.
Without the processing step
provided through the cooperative
agreement between Mission Mountain
Food Enterprise Center and Western
Montana Growers Cooperative, the
processing link to the schools would not
exist. “Schools in our region do not
have the equipment and labor to slice
The Ashland Food Co-op (AFC) serves 8,000 members in southern Oregon. Photo courtesy AFC
carrots or peel and cube a winter
squash.” The processing step adds
value. “It brings healthy, fresh food to
the schools, retains dollars in our
communities and connects people to
place,” says Sutton.
Cooperation among
co-ops magnifies values
Other links in the value-added chain
are member-owned food co-ops that
22 September/October 2012 / Rural Cooperatives
have forged new relationships with local
farms to put local products on their
grocery shelves. An example is Ashland
Food Co-op, which for 40 years has
emphasized wholesome foods in its fullservice grocery co-op.
This 8,000 member co-op business
in southern Oregon is known for its
certified organic produce and products.
“Yes, our co-op is a business,” says
Annie Hoy, outreach manager for the
co-op. “But it is a business based on our
values. The values in our mission
statement led us into the community in
support of local farmers and local
products.
“For our type of food cooperatives,”
Hoy continues, “there is always
outreach to members to support them
in their knowledge of healthy food and
healthy living. We realize our place in
the community and actively support
local farmers and local foods.
“We also work hand-in-hand with
other cooperatives in this area,” Hoy
adds, pointing to a close relationship
with the Rogue Federal Credit Union,
Grange Co-op, Medford Food Co-op
and Siskiyou Sustainable Cooperative in
the Rogue Valley of Oregon. These
relationships bring mutual support to
the Rogue Valley local food system.
Together with Ashland Food Co-op,
these cooperatives employ 600 people
with a total payroll and benefits of $25
million.
“One of the principles of
cooperatives is sharing information and
supporting each other,” says Hoy,
adding that these co-ops are working
together across business sectors. “This
is all about living our values as owners
and members of cooperatives.”
Co-ops are an important link in the
local food chain. According to a recent
study by the National Cooperative
Grocers Association, the average food
cooperative purchases from 157 local
farmers and food producers; locally
sourced products make up an average of
20 percent of co-op grocery sales. The
study, Healthy Foods, Healthy
Communities: The Social and Economic
Impacts of Food Co-ops, also found that
for every $1,000 shoppers spend at their
local food co-op, $1,604 in economic
activity is generated in their local
economy.
Cooperatives are making a difference
to local foods and food systems through
their values. For cooperatives
worldwide, it’s a difference worth
celebrating during International Year of
the Cooperative, and every year.
For more information about the
NWCDC, contact Meredith Rafferty at
(360) 943-4241, or visit:
www.NWCDC.coop. n
Montana’s small-scale poultry growers struggle
to find economic way to process, market birds
By Karl Sutton, Program Manager, Mission Mountain Food Enterprise Center, a division of Lake County Community Development
mall, mobile processing
S units
have proven to be
useful in helping smallscale poultry and
CO-OP MONTH
livestock producers
meet the needs of local markets in a
number of areas around the nation. But
in western Montana, a concerted effort
over several years to employ this
strategy has yet to gain economic
viability, due to a number of reasons.
Still, producers here hope that with
additional steps, they will be able to
“grow their businesses” and help meet
the rising public demand for homegrown poultry.
Co-op formed to
spearhead effort
The Montana Poultry Grower’s
Cooperative (MPGC) was incorporated
in 2006 to provide Montana’s smallscale poultry producers a way to
Demand is growing for pasture-raised poultry,
such as these turkeys being raised by a
member of the Montana Poultry Growers
Cooperative (MPGC), which was formed in
2006. Photos courtesy MPGC
collaborate to meet their processing and
marketing needs. MPGC provides its
18 members with access to two types of
mobile poultry processing
infrastructure:
• Two small-scale pluckers and
scalders, and
• One state-licensed mobile processing
unit (MPU), comprised of a truck and
trailer.
In addition to the processing
equipment, the cooperative organizes
education workshops on heritage breeds
of poultry, pasture-raised poultry
production methods and safe, efficient
poultry processing practices.
The formation of MPGC followed
on the heels of strategic research and
legislative work conducted by the Grow
Montana Coalition, formed in 2004.
Grow Montana is a broad-based food
and agriculture policy coalition with a
common purpose of promoting
community economic development
policies that support sustainable
Montana-owned food production,
processing and distribution. The
ultimate goal is to improve access to
Montana-produced foods.
Rural Cooperatives / September/October 2012 23
Prior to 2004, Montana’s regulatory
statutes did not recognize mobile
processing units, nor did the statutes
place such units under any regulatory
agency. Grow Montana successfully
promoted the passage of HB-484 in
2004, which gives the Montana
Department of Livestock the authority
to inspect mobile processing units.
Between 2004 and 2006, a steering
committee comprised of small-scale
poultry producers began developing
MPGC’s business framework, leading to
the start of poultry processing using
small-scale equipment.
In 2006, Mission Mountain Food
Enterprise and Cooperative
Development Center (MMFEC) — a
division of Lake County Community
Development Corporation in Ronan,
Mont. — supported a professional
research report on appropriate mobile
processing technology for Montana’s
small-scale, pastured-poultry producers.
The resulting report — “Mobile
Processing: Appropriate Technology for
Pastured Poultry Producers” — was
written by University of Montana
graduate student Sarah Stokes. It made
use of case studies, surveys and
interviews to evaluate the status of
Montana’s pastured-poultry industry,
the market potential for pasture-raised
poultry in western Montana and the
processing and regulatory barriers that
were hindering producers from meeting
the market demand.
The poultry producers surveyed for
the report were classified as “microscale” producers, meaning they raise
fewer than 1,000 birds per year. These
producers had no legal method of
accessing potential markets because
Montana did not recognize the Federal
1,000 Bird Limit Exemption that allows
farmers to slaughter and market fewer
than 1,000 birds directly from the farm
to the consumer. Many of these farmers
were selling on-farm, live birds to
sidestep Montana’s laws.
Despite a clear demand for pastureraised poultry, the state’s lack of
recognition of the 1,000-bird
A mobile poultry processing unit is available to co-op members, but more volume will be needed
to cover all operation costs.
exemption and lack of state-inspected
processing facilities presented
significant barriers to producers’ ability
to access farmer markets and retail
grocery stores.
Market parameters identified
Based on evaluations of MPUs in
New York, Washington and Kentucky,
the university report surmised that
MPUs in Montana would only be
feasible if there was an adequate base of
producers with operations scaled to
match processing unit capacities and
that were located within one to two
hours of the processing unit’s home
base.
The university researcher offered
three recommendations to help
Montana’s small-scale poultry industry
move forward:
1. Amend Montana rules, or pass
new legislation, to allow a 1,000-bird
exemption for on-farm poultry
slaughter and direct sales to customers;
2. Obtain more small-scale
processing equipment that could be
24 September/October 2012 / Rural Cooperatives
located closer to cooperative
members; and
3. Develop a state-inspected MPU
for poultry.
On the heels of this research, MPGC
members — with support from
MMFEC, the Alternative Energy
Resources Organization, and Farms for
Families — began developing
Montana’s first (and currently only)
MPU. MPGC’s pioneering work
involved designing and building the
MPU and developing a user/processing
manual that enabled producers to meet
regulatory requirements of Hazard
Analysis Critical Control Points
(HACCP) and Standard Sanitary
Operating Procedures (SSOP). It also
delivered a producer training program
that prepared MPGC members to
process high-quality, safe poultry.
By the spring of 2009, the state’s first
MPU had been inspected and licensed
by the Montana Department of
Livestock, in accordance with the
federal 20,000-bird limit exemption. In
accordance with the 20,000 bird limit
exemption, the slaughter facility is
regularly inspected, although an
inspector does not need to be onsite at
the time of processing. This exemption
allows farmers to sell at farmers markets
and into wholesale markets.
More volume needed
Under-utilization of the MPU has
been a critical concern for MPGC.
Without sufficient revenue generated
from leasing the MPU at the price of
$1.75 per bird processed, the
cooperative has struggled to cover the
costs of insurance and maintenance of
the infrastructure.
Last January, MPGC members were
surveyed to evaluate how effective the
MPU was in helping them to grow
their businesses. According to the final
report, 14 of 18 MPGC producers raise
meat birds, with an average flock size of
175 birds. Only one producer raises
more than 1,000 birds. Ten out of 14
producers are using the small-scale
plucking and scalding equipment while
only four use the licensed MPU. Of the
four producers using the MPU, only
two are marketing their birds to
commercial markets while the other
two are marketing direct to individual
customers.
The 2012 report surmises that
MPGC producers have not grown their
operations due to:
• Continued regulatory challenges (i.e.,
Montana still does not recognize the
federal 1,000-bird exemption, so
MPU producers must obtain licenses
from both the Montana Department
of Livestock and the Montana
Department of Public Health and
Human Services);
• The distance they must travel to
retrieve the MPU are too great for
some producers;
• High feed costs; and
• Lack of technical support (especially
for breed selection for pasture-poultry
and efficient range production
techniques).
These findings corroborate Stokes’
2006 report.
Montana needs a two-tiered system
that meets the needs of producers who
raise fewer than 1,000 birds. The 2012
report surmises that if Montana
recognized the federal 1,000-bird
exemption, micro-level producers could
then legally sell on their farms and
grow their businesses.
Only for producers close to reaching
the threshold of 1,000 birds will the
MPU become an appropriate resource.
At that point, regionally located, stateinspected facilities that reduce the drive
time for producers could enable
Montana poultry growers to capture the
markets for pastured poultry. n
Colorado launches health insurance co-op
By Bill Stevenson, Director, Rocky Mountain Farmers Union, Cooperative Development Center
recent birth of the
T heColorado
Health
Insurance Cooperative
CO-OP MONTH includes a number of
very important lessons
for future health insurance co-op
developers, and perhaps for those
working on other types of co-op
development projects. Our experience
with the project suggests that the
following attributes among the core
initial working group are critical:
• A passion for co-ops (of course!);
• An abiding commitment to rural
health care;
• Comprehensive health insurance and
health care experience and
knowledge;
• Strong connections in the health care
field built on lasting trust.
In a nutshell, all you have to do is
find some really smart, passionate folks
who know everybody and who are
willing to work for free!
New law opens door
for more health co-ops
The federal Patient Protection and
Affordable Care Act (ACA) was passed
in 2010 after much debate. ACA
authorizes the establishment of
nonprofit, private Consumer Operated
and Oriented Plans (CO-OPs) for
health insurance under a start-up loan
program admin-istered by the U.S.
Department of Health and Human
Services (HHS).
In the spring of 2011, at an informational meeting sponsored by the health
care community in Denver regarding
CO-OPs, the Rocky Mountain Farmers
Union Foundation (RMFU) sensed an
exciting opportunity to make a positive
difference for health care in the rural
Rocky Mountain West. This was a
challenging problem we had been
working on for decades. RMFU has
been advocating for family farmers and
ranchers and their communities for
more than 100 years and is a strong
believer in cooperatives.
Discussions were held among RMFU
staff with extensive experience in rural
health care, social issues and
cooperative development. These talks
focused on one issue in particular: Can
a CO-OP realistically serve only rural
health care needs in Colorado and
Wyoming?
Those discussions led RMFU to
invite a number of potential partners to
the table, with such skills as: expertise
in Colorado rural health issues; thirdRural Cooperatives / September/October 2012 25
Board members of the Colorado Health Insurance Cooperative hope their experience launching their new co-op will be helpful to others considering
a similar cooperative. Photo courtesy Rocky Mountain Farmers Union
party health insurance administrator
capabilities, health foundation expertise
and funding, and business savvy in
cooperative formation and operations.
Working group launched
A working group was formed in the
fall of 2011, with a chairperson and at
least some formality to its proceedings.
This group considered adding technical
expertise and identified the next steps
necessary to build the health insurance
co-op, including involvement of other
institutions and funding sources.
In the finest cooperative
development tradition, a decision was
made that a feasibility study with the
seeds for a business plan was needed.
This plan would need to determine if
this co-op idea could work; if so, all the
“how, what, who and when” questions
would have to be addressed.
We were very fortunate in that
members of our working group had
deep connections in the health care
industry, which led us to other individuals with expertise and even more
connections who offered their help.
This led to an important gathering last
February of “interested persons” with a
variety of specialties who wanted to be
kept informed and involved.
The resources the working group
was gathering were truly impressive by
any measure within the Colorado health
insurance, health care and rural
advocacy communities.
The cost of the feasibility study
(which included the costs for actuary
and statistical knowledge, as well as an
analysis of provider networks, claims
processes and general administration
and legal issues) was estimated at more
than $100,000. A budget was
established by interviewing four actuary
candidates and reviewing their cost
estimates, as well as securing cost
estimates for statistical work and the
services of a third-party administrator.
Fundraising then began, ultimately
yielding generous commitments from
the Colorado Health Foundation and
USDA to sponsor the feasibility study.
Preparing for HHS
loan application
With the feasibility study underway,
the working group began to plan for
the co-op’s HHS loan application,
which was due in April, 2012. But what
would the feasibility study reveal?
The results finally arrived, with the
important revelation that the health
insurance co-op was viable and could be
26 September/October 2012 / Rural Cooperatives
rural in focus. But the study also said a
co-op must include urban, as well as
rural, residents to ensure the number of
members necessary for the company to
survive and thrive.
By March the time had come for the
health insurance co-op to incorporate as
the Colorado Health Insurance
Cooperative Inc., a Colorado nonprofit
cooperative, with RMFU as the co-op’s
sole member (until it actually begins
issuing policies). Five directors were
selected for the board: a former rural
healthcare expert in government, a
prominent cooperative lawyer and
developer, a former Colorado state
insurance commissioner and state
auditor, a former health insurance
company CEO, and a former rural
healthcare administrator.
The co-op also needed to develop
working relationships with Colorado’s
Division of Insurance. In early April,
the co-op applied for about $69 million
in start-up and solvency loans from
HHS. The voluminous application
effort was led by the co-op’s interim,
third-party administrator and actuary.
The need for technical savvy at this
point was paramount.
As we waited for the HHS decisionmaking process to unfold, the co-op
began to plan for the start-up, with a
highly qualified interim CEO hired
(based on some strong
recommendations) who performed
much of the detail work at no charge.
Interview preparation pays off
In mid-May, the first hurdle was
cleared when the co-op leaders flew to
Washington, D.C., to be interviewed
about the loan application at the offices
of business consultant Deloitte, HHS’s
counselor in the selection process. All
five directors participated, along with
the co-op’s interim third-party
administrator, actuary and CEO. The
interview went extremely well, thanks
to the group’s careful listening to the
expectations that Deloitte laid out for
them, as well as thorough preparation
(both in Denver and upon their arrival
in Washington the day before the
interview). The expertise of the co-op’s
interim third-party administrator,
actuary and CEO also proved
invaluable during the interview.
By mid-June we had achieved
success. HHS notified the co-op board
president that the co-op had been
accepted for ACA’s CO-OP loan
program, subject to successful
“negotiation” of loan particulars. (The
basic loan terms — such as interest
rates and repayment requirements —
were non-negotiable, while others, such
as business plan milestones, needed
further discussion or clarification.)
Just a short time later, the U.S.
Supreme Court ruled in favor of ACA’s
constitutionality, and in late July the coop’s loan documents were signed, the
transaction closed and the award was
made public.
Permanent staff hired
The board expanded to seven in
May, with the addition of a rural
hospital administrator and the
administrator of a rural, Federally
Qualified Health Center. By midAugust, the board and the interim CEO
(now being paid) hired a human
resources consultant, a project manager,
a legal counsel, a regulatory-compliance
specialist, an accounting firm and a
public relations firm. All were hired as
independent contractors.
Interviews were also begun for a fulltime CEO (six candidates passed the
initial review and a CEO was hired in
September). Job descriptions were
drafted and posted for the co-op’s chief
financial officer, regulatory compliance
officer and director of consumer
services (all considered senior staff
positions).
Meanwhile, RMFU was planning to
hire at least two outreach/education
staff members, to assist in the essential
community organizing, grassroots work
necessary to promote and develop the
co-op throughout Colorado.
The co-op will begin marketing
policies in the fall of 2013, with the first
effective date Jan. 1, 2014.
Hard work, but co-op
has huge potential
This process shows that there is an
incredible amount of work to do when
starting an insurance company. But with
health care such a critical issue for so
many rural Americans, it is an effort
that has to be made in more places.
To reiterate the themes mentioned at
the start of this article, the co-op’s
success has depended on enlisting the
help of amazing people with a unique
variety of interests, all of whom have a
passion for helping people through
cooperative businesses. They also all
have an abiding commitment to
improving rural health care, and
experience and knowledge of health
insurance and health care issues. They
also had strong connections built on
lasting trust.
In short, they are really smart,
passionate people who know everybody
in the health care field and are willing
to work for free!
With that as a base, those who
dream of dramatically changing the
health insurance world for the better
really can succeed. n
Iowa State students team with co-ops to develop new businesses
By Carly Cummings, Program Assistant, Iowa State University
Iowa Alliance for
T heCooperative
Business
Development (IACBD)
CO-OP MONTH and the Agricultural
Entrepreneurship
Initiative (AgEI) have developed an
experience-based learning program for
Iowa State University students, giving
them the opportunity to work with
Iowa’s rural cooperatives.
The program, funded through a
Rural Cooperative Development Grant
from USDA Rural Development, is
designed to team students and faculty
with cooperatives to develop new
businesses in rural areas.
Cooperatives are major drivers of
economic development in rural areas
and are positioned to help
entrepreneurs. This program combines
the energy of university students, the
technical knowledge of faculty and the
business resources of established
cooperatives to create new businesses.
Rural Cooperatives / September/October 2012 27
Pushing business concepts
to the front burner
“The thought behind our program is
that managers at rural cooperatives have
business development projects that
often are difficult to move off the back
burner,” says Kevin Kimle, director of
the AgEI at Iowa State. “Some of those
projects can be moved forward by
students and faculty, teamed with
managers from cooperatives.”
The program started in 2011 with
three interns working at Farmers
Cooperative Co. in Afton, Iowa. The
students conducted market research and
financial analysis and reviewed
engineering processes for a new feed
business the cooperative wanted to
develop.
“With the high price of corn and
alfalfa, farmers are looking for
alternative sources of energy and fiber
in their feed rations,” says Randy Pettit,
Farmers Cooperative feed manager.
“Developing a product at a lower cost is
what the market is demanding.”
The three interns, all students in the
College of Agriculture and Life
Sciences at Iowa State, completed a
plan for the new business.
In 2012, the AgEI and the IACBD
placed another three interns with
Heartland Cooperative in central Iowa.
Their objective was to develop a
logistics model and business plan for
Heartland’s fertilizer business. Marc
Melhus, Heartland vice president of
operations, served as the project lead.
“The purpose of this project was to
compare and determine the best way for
Heartland to provide custom fertilizer
application services to our customers by
looking at the two distinct models we
currently employ,” explains Melhus.
“The students were challenged with
exploring the economics of each model
and to consider the other factors
involved in consolidating the two
models into one.”
Conducting market research
After being briefed on the company’s
These Iowa State University students have gained real-world experience in what it takes to run a
successful cooperative. Touring a Farmers Cooperative Co. warehouse are student interns (from
left): Nicole Jennett, Erica Lundy and Casey Clemens. Photo by Ronda Driskill
goals and objectives for this project, the
students conducted market research and
financial analysis and made location
visits to familiarize themselves with the
fertilizer market and Heartland’s
business structure.
Throughout the summer, the
students collaborated with Iowa State
faculty members Bobby Martens and
Georgeanne Artz to evaluate the
efficiencies of alternative facility
strategies. Many factors were built into
the analysis, including travel distances,
building maintenance, fertilizer prices
and custom application costs. The
interns were challenged with evaluating
each of these factors and combining
them to determine the optimal business
model for Heartland’s fertilizer
business.
“The students gave us the jump-start
the organization needed to pursue the
best decision for further developing our
28 September/October 2012 / Rural Cooperatives
fertilizer business,” says Melhus. “It was
also a great way for students to
participate in a high-impact business
development project at a cooperative.”
The program’s continuing goal is to
partner with Iowa cooperatives and
generate rural economic impact. The
public/private partnership model
creates valuable opportunities for
participating cooperatives as well as the
students and faculty from Iowa State.
For more information on this
program, contact Stacey Noe, program
coordinator, at 515-294-4945, or:
snoe@iastate.edu.
The IACBD is a USDA Rural
Cooperative Development Center
located at Iowa State that focuses on
applied research and agricultural
cooperative development. The AgEI
provides training and guidance to
students for the development of highgrowth agricultural businesses. n
Central Kentucky Growers helps members
transition from tobacco to vegetables
By Kara Keeton
Editor’s note: Keeton is a Kentucky-based
writer who produced this article on behalf of
the Kentucky Center for Agriculture and
Rural Development.
entral Kentucky
C Growers Association
(CKGA) began in 1998
as a vegetable marketCO-OP MONTH ing cooperative when a
small group of growers decided to
diversify away from tobacco, which had
been a mainstay on farms in the area.
The new focus of their efforts was on
horticulture production.
“I began growing pumpkins for the
co-op in ‘98 or ’99, I believe,” says
Kevan Evans, owner of Evans Orchard.
“I had already begun transitioning away
from tobacco into vegetable and fruit
production, selling at farmers markets
and from a small farm market. Becoming a member of the co-op gave me
another marketing option to expand my
horticulture production before we really
started to grow our agri-tourism
business: Evans Orchard.”
The co-op became a key marketing
outlet for current CKGA president,
Zeldon Angel. He began producing
horticulture products as he saw the
change looming for Kentucky’s tobacco
industry. As a co-op member, Angel
has worked closely with the
management to help identify new
marketing opportunities for the co-op.
“Over the years, we have tried
almost every marketing approach that
exists,” says Angel. “Some have worked,
and others haven’t. But we have always
been open to hear new ideas.”
Currently CKGA is working with
Castellini and Cabbage Inc. to market
“Between the determination and willingness to sacrifice on our [members’] part, and KCARD’s
dedication to work with us, we were able to pull out of the red,” says Zeldon Angel, president of
the Central Kentucky Growers Association (CKGA). Photo courtesy CKGA
Rural Cooperatives / September/October 2012 29
co-op products. The primary crops for
CKGA are cucumbers and peppers —
which can be packaged across the
processing line at its facility — but it
has also had success with green beans
and producing cabbage under contract
for Cabbage Inc., a fresh produce
company based in Sheffield Lake, Ohio.
“In the early years our members had
to step up financially to get the co-op
going,” explains Angel. “Over the years,
we have seen that level of financial
commitment from our members and
the community. It has been that
determination that kept us going even
when other co-ops were closing the
doors.”
Development (KCARD) as the key
factor to helping the organization
overcome the challenges along the way.
“In 2005, we were struggling with
several issues at the co-op and went
back to the Ag Development Board for
funding assistance; we received about
$121,000 as a forgivable loan to
stabilize management and purchase
necessary equipment,” explained Angel.
“Yet, what made the difference with this
round of funding was that we began
Seed money helps
co-op expand
In 2001, CKGA received a boost
when it was awarded nearly $500,000 in
Kentucky Agricultural Development
Funds for the purchase of equipment
and market development. These funds
allowed CKGA to work with more
growers and buyers.
Soon, the growing co-op was in need
of another expansion. In 2003, the
group received an additional $300,000
to update a production line, expand to
year-round marketing, and to meet the
needs of new and existing growers.
Evans admits that the funds from the
Ag Development Board (ADB) were
critical to the early development and
growth of CKGA. But serving as
current secretary and one-time
president of the co-op, Evans also
recognizes that there were challenges
the group faced in those early years
with inexperienced members,
production problems, retaining buyers
and general management issues that
needed more than just money to fix.
“One of our biggest issues was the
tobacco mentality,” said Angel. “The
thought was that if we grow it, there is
a market for it; but it is not that way in
the vegetable business.”
Evans and Angel both point to
CKGA’s involvement with the Kentucky
Center for Agriculture and Rural
Butch Case is vice president and a long-time
member of CKGA, which was launched in
1998 to help tobacco growers switch to
vegetable and fruit crops.
working with Larry Snell [KCARD
executive director] and KCARD to get
a handle on financials.”
Angel explains that working with
KCARD helped the CKGA board of
directors realize what needed to done
each year to make accurate projections
about how to run the business. They
followed KCARDs recommendation
and brought in an outside company in
2006 to run the business for a year to
give them ideas on management.
“When we began working with
KCARD, we were in the red. But Larry
Snell and the staff just kept working
with us on what we needed to do on the
financial side to get a better handle on
30 September/October 2012 / Rural Cooperatives
things and to make accurate projections
so we could pull enough out to balance
the budget,” says Angel. “Between the
determination and willingness to
sacrifice on our members’ part and
KCARD’s dedication to work with us,
we were able to pull out of the red.”
Strong working
relationship with KCARD
Since that experience, the co-op has
continued to work with KCARD
periodically to review finances, polices
and general management. Recently, the
group had to turn to KCARD once
again as it met with the Agriculture
Development Board to review the terms
of the forgivable loan.
“If we hadn’t worked with KCARD
during this evaluation of our agreement
with ADB, then the deal probably
wouldn’t have gotten done,” Angel says.
“KCARD’s knowledge of the industry
and the fact that they were working
with us to address the terms of the
agreement brought to the table a level
of credibility that helped us to achieve a
workable agreement.”
“The major strength of CKGA is the
leadership and unwavering commitment
of its board of directors over the years,”
says Snell. “They are determined that
the cooperative will succeed and
provide a reliable market for
commercial vegetable growers in
Central Kentucky.”
Angel realizes there will continue to
be challenges for CKGA. This year the
major challenge has been the weather.
Dry, hot conditions have made it
difficult for the group to produce
quality products to take to the market.
But he believes that the commitment to
the CKGA remains.
“As much hard work as we have all
put into the co-op, I hope we are still
going strong in five to ten years,” says
Angel. “We want to make it selfsustaining and keep it going. It will
work, but we just need to find a few
more growers who are willing to make
the sacrifices to produce a quality
product for the market.” n
Public garden latest addition at resident-owned community in Maine
The community garden at the Medomak
Mobile Home Cooperative has helped improve
the diets of members with more fresh
produce.
Editor’s note: This is a condensed and
slightly adapted version of an article by
Shlomit Auciello that was originally
published in the Aug. 16, 2012 edition of
The Lincoln County News. It is
reprinted here with permission.
The Cooperative Development Institute
(CDI) (www.cdi.coop) is the Northeast’s
center for cooperative business education,
training and technical assistance. It has
been serving New England and New York
since 1995. This year, CDI formed a
partnership with the Genesis Fund to bring
more resident-owned cooperative
development to the state of Maine.
“We look forward to helping more
resident-owners build communities and take
control of their circumstances,” says Noemi
Giszpenc, CDI executive director. “When
co-ops pay attention to their members’ needs
and leverage their collective resources, they
can become the seedbed of new cooperative
activities that benefit their owners and the
community.”
Cooperative illustrates
that when residents
gain control over their
shared land, they are
CO-OP MONTH
able to mobilize greater
trust and care, which can translate into
such tangible benefits as affordable local
food and better maintained homes and
grounds. This in turn makes the park a
desirable place to live, ensuring lower
turnover and quicker filling of vacancies
— which benefits the co-op’s bottom
line.
When the board of the 32-unit
Medomak Mobile Home Cooperative
in Waldoboro, Maine, heard a
suggestion last summer to create a
community garden, treasurer Linda
Norwood took action.
Norwood, who has lived at the park
since 1995, went next door to the
Hannaford supermarket to research the
cost of a salad, pricing the lettuce,
tomatoes, cucumbers and onions. When
she compared the result against what it
T
would cost to grow the vegetables at
home, she asked the board for support.
With the help of the Genesis Fund,
which had supported the park’s
conversion to a co-op in 2006, and
contributions from businesses and
individuals, co-op members built six
raised plant beds. They filled them with
soil, planted seeds and seedlings, and
learned how to use organic methods.
The project was just one of many
ways the co-op works to build a closeknit community. Last year, members
worked side-by-side with volunteers on
repair projects to improve the safety of
individual homes. In addition, residents
host work days approximately once a
month to maintain the grounds, clear
abandoned home sites and make
improvements to common facilities.
“There’s tremendous community
building,” says Liza Fleming-Ives,
associate director of the Genesis
Community Loan Fund. At the end of a
work day, residents gather for a
community meal.
“People live busy lives,” FlemingIves says. “Many in the park work
multiple jobs, all kinds of shifts, have
young children or are elderly.” In spite
of the efforts residents undergo just to
make ends meet and take care of basic
responsibilities, they work hard to meet
the challenges of community living, she
says.
Norwood says the formation of a
cooperative has meant that residents
take a greater interest in the well-being
of their neighbors.
“Since the co-op has taken over,
there’s been a big change,” says John
he story of Medomak Mobile Home
Rural Cooperatives / September/October 2012 31
Flaherty, a veteran who serves as
cooperative president and has lived at
Medomak since 1996.
Gardens help residents
help each other
“Most of the people in this park are
on low- and fixed-incomes,” Norwood
says. “Many are on food stamps
(SNAP). I wondered how they would
eat if prices kept going up.”
She sited the garden on land that is
too wet for mobile homes, and sought
donations of money, lumber and plants.
She used the cash to buy tomato cages,
sticks, twine, chicken wire and
marigolds.
“Everything else has been donated,
and happily donated,” she says.
Seedlings came from a local garden
center, along with more advice and
support. A signboard, next to the plant
beds, lists 17 sponsors who helped make
the gardens a reality.
“They grew like you couldn’t
believe,” Flaherty says. Next year the
community hopes to have 18 raised
beds. He says he plans to have two beds
next year, so that he can grow food to
give away to his neighbors.
“I’m happy just sitting on a stool
with a jar of mayonnaise and a loaf of
bread in the cucumber patch,” says
Co-op members use this sign by the community garden to thank their sponsors. Seen here are
Linda Norwood, co-op treasurer, and John Flaherty, co-op president. Photos by Shlomit Auciello
Norwood, who is now head of the
Garden Committee.
When Flaherty was hospitalized,
early in the summer, Norwood and
other neighbors kept an eye on his
house and watered his garden. For his
part, Flaherty brings a daily basket of
cherry tomatoes to a couple who do not
have a garden. Norwood says that is
representative of changes in the
community since residents took over
ownership.
“Here, we care about everybody.
Everybody owns this now. People take
care of what they own. That’s what this
is all about,” Flaherty said. n
Feed mill seen as key to success of Amish dairy farms
By Debbie Trocha, Executive Director, Indiana Cooperative Development Center
of the major limiting
O nefactors
on growth of
the nation’s organic
CO-OP MONTH dairy and livestock
industries is the
availability of quality organic feeds at an
affordable price. That’s why a new coop of dairy farmers in northern Indiana
is pursuing the purchase of an organic
feed mill to help ensure the future
viability of their farms and
communities.
Co-op seen as vital
for community
The Indiana Cooperative
Development Center (ICDC) was
contacted in early 2011 by Wisconsinbased Organic Valley — the nation’s
largest organic cooperative — and asked
32 September/October 2012 / Rural Cooperatives
to assist a group of 80 organic milk
producers in northern Indiana form a
cooperative to purchase a local organic
feed mill in Wolcottville, Ind. The
farmers are also members of Organic
Valley.
Most of these producers have small
organic farms with fewer than 50 dairy
cows. The majority of the milk
producers belong to the local Amish
community, a group which usually
prefers to avoid public exposure.
Their leaders are mostly elders of
the community (although there are also
some younger producers in their 30s
rising to leadership positions) and they
typically do business on a handshake
agreement, which can be problematic in
today’s business world.
Social responsibility is more than a
buzz word for the Amish — it’s a way of
life for them. They are thus developing
the cooperative for “the community” —
not only for their community, but for
their neighbors as well. They look at
the organic model as the best way to
keep their small farms profitable and
sustainable.
An initial two-day meeting of all
interested parties was held in late
March 2011. A five-member executive
committee was formed, and funds were
committed for initial expenses for the
formation of a cooperative.
Future linked to
reliable feed supply
These milk producers were
concerned about their ability to obtain a
reliable supply of high-quality organic
livestock feed and supplies — with a
degree of price stability — for
themselves and for future generations.
The Wolcottville Organic Feed Mill is
a major source of
organic feed for
their dairy herds.
The continued
operation of the
mill is thus
viewed as key to
the expansion of
the area’s organic dairy/livestock
industry and the profitability of
producers.
Following the initial meeting, ICDC
staff worked with the co-op organizing
committee to explore the possibility of
purchasing the Wolcottville Organic
Feed Mill. ICDC staff helped the
steering committee review and
understand the financial statements of
the existing mill operation and to
identify a firm that could provide a fair
appraisal of the mill’s value.
An attorney experienced in co-op law
was identified, and ICDC staff assisted
in the development of the co-op’s
articles of incorporation and bylaws.
By 2012, the steering committee was
meeting every two weeks to complete
the co-op organizational documents. In
April 2012, the cooperative — the
W.O.L.F. (Wolcottville Organic
Livestock Feed) Cooperative — was
registered with the Indiana Secretary of
State, and its first board was elected.
Because a number of producers in
Michigan are interested in becoming
members of the cooperative,
incorporation in Michigan is also being
considered.
Equity drive meets goal
Membership documents were then
developed and the equity drive began in
mid-summer. It took only a few weeks
for the co-op to reach more than 50
percent of its goal of raising $250,000.
The directors have established a goal of
having a 50-percent equity stake prior
to the purchase of the mill.
ICDC provided training in July for
the board to ensure that members
understood their fiduciary
responsibilities to the co-op.
As of this writing, in early
September, the co-op expects to
purchase the feed mill by the first of the
year, helping to ensure the future
viability of organic dairy production
among this community of farmers.
“Our producer-members knew they
wanted to form a cooperative from the
beginning.,” says Dan Mosgaller,
regional coordinator for Organic Valley.
“Without the assistance from the
Indiana Cooperative Development
Center, W.O.L.F. Cooperative would
not be at this stage of development.” n
Amish dairy farmers in Indiana have formed a co-op to pursue the purchase of an organic feed mill. Most Amish farmers, such as this one in
Pennsylvania, rely on horses or mules to work their crops. USDA photo by Dan Campbell
Rural Cooperatives / September/October 2012 33
Nebraska town striving to recover from loss of grocery store
By Amanda Lynne Bergstrom, Graduate Assistant, Nebraska Cooperative Development Center
a grocery
T hestorelossinofa rural
community can be a
CO-OP MONTH devastating blow,
especially when it is the
only, or at least major, source of local
groceries. Not only do people then have
to travel farther and expend more time
and money to get their groceries, but it
can also be a serious blow to
community pride and make it harder to
attract new residents and businesses.
When the only grocery store in
Elwood, Neb., closed last January,
community leaders quickly responded,
organizing a community meeting the
next month to consider opening a
cooperatively owned grocery store. The
meeting attracted more than 100
people, almost all of whom felt that a
grocery store was vital to the future of
the community.
Following the meeting, community
leaders developed and distributed a
survey to gauge interest in opening a
co-op grocery store, which revealed
widespread support for the concept. A
committed, hard-working steering
committee was then formed to pursue
the project.
This steering committee formed subcommittees that focused on facilities,
business and finance issues, and
incorporation options. Expert advice
was sought from a local attorney,
insurance agents, former store owners,
neighboring stores and managers of
grain co-ops in nearby towns (one grain
co-op also owned a grocery store). Ideas
were also sought from cooperative
accountants, area economic developers
and grocery suppliers.
A financial plan was developed for
remodeling the store, and more
community-wide meetings have been
held, showing that there continues to be
NCDC hosted an
exploratory meeting in
central Nebraska, inviting
all farmers’ market
managers from across the
state. The meeting
explored the potential of a
statewide association and
the kinds of programs and
services an association
could provide its members.
These services could
The number of farmers markets in Nebraska has doubled
during the past 10 years, leading to the formation of the
include: consumer
Farmers’ Market Association. Photo courtesy Nebraska Coeducation; group
op Development Center
marketing opportunities;
assistance with funding
(such as grants and
widespread support for opening a new
fundraising); market manager training;
grocery store.
statewide networking; and how to
The cooperative was incorporated in
accept SNAP (food stamp) benefits, and
May as the Elwood Hometown
debit and credit cards for payment at
Cooperative Market. The board of
farmers markets.
directors is conducting a membership
A steering committee was formed
drive. If the drive is successful, the
and has continued to meet regularly to
former store location will be purchased
plan an organizational structure that
and remodeled, with operations
could be a model for a future
anticipated to begin before the end of
association. The committee successfully
year.
applied for a Specialty Crop Block
The Nebraska Cooperative
Grant from USDA this year to improve
Development Center (NCDC)
food safety in Nebraska’s farmers’
provided the outline for this process, a
markets. In partnership with the
spreadsheet for the financials, referrals
University of Nebraska–Lincoln, a
for attorneys and guidance for each
committee. It has been working hand in series of GAP (Good Agricultural
Practices) workshops were held across
hand with the steering committee each
the state for vendors and market
step of the way.
managers. Market managers were
Farmers’ Market Association
provided with food safety tool kits
The Farmers’ Market Association
which included educational materials
was proposed in 2010 as a way of
for market customers and marketing
creating a network that would connect
ideas.
Nebraska farmers markets and
NCDC awarded the committee a
managers. The need for such an
small grant in 2012 to assist it with
organization was underscored by a
paying incorporation legal fees,
doubling in the number of farmers
membership recruitment and annual
markets in Nebraska during the past 10
meeting planning. It is anticipated that
years.
the committee will complete its work
34 September/October 2012 / Rural Cooperatives
and formally organize the association
sometime this fall.
Co-op Business Assessment
and Evaluation Program
As cooperatively owned businesses
develop and implement their business
plans, many return to NCDC in their
second through fifth years of operation,
seeking assistance in taking another step
forward in development of their
business. These co-ops, which typically
have accomplished their initial goals,
have encountered obstacles and
identified opportunities for further
business development.
NCDC has now developed a formal
business assessment and evaluation tool
for use with cooperatively or mutually
owned companies in Nebraska. It is
based on the model developed by the
Kentucky Center for Agriculture and
Rural Development (KCARD).
The “Nebraska model” for
cooperative business assessment was
tested in 2011, and the program was
implemented in 2012. The business
assessment program is called CoBAsE
(Cooperative Business Assessment and
Evaluation). It is a fee-for-service
program from NCDC.
One such study was completed in
2012 for a co-op that began business in
2005, and NCDC has also assisted two
other groups, formally and informally,
under the program.
The business assessment program
normally consists of:
• Initial meetings with board and
critical partners;
• Interviews with the board and
employees, cooperative members,
business partners and resource
providers;
• Review of several years of financial
statements;
• Review of past business plans, ideas
and studies;
• Review of marketing materials,
website and social media use;
• Review of physical facilities and
processes;
• Review of past and current feasibility
studies.
Following the formal report of the
findings to the board, NCDC provides
a list of recommended “action steps” as
well as a timeline for action. As a part
of its “normal” work process, NCDC
will continue to work with CoBAsE
clients for follow-up of business
development and growth. n
Jersey shellfish co-op well situated for growth
By Cathy Smith, Peggy Fogarty-Harnish
Editor’s note: Smith is executive director
at the Keystone Development Center in
York, Pa.; Fogarty-Harnish is a co-op
development consultant at Keystone. The
authors thank Gef Flimlin, professor and
marine extension agent with Rutgers
Cooperative Extension, for his assistance.
For more information about Keystone,
contact: smith@kdc.coop.
of the Keystone
O neDevelopment
Center’s
most exciting new
CO-OP MONTH projects involves oyster
and clam growers in
New Jersey. This group is employing
state-of-the art technology to raise
oysters and clams in a controlled
environment — first in laboratory
settings, then in coastal waters and in
Delaware Bay, leased from the state of
New Jersey.
Shellfish are spawned in New Jersey
hatcheries, where they are fed specially
grown phytoplankton
and nurtured until they
are large enough to be
nourished on bay water
in land-based nurseries.
After that, the clams (8
to 15 millimeters in
size) are planted on the
bay bottom and
covered with ¼-inch
plastic mesh, where
they remain until ready
for harvest in about
two to three years.
The oysters go
through a similar landbased rearing process,
but are grown in heavy
mesh bags, which are
usually raised off the
bay bottom, until they
reach market size in two
years. Constant cleaning
and management of the
Shellfish grower Charlie Cummings directs a jet of water as he
cleans his new crop of clams. Co-op members also raise oysters
in New Jersey coastal waters and Delaware Bay. Photos
courtesy Keystone Development Center
Rural Cooperatives / September/October 2012 35
crop is necessary to reduce mortality
from predation or bio-fouling, caused
by seaweeds. (Author’s note: this
description is a simplified version of the
process).
A major competitive advantage for
the New Jersey shellfish growers is the
proximity of their production areas to
roughly 40 percent of the U.S.
population along the New YorkWashington D.C. corridor, which also
contains eight of the nation’s top 10
counties for median income.
A co-op member’s oyster hatchery near
Atlantic City, N.J.
Keystone Development Center
(KDC) is helping the group to
cooperatively develop its market
through a variety of strategies. Rutgers
Cooperative Extension of Ocean
County (Marine Extension), the New
Jersey Sea Grant Consortium and the
New Jersey Department of Agriculture
are KDC’s partners in the development
of the shellfish cooperative.
more productive natural shellfish beds.
Shellfish farmers pay permit and
lease fees for the privilege of conferring
these benefits to the public through the
course of producing their product.
There has been discussion aimed at
generating revenue for shellfish growers
in exchange for the environmental
benefits that result from shellfish
production. The growers hope that a
valid strategy is to leverage these
environmental benefits toward the goal
of generating a greater connection with
customers who value local food
production. Access to new
markets and price premiums is a
positive business outcome of
forging these local food
connections.
Eight to 10 clam growers and
12 oyster growers in New Jersey
have begun the process of
developing a marketing,
purchasing and shared-services
cooperative for their products.
KDC is currently assisting the
group with a logistics study for
locating a shellfish aggregation
center. KDC is also assisting its
partners in the development of a
survey that would gauge
production volume and is examining the
existing infrastructure and potential
markets available to producers.
The current transportation and
distribution assets of shellfish growers
are predominantly built to serve
conventional sales to wholesalers in
coastal and shore-oriented retail outlets,
which are highly seasonal. One of their
goals is to expand their year-round
markets.
Shellfish farming creates
environmental benefits
Forging links with food co-ops
A growing body of scientific
information is documenting the
environmental benefits of shellfish
farming. These benefits include: marine
habitat creation; removal of excessive
amounts of nutrients from water;
carbon sequestration; shoreline and
bottom stabilization; reduction in the
impact of waves on coastal areas; and
In the next year, KDC will continue
to assist the group with logistical plans
for siting aggregation points,
identifying area markets and developing
transportation plans for efficient
marketing. This includes connecting
shellfish producers with food
cooperatives in the area — a primary
goal for the group.
36 September/October 2012 / Rural Cooperatives
The growers identified the
development of effective, directmarking strategies that emphasize the
local aspect of farm-raised shellfish as
their most significant marketing
challenge. Emphasis on local food
production is, likewise, a viable strategy
for shellfish growers in other regions.
Currently, more than 85 percent of the
seafood consumed in the Unites States
is imported, so the market is open for
local products.
The MidAtlantic Alliance of
Cooperatives (MAFCA) is being used as
one resource to help develop the
connections to food cooperatives.
MAFCA, in its third year of operation,
is a network of food cooperatives in the
Mid-Atlantic area. KDC has been
instrumental in the formation of the
organization and continues to support
this important organization.
MAFCA currently has 22 member
cooperatives and has identified an
additional 20 potential members.
Within this group are 10 start-up
operations, most of which KDC has
been advising.
The food cooperative members have
an estimated total membership of nearly
39,000 individuals or households.
Current aggregate gross sales are more
than $100 million, not including the
projected sales of the start-ups.
MAFCA estimates that its members
are already purchasing more than $16
million annually in local products.
Representatives of the shellfish group
have met with several food cooperatives
in the area through MAFCA, and the
response has been very positive.
“Through this project, our members
would have improved access to local
seafood, as well as the knowledge that
we are contributing to a sustainable,
local, cooperative economy,” says Sue
Wasserkrug, an MAFCA board
member. “This project would be an
important component in expanding
access to local shellfish for thousands of
families in the Mid-Atlantic region,
while ensuring the vibrancy of the
coastal New Jersey economy.” n
The Scircleville Grain and Fertilizer hub in Indiana is part of Co-Alliance LLP, a
joint venture of five cooperatives. Photo courtesy Co-Alliance LLP.
Use of joint ventures by ag co-ops on rise
By Bruce J. Reynolds Ag Economist
USDA Rural Development
ventures and
J oint
subsidiaries offer
alternative ways for
cooperatives to test
market opportunities or
to gain expertise about new industries
without having to build a new division
within their organizations. In some
cases, providing a new service may
involve such large economies of size
that sharing costs in a joint venture
produces substantial savings.
The types of businesses that
cooperatives establish as joint ventures
are examined in a recent research
report, Joint Ventures and Subsidiaries of
Agricultural Cooperatives, Research
Report 226, available for download
from USDA at: www.rurdev.usda.gov/
BCP_Coop_RRs.htm; or, for a free
hard copy, send e-mail to: coopinfo@
wdc.usda.gov. This article is based on
that report.
Survey methodology
The collection of data for this report
combined a mail survey with follow-up
by telephone of cooperatives that
reported involvement in joint ventures.
The 185 co-ops reported having 108
wholly-owned subsidiaries and 209 joint
ventures.
The follow-up by telephone
interviews identified the names of the
joint ventures, enabling the elimination
of any duplicate reporting of joint
ventures. In addition, details on the
types of businesses that cooperatives
organized in joint ventures were
obtained; the same information was not
collected for wholly-owned subsidiaries.
The distribution of different types of
businesses for joint ventures is
presented in the pie chart.
Several distinctive developments are
identified in the report, of which three
are highlighted in this article: the
prevalence of the Limited Liability
Company (LLC) as a legal form for
organizing, using joint ventures to
combine all business operations of
separately owned partners and the
strategy of spawning new businesses.
Use of Limited
Liability Companies (LLC)
Cooperatives have established
subsidiaries and participated in joint
ventures over many decades, but the
availability of the LLC as a legal form
of organizing during the mid-1990s
significantly increased their number. In
a survey from 2010/2011, agricultural
cooperatives reported participation in
240 LLCs, of which 172 were joint
ventures. A corporation was the second
Rural Cooperatives / September/October 2012 37
Joint ventures by type of business operation
Marketing agent 21
Processing 30
Other 29
Business combination 6
Agronomy 29
Bioenergy 16
Supplies purchasing
Fuel distribution 21
Grain terminals 19
most used form, followed by limited
liability partnerships.
A 1975 study of cooperatives
involved in food marketing and
processing identified 22 joint ventures,
as compared to almost 100 federated
cooperatives in operation at that time.
Comparing those findings with the
results of USDA latest research suggests
that the LLC form of organization is
being used in many cases as a substitute
for incorporating as a federated
cooperative.
Many cooperatives have joint
ventures that include non-cooperatives.
Although a federated cooperative can be
established with non-cooperatives, it is
more common today to have joint
ventures instead. The 1975 study
identified six joint ventures with both
cooperatives and non-cooperatives out
of a total of 22 such businesses. By
contrast, the recent study showed that
there were 83 joint ventures that
included non-cooperatives partners out
of 175 joint ventures that reported
partner information.
The availability of organizing as an
LLC may not only increase the
frequency of joint ventures but also
Feed mills 21
accommodates more of them between
cooperatives and non-cooperatives. Of
course, other market forces have also
played a part in increasing the
participation of cooperatives with noncooperatives in joint ventures since
1975.
Most of the joint venture activity
with agricultural cooperatives did not
involve numerous partners (more than
20). Joint ventures with 7 to 20
agricultural cooperatives as members
were mostly organized for purchasing
supplies, obtaining regulatory compliance services or sharing marketing
agents.
The survey identified 17 farm supply
purchasing joint ventures, with one
organized as a cooperative and the
other 16 as LLCs. By contrast, there
are several examples of purchasing
cooperatives organized by nonagricultural small businesses (as
reported in USDA’s Cooperative
Information Report 63). They mostly
operate nationwide, with memberships
well in excess of 100.
Examples include Imark, which
purchases supplies for electrical
equipment distributors, and Carpet
38 September/October 2012 / Rural Cooperatives
One, with a large membership of store
owners who retail carpet and floor
products.
Organizing large memberships in
cooperatives rather than in LLCs may
have advantages for empowering a
board of directors. Delegating decisionmaking authority to a small board of
directors in a cooperative is sanctioned
by incorporation statutes. Granting
such authority to a few partners in an
LLC with a large membership may
involve more complex legal provisions.
Business combinations
Since the early 1990s, there have
been several instances of neighboring
cooperatives combining a division, such
as their agronomy units, into a single
operating unit. These joint actions are
often precursors to mergers of the
cooperatives. A recent development for
some local grain and farm supply
cooperatives is to form joint ventures
with similar businesses that combine all
operations into an LLC operating
entity with one trade name. In these
cases, there is no plan for a future
merger. Instead, each cooperative
functions as a holding company for the
joint venture and retains its separate
membership for distributing patronage
dividends.
The survey identified six joint
ventures that combine all grain
marketing and farm supply services
under one trade name. Four of these
ventures include cooperatives
partnering with one non-cooperative
from different multi-national
agribusiness companies.
When operating with noncooperatives under a new trade name,
cooperative identity may be diminished
or lost for future generations of
farmers. Two of these businesscombination joint ventures exclusively
have cooperatives as partners and
promote cooperative principles to their
members.
Business spawning
In contrast to combining business
operations of two or more cooperatives,
joint ventures can also be organized for
entering businesses in which the
partners have not had previous
involvement. One form of this type of
development is called “spawning,”
which refers to a business that helps
others start up a new activity that it
does not want to exclusively own and
operate within its organizational
structure.
The survey identified a few examples
of spawning. Large regional
cooperatives participate in some joint
ventures for facilitating direct
involvement and ownership by local
cooperatives in new businesses. For
example, several feed milling joint
ventures involved a large regional
cooperative working in joint ownership
with local cooperatives.
There were also examples of rural
electric cooperatives participating in
propane distribution joint ventures with
farm supply cooperatives to assist in the
start-up of those businesses. The rural
electric co-ops eventually left the joint
ventures once these propane businesses
were firmly established. Apart from
joint venture partnering to spawn
businesses, utility cooperatives also have
a role in helping USDA Rural
Development implement renewable
energy programs and new enterprises.
Working together
USDA Cooperative Programs’
Research Report 226 updates the
current status of cooperative
involvement in joint ventures and
subsidiaries. It reports a variety of
different types of businesses where
cooperatives have identified advantages
of lower costs and better performance
by working with others.
As cooperatives represent farmers
and ranchers working together, this
research shows that they can extend the
same idea in forming joint ventures with
other cooperatives and businesses. n
Rural Cooperatives / September/October 2012 39
It has been a long, bumpy road for members of the Ferro
Cooperative in Ethiopia, seen here sorting and drying
their crop. But the co-op is helping growers earn a better
return for their coffee. Photos courtesy ACDI/VOCA
‘The pillar of my home’
Coffee co-ops brew
better quality of
life for Ethiopian
farm families
By Anja Tranovich
40 September/October 2012 / Rural Cooperatives
Editor’s note: Anja Tranovich is editor and media relations senior
specialist for ACDI/VOCA, a nonprofit organization promoting
economic and cooperative development around the world. ACDI/VOCA
has worked in 145 countries since 1963 implementing projects funded
by USDA, the U.S. Agency for International Development (USAID),
ACDI/VOCA member cooperatives and farm credit banks, the Bill &
Melinda Gates Foundation and others.
2005, the Ferro coffee cooperative in
I nEthiopia
accomplished a remarkable feat: its
Shirkina, dry-processed coffee was designated
as a Starbucks’ Black Apron exclusive coffee.
It was only the eighth coffee in the world to
receive the designation.
Starbucks introduced the Black Apron label in 2004 to
designate “rare, exotic and cherished coffees…that represent
Starbucks’ expertise in coffee and dedication to the farmers
who grow the finest beans.”
The Seattle coffee giant has worked closely with the coop, buying the first year’s crop even when it ultimately had to
be thrown away due to problems during the sun- drying
process. But the second year’s harvest produced an
Rural Cooperatives / September/October 2012 41
“Without cooperatives, Ethiopian coffee growers
would be out of the market.”
Ethiopia, considered to be the birthplace of coffee, is regaining its reputation as a producer of premium coffee beans, seen here being dried.
extraordinary, limited-issue coffee that Starbucks marketed
with great success. The company also provided a $15,000
grant to the Ferro co-op’s community and extended $5
million in financing through a nonprofit associate, EcoLogic
Finance.
For the co-op members, it had been a long, bumpy path
from Ferro’s small “backyard coffee gardens” to upscale
coffee shops in the West, glowing reviews and a rarefied
retail price of $26 per pound.
World’s 2nd most
valuable commodity
Much is at stake in the global coffee market. Coffee is the
42 September/October 2012 / Rural Cooperatives
world’s second most valuable commodity, trailing only
petroleum. Today, most coffee lovers don’t blink at the
premium prices fetched by Ethiopian specialty-roast coffee in
high-end shops. But it wasn’t always that way.
Ethiopia, the birthplace of coffee, once had a reputation
for producing mediocre quality coffee. Its coffee was
aggregated and sold as a bulk commodity instead of as a
value-added, specialty food. Government intervention,
limited availability of capital to farmers and careless
processing kept Ethiopian coffee — and its growers —
marginalized.
A number of U.S. development organizations,
cooperatives and volunteers worked with USDA, the U.S.
Agency for International Development (USAID), the
Ethiopian government and Ethiopian farmers for nearly two
decades to reform the cooperative sector. That work
propelled the development of the entire coffee value chain
upward, enabling cooperatives such as Ferro to reach new,
vastly expanded markets.
“Without cooperatives, Ethiopian coffee growers would be
out of the market,” says Asnake Bekele, general manager of
the Sidama Coffee Farmers Cooperative Union, which
represents 80,000 smallholders. There are now 37,647
primary cooperatives in Ethiopia, with 5.9 million individual
members. Cooperatives directly benefit 39 percent of the
country’s farmers.
U.N. recognizes promise of cooperatives
The United Nations (U.N.) has designated 2012 as the
International Year of Cooperatives, and the U.N.’s Food and
Agricultural Organization (FAO) is celebrating World Food
Day on Oct. 16 with the theme: “Agricultural Cooperatives:
Key to Feeding the World.” These efforts resonate deeply in
a place like Ethiopia, where growers’ needs are virtually
unlimited and food shortages constantly loom. Co-ops here
are a critical organizing medium and a catalyst for economic
growth.
With a history of recurrent drought and regular structural
food deficits, Ethiopia faces serious agricultural challenges.
Half of the country’s gross domestic product is based on
agriculture, but a lack of technical know-how, widespread use
of out-dated agricultural practices and a co-op system that
was previously more of an entity of the state than a modern
business model all combined to inhibit economic growth.
On-the-ground training
and development
After the collapse of the authoritarian Derg regime in
1991, the United States began providing Farmer-to-Farmer
Program volunteers and other assistance to boost Ethiopia’s
agricultural sector. ACDI/VOCA and Land O’Lakes were
among the organizations that sent U.S. volunteer experts to
train local cooperatives in management, accounting and
operations under Farmer-to-Farmer and other development
programs.
Volunteer Brad Perry, the president of an agribusiness
consulting firm in Omaha, Neb., has completed five
assignments in Ethiopia. His first trip was to Yirgalem, an
area in the heart of the country with rich soil and a damp
climate. Working all day in a university classroom, with only
short coffee breaks during the intense heat of the day, he
trained about 40 cooperative members in financial
management.
The trainees were “extremely capable and competent
people,” Perry recalls. “The highest compliment I could
give,” he continues, “is that I’d hire them in a heartbeat.”
But the Ethiopian marketplace presented many barriers.
Labor is cheap in Ethiopia, while capital — especially during
the 1990s — was nearly inaccessible, acutely so for farmers.
In his classes, Perry would set aside time to work through
case studies, each of which identified an actual problem
facing their co-ops. It seemed that nearly all his projects
became feasibility studies on how to amass capital to purchase
a truck, expand coffee processing or build a warehouse.
Cooperative unions
provide breakthrough
Co-op capacity building took place both person-to-person
and insti-tutionally. In 1997, ACDI/VOCA began a USAIDfunded program to consolidate primary cooperatives into
unions in order to increase their leverage and impact through
increased bargaining power, management capacity and
economies of scale. This helped them access capital.
One of the first apex organizations — the Lumme
Farmers’ Cooperative Union — initiated a competitive
bidding process and bought inputs directly from importers to
save $175,000 in fertilizer costs for all cooperatives in the
Oromia region.
Over two years, the success of this union model was
replicated in other districts of the region, reducing overall
fertilizer costs by $4 million for 47,000 coffee and cereal
farmers. For the first time in Ethiopian cooperative history,
farmers were also paid a dividend on their production.
These dividends had direct impact: they allowed members
such as Etensesh Mekonen to cover her thatched-roof house
with corrugated iron sheeting. Other union members
invested dividends back into their coffee ventures, started
new businesses or paid for their children’s education.
Strengthening co-ops’
capacity to scale up
Ethiopian cooperatives worked with U.S. businesses and
agencies to build a reputation as a source for high-quality,
organic and fair trade coffee for the global market. It was a
comprehensive, value-chain approach that addressed
opportunities and constraints at each level of the industry.
The emphasis was placed on strengthening cooperation
among small-scale producers, as well as establishing
secondary cooperatives or unions to achieve the economies of
scale needed to reach international markets.
The coffee unions won the right to sell outside of the state
auction process. Once international roasters and buyers could
purchase specific lots of coffee instead of undifferentiated
commodity, there was a revolution in coffee quality.
Suddenly growers had incentives to produce carefully tended
and processed coffee; quality standards soon skyrocketed.
In 2005, the California-based Ecafe Foundation worked
with local stakeholders to organize a co-op coffee
continued on page 50
Rural Cooperatives / September/October 2012 43
Newsline
Co-op developments, coast to coast
Send co-op news items to: dan.campbell@wdc.USDA.gov
Land O’Lakes acquires
Kozy Shack
Land O’Lakes has acquired Kozy
Shack Enterprises Inc., a market leader
in the chilled dairy desserts category in
North America. “Kozy Shack is a strong
strategic fit with our value-added dairy
foods product portfolio,” says Land
O’Lakes President and CEO Chris
Policinski.
Kozy Shack, based in New York, was
founded more than 40 years ago and
markets dessert products in the United
States and Canada, with a small
presence in Ireland. Its plant in
Hicksville, N.Y., produces 70 percent of
its product volume. It also has a plant in
Turlock, Calif. The company also owns
and operates a logistics services
company, Freshway Distributors, which
serves various third-party manufacturers
and distributors.
“The acquisition of Kozy Shack
represents a new category for Land
O’Lakes — refrigerated desserts —
which offers our retail customers an
even wider selection of premium dairy
food products,” Policinski says. Land
O’Lakes will apply its extensive sales,
marketing, distribution and customer
service expertise to expand sales of these
products, he adds.
Co-op conference to
explore global market trends,
innovation
Ways in which agricultural
cooperatives can strategically position
themselves for sustainable growth will
be the focus of this year’s Farmer
Cooperative Conference, Nov. 8-9 in
Minneapolis. Now in its 15th year, this
annual national conference regularly
attracts top cooperative business leaders
and industry experts. They come
together to share the latest research,
trends and innovative approaches by
agricultural cooperatives.
44 September/October 2012 / Rural Cooperatives
The conference is organized by the
University of Wisconsin Center for
Cooperatives, with assistance from a
planning committee of industry and
academic experts.
This year’s conference theme is
“Leading Change: Envisioning the
Future.” Sessions will address the
impact of the global economy on coops, federal policy developments,
valuing cooperative businesses in
mergers and acquisitions, trends in the
energy marketplace and successful
cooperative leadership programs.
“This is one of the few events where
academics, service providers, directors
and employees of cooperatives have an
opportunity to interact in the same
forum,” says Michael Boland, a
professor of agricultural economics at
the University of Minnesota. He is
examining the culture of safety within
cooperatives and will be moderating a
panel at the conference on developing
better practices relating to risk and
safety.
Support for the program comes from
CoBank, CHS, Dorsey & Whitney,
Farm Foundation, GROWMARK,
Land O’Lakes, Lindquist and Vennum,
NCFC Education Foundation, Stoel
Rives, CliftonLarsonAllen and the
Ralph K. Morris Foundation.
“The University of Wisconsin
Center for Cooperatives has put
together another outstanding program
this year, and we urge cooperative
organizations to attend the conference
and to support its ongoing success,”
says Peter Rudeen of CoBank’s
Regional Agribusiness Banking Group.
The two-day conference will be hosted
at the Radisson Plaza Hotel
Minneapolis. More information about
the conference program and
registration is available at:
www.uwcc.wisc.edu or by contacting
Anne Reynolds at 608-263-4775 or
atreynol@wisc.edu.
Established in 1962, the UW Center
for Cooperatives focuses on education,
research and outreach on all aspects of
the cooperative business model,
including development, finance,
structure and governance.
Linn Co-op to get
boost with E15 sales
The Linn Co-op Oil Co. in Marion
will be one of the first Iowa fuel
retailers to offer E15 (gasoline
containing 15 percent ethanol) for late
model vehicles. The Iowa Renewable
Fuels Association announced in early
September that it has launched an
advertising campaign to promote E15.
CoBank announces drought assistance initiatives
CoBank announced Sept. 13 that it is launching new
initiatives to assist agricultural borrowers and others
impacted by the 2012 drought. CoBank’s base of
customers includes hundreds of grain and farm supply
cooperatives in the central region of the country, as well
as a large number of customers in the protein and dairy
sectors, where impacts from the drought have been the
worst. In addition, the bank’s affiliated Farm Credit
associations serve over 70,000 individual farmers and
ranchers in 23 states across the nation, including many
drought-impacted areas.
“We’re committed to supporting our customer-owners
at a time of significant challenge for U.S. agriculture,”
says Robert B. Engel, CoBank’s president and CEO. “Our
agribusiness customers are, in general, in good financial
condition and accustomed to dealing with weatherrelated volatility that is a fact of life for their industry. The
same is true of the farmers and ranchers who borrow
from our affiliated Farm Credit associations. But we
believe having this program in place will help us better
fulfill our mission as the impacts of this historic drought
are felt over the balance of the year.”
CoBank’s drought relief initiatives will include
expedited review and processing of any customer’s loan
request stemming from the drought, as well as working
collaboratively with borrowers experiencing droughtrelated distress on a case-by-case basis. In addition, the
bank will partner with its affiliated associations to
provide support for local drought relief programs
established to assist farmers, ranchers and other rural
borrowers within their individual service territories.
“As a cooperatively owned, mission-based lender,
CoBank’s core purpose is to provide dependable credit
for agriculture and the other vital industries we serve in
rural America,” Engel says. CoBank and the nation’s
three other Farm Credit banks issued a joint statement
saying that despite the challenges presented by the
drought, the Farm Credit System remains well positioned
to meet the financial needs of the farmers, ranchers,
cooperatives and other rural borrowers.
CoBank also announced it will contribute $1 million to
Feeding America, the nation’s leading hunger relief
charity. The funds will be designated to support programs
in areas of the country where the bank and its affiliated
associations have significant operations. n
Rural Cooperatives / September/October 2012 45
The campaign is co-sponsored by the
Iowa Corn Growers.
Billboards announcing the
availability of E15 at Linn Co-op have
been erected. The billboards were to be
changed to a branding message on Sept.
24, and are to stay up until Oct. 7. The
slogan for the campaign will be: “The
roads of Iowa will never be the same.”
Campaign messages will emphasize the
cost savings and performance benefits
of E15, according to association
officials.
In June, the U.S. Environmental
Protection Agency approved rules
allowing retailers to sell the 15-percent
ethanol fuel blend for 2001 and later
vehicles. Linn Co-op was among the
first five retailers to receive an EPA
approval letter to sell the fuel.
Robert Hawk new CEO at
blueberry co-op
Robert E. Hawk assumed duty Aug.
1 as CEO and president of MBG
Marketing, a blueberry cooperative
based in Grand Junction, Mich. During
his 35 years of professional experience,
Hawk has worked in a variety of
production and senior management
positions at leading consumer products
companies, including Weaver Popcorn
Co. Inc., CROSSMARK Inc. and
Northland Cranberries.
“Bob’s experience in value-added
product development and plant
operations are an excellent fit for our
recently completed strategic plan,” says
Pat Goin, chairwoman of the MBG
board.
Hawk says he is impressed that
MBG, established in 1936, “has had the
foresight to invest in new innovations
and expanded capabilities. We will
continue to focus on growing and
delivering a high level of quality
products and services that lead to solid
customer relationships, loyal consumers
and long-term grower profitability.”
In 2013, MGB will be exploring
opportunities for new, value-added
products and will open an IQF
(instantly quick frozen) berry processing
plant in Bloomingdale, Mich. The coop will be offering several new
Robert Hawk
proprietary blueberry varieties that have
been developed by its in-house plant
breeders. “These berries have incredible
flavor, size and improved vigor for
better shelf life,” Goin says.
“As a growers’ cooperative, we also
focus on attracting additional highquality growers into the organization so
that we can provide a consistent supply
of delicious berries to our clients,” says
Goin, who credited Hawk for “hitting
the ground running” in August as the
co-op was handling a record 2012 crop.
MBG Marketing – also known as
“The Blueberry People” – is a
producer-owned blueberry marketing
cooperative with many multi-generation
farm families growing primarily
blueberries in Michigan, Indiana,
Georgia, Florida, New Jersey, North
Carolina, Oregon, Washington and
British Columbia. In conjunction with
its three partners in grower-owned
Naturipe Farms, MBG is the largest
marketer of fresh and processed
blueberries in the world.
MFA expands
operations in Kansas
MFA Enterprises, a wholly owned
subsidiary of MFA Inc., has purchased
Irsik & Doll’s feed mill and grain
elevator in Emporia, Kan., as well as
Emch Feed and Elevator Co. Inc. in
Madison, Kan. The new additions will
strengthen its feed manufacturing and
grain merchandising operations in the
46 September/October 2012 / Rural Cooperatives
region, the co-op says.
MFA, which had net sales of $1.3
billion in 2011, also recently added a
retail outlet in Osage City, Kan., to the
Ag Choice Agri Services centers MFA
already operates in eastern Kansas and
northeastern Oklahoma through its
AGChoice retail stores.
“Buying the Emporia and Madison
facilities allows MFA to expand its
scope of agricultural products and
services to a wider geographical area
and to strengthen service to MFA’s
existing farmer and rancher customers
in eastern Kansas, Missouri and the
Midwest,” says Alan Wessler, MFA vice
president of feed operations and animal
health.
MFA serves 45,000-plus active
farmers in Missouri, eastern Kansas,
northeastern Oklahoma and adjacent
states. Founded in 1914, MFA has 131
company-owned locations and 25 local
MFA affiliates with 23 branches. The
cooperative also serves about 400
independent dealers and local
cooperatives not affiliated with MFA.
USDA loans to help co-ops
deploy smart grid technology
U.S. Agriculture Secretary Tom
Vilsack in August announced that rural
electric utilities in 18 states will receive
loan guarantees to make improvements
to electric lines and transmission
facilities, and to reduce peak-demand
electric loads by deploying “smart grid”
technologies. USDA Rural Utilities
Administrator Jonathan Adelstein made
the announcement on Vilsack's behalf
while visiting the offices of one of the
recipients, Southside Electric
Cooperative (SEC) in Crewe, Va.
This consumer-owned, Virginia
power cooperative is using the USDA
funds to build and improve a
distribution line and a transmission line;
it will also invest nearly $7.4 million for
smart grid system enhancements. In all,
service will be upgraded for about 1,500
SEC members.
“Maintaining and upgrading rural
electric systems improves system
reliability, creates jobs and supports
economic development,” Vilsack says.
“With these loans, we are continuing to
help cooperatives provide reliable
service to rural residents. A significant
portion of this funding will go to smart
grid technologies, helping consumers
lower their electric bills and reducing
peak demand for producers.”
The awards announced in August
include support for nearly $29 million
in smart grid projects, helping USDA
Rural Development move closer to
reaching Secretary Vilsack’s goal of
providing more than $250 million for
smart grid technologies. In all, USDA is
investing more than $420 million in
rural electric infrastructure.
Farm Credit supports
Gardening for Greenbacks
Three of the nation’s leading
agricultural lenders have joined forces
to provide financial support for
beginning urban farmers in Cleveland
as part of the city’s “Gardening for
Greenbacks” program. Minneapolisbased AgriBank, Denver-based CoBank
initiative developed by the city of
Cleveland to increase the production of
local foods and establish Cleveland as a
model for local food system
development. By providing financial
assistance to local entrepreneurs for the
development of for-profit urban food
gardens, the program aims to encourage
economic development while helping to
ensure that every resident has access to
fresh, healthy and affordable food.
“Our contribution to Gardening for
Greenbacks is a great way for us to
serve farmers in an urban
environment,” says Bill York, AgriBank
CEO. “We recognize the value urban
farming offers to local communities as a
supplement to more traditional forms of
agriculture. Cleveland is at the
forefront of this movement and we are
proud to help further their efforts.”
“As a mission-based lender, we are
committed to encouraging the
development of local food systems,
including urban farming. We’re
delighted to be partnering with other
Cleveland Mayor Frank G. Jackson (far left) gathers with Farm Credit and CoBank officials
and other city council members during a ceremonial check presentation made in support of
the city’s Gardening for Greenbacks program. Photo courtesy Farm Credit
and Louisville-based Farm Credit MidAmerica each committed $45,000 to the
program for a total donation of
$135,000.
All three institutions are members of
the Farm Credit System, a nationwide
network of producer-owned banks and
associations chartered to meet the
credit needs of agriculture and other
key rural industries.
Gardening for Greenbacks is an
Farm Credit organizations in support of
this innovative program,” adds Andrew
Jacob, executive vice president at
CoBank.
The Farm Credit donation will fund
grants of up to $5,000 to enable
program participants acquire the
necessary equipment for urban
gardening, such as tools, fencing and
irrigation systems. Grant recipients are
required to successfully complete a
market gardener training class offered
by the Ohio State University Extension
and to sell their produce locally.
For nearly a century, Farm Credit
has been a national provider of credit
and related services to rural America
through a cooperative network of
customer-owned lending institutions
and specialized service organizations.
Book says co-ops best way
to re-charge U.S. economy
E.G. Nadeau, a well-known
cooperative development consultant,
has written a new book:
“The Cooperative Solution: How the
United States
can tame
recessions,
reduce
inequality and
protect the
environment.”
It focuses on
the widespread
role of
cooperatives in
the U.S.
economy and makes the case for greatly
expanding their role in the future as a
means to stabilize the economy and
improve the quality of life for its
citizens.
Despite the major presence of co-ops
in the world economy and in the
United States, this democratically
owned part of the private sector is
inadequately understood and greatly
underappreciated, Nadeau says. His
basic tenet is that co-ops are
democratically controlled and are
motivated primarily by the goal of
providing services to their members,
not by generating profits for their
owners and investors. As a result, coops are much more likely to avoid the
negative consequences of economic
institutions that are primarily driven by
the quest for ever-increasing profits.
Nadeau, who has a Ph.D. in
sociology from the University of
Wisconsin-Madison, has spent the past
40 years researching, developing,
teaching and writing about cooperatives
in the United States and in 20 other
Rural Cooperatives / September/October 2012 47
countries. For more information, send
e-mail to: egnadeau@inxpress.net.
Minn-Dak
expanding sugar plant
Minn-Dak Farmers Cooperative is
planning a $70-million expansion to be
built over two years at its sugar beet
processing plant in Wahpeton, Minn.,
according to the Wahpeton Daily
News. The molasses de-sugarization
plant will turn byproduct beet molasses
into products used in food, pharmaceuticals and feed supplements. The coop says the project will create 20 fulltime jobs.
The Richland County Commission
has approved a tax break for the
expansion, under which property taxes
will be waived the first five years and
cut in half the next five years, the
newspaper reported.
Eric Erba new strategy
officer at California Dairies
California Dairies Inc. (CDI), the
nation’s second largest dairy processing
cooperative, has appointed Eric Erba as
senior vice president and chief strategy
officer (CSO). He will report to Andrei
Mikhalevsky, president and CEO.
Erba is the former senior vice
president of administrative affairs for
CDI, based in Visalia, Calif., where he
has worked since 2006. Before that, he
was the assistant director for the
Division of Animal Health and Food
Safety Services at the California
Department of Food and Agriculture.
He holds a doctorate degree from
Cornell University in ag economics
(dairy markets and policy specialty).
The co-op has also appointed David
Treiber as senior vice president of fluid
business development. In his new role
with CDI, Trieber will manage all fluid,
condensed and cream sales. He had
been vice president and division
manager for food ingredients at
Challenge Dairy Products, a wholly
owned subsidiary of CDI, since 1999.
CDI is the largest member-owned
milk marketing and processing
cooperative in California, producing 43
percent of the state’s milk. It is owned
by more than 420 dairy producers, who
ship more than 17 billion pounds of
milk annually to their co-op, which
manufactures butter (including the
Danish Creamery and Challenge
brands), fluid milk products and milk
powders.
USDA issues expanded
farmers market directory
There has been a 9.6 percent
increase in the past year in the number
of farmers markets listed in USDA’s
National Farmers Market Directory,
U.S. Agriculture Deputy Secretary
Kathleen Merrigan announced in
August to help kick off National
Farmers Market Week. Many farmers
markets are organized as cooperatives,
and many others operate on cooperative
principles.
USDA’s farmers market directory can
be viewed on-line at:
farmersmarkets.usda.gov. It identifies
7,864 farmers markets operating
throughout the United States, up from
7,175 markets listed the year before.
The information collected in the
directory is provided voluntarily by
farmers market managers through an
annual USDA outreach effort.
“Farmers markets are a critical
ingredient to our nation’s food system,”
Merrigan said at the kickoff event.
“These outlets provide benefits not
only to the farmers looking for
important income opportunities, but
also to communities looking for fresh,
48 September/October 2012 / Rural Cooperatives
Farmers markets such as this are
increasingly popular with shoppers.
healthy foods. The directory is an online tool that helps connect farmers and
consumers, communities and businesses
around the country.”
The states with the most farmers
markets are: California (827); New York
(647); Massachusetts (313); Michigan
(311); Wisconsin (298); Illinois (292);
Ohio (264); Pennsylvania (254);
Virginia and Iowa (tied with 227) and
North Carolina (202). Together, these
states account for nearly half of the
farmers markets listed in the 2012
directory.
USDA’s Food and Nutrition Service
is helping more farmers markets gain
the ability to accept SNAP
(Supplemental Nutrition Assistance
Program, formerly food stamps). It has
made $4 million available to equip
farmers’ markets with wireless, pointof-sale equipment. Currently, more
than 2,500 farmers markets are using
Electronic Benefit Transfer technology.
CHS, Mountain View Co-op
building warehouse
Energy, grains and foods co-op CHS
Inc. and Mountain View Co-op of
Black Eagle have formed a limited
liability company to build a 35,000-ton
dry fertilizer warehouse at Collins,
Minn. Warehouse construction is
underway, with completion expected
mid-summer 2013.
Mountain View Co-op will be the
facility’s exclusive fertilizer retailer,
serving growers throughout their trade
area. Products stored at the new facility
will include urea, phosphates, potash,
ammonium sulfate and micronutrients,
and all agronomic products routinely
used by area growers.
“Over the years, we’ve noticed a
continued shift to earlier planting and
an increase in the time it takes fertilizer
manufacturers to get products to us to
meet growers’ needs,” says Bruce Clark,
general manager of Mountain View
Co-op. “This new facility will enable us
to meet our growers’ increased demand
for nitrogen and sulfur products, to
ensure healthy, profitable crop
production.”
Located in north-central Montana,
As construction crews worked
Mountain View Co-op operates
and heavy machinery roared
10 agronomy locations within a
behind him, McDowell thanked
100-mile radius of Great Falls,
USDA and Lismore Telephone
serving farmers growing dryland
for supporting the project.
winter wheat and irrigated hay,
“Because of their guidance and
malt barley and dryland barley.
support, livestock producers will
“Urea normally produced and
have access to the most efficient
shipped from Canada is
and versatile feed mill in the
increasingly being used locally
Midwest.”
by Canadian farmers, greatly
Both the loan and the grant
limiting product availability,”
were awarded through USDA’s
says Cheryl Schmura, CHS vice
Rural Economic Development
president for its Crop Nutrients
Loan and Grant (REDLG)
division. “The strategic location
program, which provides zeroof the Collins fertilizer hub
interest loans to local utilities
plant means customers in this
which, in turn, provide funds to
region will have secure,
local businesses (ultimate
competitive supply.”
recipients) for projects that will
In other CHS news, the cocreate and retain employment in
op has announced that it will
rural areas.
serve as the exclusive off-take
company for urea fertilizer
Hispanic, women farmers
produced by the Summit Texas
may seek compensation
Clean Energy Project LLC
Hispanic and women farmers
plant at Penwell, Texas. CHS
and ranchers who believe that
will also be a minor investor in
New Vision Co-op’s feed mill in Magnolia, Minn., during
construction. The grain elevator at the $12.6 million facility
the U. S. Department of
the plant, which is expected to
is expected to open by November, with the feed mill to be
Agriculture (USDA) improperly
generate up to 700,000 tons of
in operation by June.
denied them farm loan benefits
urea annually.
between 1981and 2000 because
“The ability to source highthey are Hispanic or female may
quality, domestically produced
be eligible to apply for
urea will help enhance and
re-loaned the funds to New Vision Cocompensation
if:
streamline our operations while
op to help pay for the $12.6-million
1) They sought a farm loan or farmproviding consistent supply to
project.
loan servicing during that period;
customers throughout the region,” says
The facility will process about 120
2) The loan was denied, provided
Schmura.
tons of feed an hour, employ 15 people
late,
approved for a lesser amount than
and deliver swine, dairy and poultry
USDA helping Minn.
requested, approved with restrictive
feed to customers from as far as 100
co-op build feed mill
conditions or USDA failed to provide
miles away. About 200 area farmers will
As construction crews were busy
supply the 3 million bushels of corn and appropriate loan service; and
recently putting the finishing touches
3) They believe these actions were
500,000 bushels of soybean to the mill
on New Vision Co-op’s new grain
based on their being Hispanic or
annually.
elevator and feed mill in Magnolia,
female.
“It’s a big deal,” says Frank
Minn., USDA Rural Development
To receive a claims package, visit:
McDowell, New Vision’s general
State Director Colleen Landkamer and
www.farmerclaims.gov,
or call 1-888manager. The elevator is expected to be
other area leaders visited the site to
508-4429.
open in November and the mill should
highlight the economic impact of the
For further guidance, you may
be operating by June.
project. “This investment by USDA
contact a lawyer or other legal services
USDA Rural Development also
means jobs and economic development
provider in your community. USDA
selected Lismore Telephone
opportunities,” Landkamer said.
cannot provide legal advice. If you are
Cooperative to receive a $300,000
The investment from USDA Rural
currently represented by counsel
Rural Economic Development Grant,
Development came in the form of a
regarding allegations of discrimination
which will be used to establish a
$740,000 Rural Economic
or in a lawsuit claiming discrimination,
revolving loan fund to help small
Development Loan made to the
you should contact your counsel
businesses in Rock County with “gap
Lismore Telephone Cooperative, which financing” and job creation projects.
regarding this claims process. n
Rural Cooperatives / September/October 2012 49
Top 100
continued from page 12
segment) are: farm supply co-ops (10);
mixed farm supply and grain co-ops
(29); grain co-ops (14); dairy co-ops
(22); sugar co-ops (7); fruit and
vegetable co-ops (8); and other
marketing co-ops (10).
Historical comparison
Comparing total gross business
volume of these 100 cooperatives from
2006 to 2011 shows that there was a
peak in 2008, then total gross business
‘The pillar of my home’
continued from page 43
competition. The highest-scoring
coffees from the competition were
selected to participate in an Internet
auction hosted by the Specialty Coffee
Association of America (SCAA). This
first-ever Internet auction of Ethiopian
coffee generated more than $187,000
for farmers in 150 co-ops, with an
average price paid of $3.22 per pound,
compared to the then-market price of
$1.30 per pound.
An overall premium of $75,000 was
paid for these coffees, with all proceeds
distributed to the cooperatives. A
second auction in 2006 earned more
than $250,000. In addition to benefiting
these limited-resource producers, the
reputation of Ethiopian coffee was also
elevated into the first rank.
As a result of the auction, William
Boot, co-founder of Ecafe, declared:
“Farmers at the co-op level who
produce these exemplary coffees will
receive the prices and the recognition
they deserve.”
Building on success
Today, a USDA-funded
volume fell before hitting a high during
2011. Total business volume increased
by almost 30 percent between 2010 and
2011 as illustrated in figure 1.
Patronage income (income from
other cooperatives) increased by $12.2
million in 2011, or 7.3 percent. Net
income (after taxes) grew by 38 percent,
or $877 million. The value of crop and
livestock production affected the
increase in net income during 2011.
Figure 3 shows that mixed grain and
supply cooperatives account for 43
percent of the revenue of the top 100
co-ops while comprising only 29
percent of the number of cooperatives
on the list (the largest group). The
mixed grain and supply group also
accounted for 47 percent of the assets
of the top 100 ag-co-ops.
Dairy (22 cooperatives) accounted
for 23 percent of the revenue and 15
percent of the assets (figure 4). This
dropped from last year’s figures of 25
percent and 17 percent, respectively.
Changes in the size of the functional
groups between 2002 and 2011 are
shown in figures 5 and 6. Mixed
cooperatives were also the most
numerous (29 percent) in 2002. The
number of co-ops in each functional
group shows only small fluctuations
during the 10-year period. n
ACDI/VOCA project is working to
increase the incomes of smallholder
farmers through improved access to
consistent, affordable and high-quality
animal feeds that can support greater
livestock productivity and efficiency.
The Agricultural Growth ProgramAgribusiness and Market Development
(AGP-AMDe) — a USAID-funded,
Feed the Future initiative — is
currently strengthening Ethiopia’s
agriculture sector, enhancing access to
finance and stimulating innovation and
private sector investment. Amde means
“pillar of my home” in Amharic,
signaling its importance to household
well-being. Continued cooperative
development is a cornerstone of this
project.
“…As we look across sub-Saharan
Africa, we see enormous economic
growth, even as the global economy
continues to struggle,” U.S. Secretary
of State Hillary Clinton said in
Johannesburg, South Africa, on Aug. 6
during the U.S.-South Africa Business
Partnership Summit. “Seven of the
world’s 10 fastest-growing economies
are in this region,” she added.
Ethiopia, with more than 8 percent
GDP growth during the past decade, is
one of the countries Secretary Clinton
was referring to. However, its rural
poor still tend to be left out.
Food security in Ethiopia depends
largely on smallholder farmer
agriculture. For example, most of the
country’s coffee is produced by
smallholder farmers owning just three
to five acres of land and earning less
than $1 per day. Ethiopia’s decision to
revitalize its farmer cooperatives and
help them transition to marketoriented, private business organizations
– coupled with ongoing USAID- and
USDA-funded programs – has
established a framework for future
success.
Interventions to date through these
programs have had a big impact. An
ACDI/VOCA program assessment
showed that farmers reported having:
• Improved diet (64 percent of farmers);
• Better educated children (84 percent);
• Increased purchasing power for
consumer goods (77 percent);
• Improved homes (67 percent);
• Increased numbers of livestock (54
percent) and
• Newfound ability to hire labor (51
percent).
50 September/October 2012 / Rural Cooperatives
Revolutionizing Ethiopia’s
co-op movement
“The bureau, supported by
ACDI/VOCA with USAID funding, is
revolutionizing the cooperative
movement in Ethiopia,” says Zerihun
Alemayehu, former head of the
cooperative promotion bureau in the
Ethiopian prime minister's office.
Cooperatives under the previous regime
were poorly managed, he says
“The new model cooperatives
currently being promoted by the
government and ACDI/VOCA,”
Alemayehu continues, “are democratic,
business-oriented and professionally
managed with increased income to
member farmers as the primary
objective.”
Brad Perry agrees with Alemayehu
regarding the impact of cooperatives,
both in Ethiopia and the United States.
The work he did in Ethiopia
reinvigorated his appreciation of the
value and worth of cooperatives, which
has also benefited his work in the
United States, he says.
“It’s been a refresher course for me
on co-op theory and education,” Perry
says. “Because they really believe it [the
value of cooperatives] in Ethiopia; too
many times in the U.S., we’ve lost sight
of it.”
Management Tip
continued from page 19
Succession planning
resources from Farm Credit
Succession plans, like any business
plan, involve numerous factors that
require careful consideration. Seek
professional advice from to your lender,
accountant and attorney when
formulating a succession plan.
If keeping the farm in your family is
a top priority, look to experts you trust
to begin or revisit a succession plan; ask
questions and seek advice to help guide
you in building and maintaining a plan
that works for you and your family
business. Farm Credit, through its retail
banks and associations, offers many
programs that help borrower-owners
plan for and navigate the complexities
of succession planning.
Among them:
• AgSouth’s AgAware:
agsouthfc.com/AgSouthAgAwareProg
ram.html;
• AgCountry Farm Credit Services:
agcountry.com/en/Products-andServices/Succession-andRetirement.aspx;
• Visit farmcredit.com/locations to find
a Farm Credit location and additional
resources near you.
Now Available
“The Nature of the Cooperative” is a collection of five articles
reprinted from Rural Cooperatives Magazine that examine cooperatives
and their place in our free-market economy.
Author Charles Ling explains co-op economic structure, theory and
practice, as well as the economics of cooperative marketing and
co-ops’ relationships with other market participants through their roles
in transaction governance.
Available as hard copy or online. For hard copies, email:
coopinfo@wdc.usda.gov. Request Publication CIR 65 and indicate
quantity needed. Or call: (202) 720-8381. Or write: USDA Co-op Info,
Stop 0705, 1400 Independence Ave., SW, Washington DC 20250.
To download from the Web, visit:
www.rurdev.usda.gov/rbs/pub/cir65.pdf
Rural Cooperatives / September/October 2012 51
United States
Department of Agriculture
Washington, DC 20250
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52 September/October 2012 / Rural Cooperatives
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| File Type | application/pdf |
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| File Modified | 2012-09-28 |
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