al r u R COOPERATIVES - USDA Rural Development · Agriculture, Trade and Consumer Protection. Nilsestuen thus set in motion a ... Nilsestuen’s vision to connect the future economic

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lCOOPERATIVESCOOPERATIVES

Business blooming for new crop of co-ops

CO-OP MONTH SPECIALSECTION / page 18

September / October 2013

2 September/October 2013 / Rural Cooperatives

By Bob Wagner, Senior Policy and Program AdvisorAmerican Farmland Trust

“No matter how big our economy grows, nomatter how technology advances, no matterhow global our society, we need people to tillthe land, produce our food, harvest timber,produce our paper and conserve our most

basic and precious resource: Wisconsin’s productive workinglands.” Those words were penned in 2006 by co-opchampion Rod Nilsestuen, now deceased, but at the timesecretary of the Wisconsin Department ofAgriculture, Trade and ConsumerProtection.

Nilsestuen thus set in motion acomprehensive effort to overhaul andexpand Wisconsin’s commitment topreserving and conserving the state’sfarmland under the Wisconsin WorkingLands Initiative. As he crisscrossed thestate promoting the initiative, Nilsestuenwould often note that Wisconsin’sagriculture industry contributed morethan $50 billion to the gross state productwhile 30,000 acres of farmland were beinglost each year to development andfragmentation (land parcels too small tofarm and too large to mow).

With then-population growth projections of more than 1million additional people in the state by 2030, he could seethat accommodating this new growth with the same old land-use patterns was unsustainable and that the state’s agricultureindustry, landscape and environment would suffer.

Co-op commitment to the land, sustainable communities

As founder of Cooperative Development Services,longtime head of the Wisconsin Federation of Cooperativesand a member of the National Cooperative Hall of Fame,Nilsestuen’s vision to connect the future economic health ofthe agricultural industry in Wisconsin to the health and well-being of its soils reflected his commitment to the cooperativeprinciple of sustainable community development. Spurred by

his leadership and the clear synergy between the environmentand the economy, the Working Lands Initiative, notsurprisingly, benefited from the support and participation ofcooperative entities and their members across the state.

Adopted in 2009, the Working Lands Initiative combinedreforms to the state’s existing farmland preservation planningand zoning programs with new opportunities to promotefarming enterprises and activities through the establishmentof Agricultural Enterprise Areas and to preserve farmlandwith a state-funded agricultural conservation easementpurchase program.

Cooperative Resources International, CooperativeNetwork, Wisconsin Farmers Union, CHSInc., CHS Foundation and Organic Valleywere among the broad coalition offarmers, farm organizations, communityleaders, land trusts and conservationorganizations that came together tosupport the initiative.

American Farmland Trust (AFT)was honored to be a partner with SecretaryNilsestuen and the cooperatives in framinga new relationship between landprotection, conservation and farm viabilityin Wisconsin. As the national, nonprofitorganization dedicated to reversing andstopping the loss of our nation’sagricultural lands to non-farm

development, AFT appreciated the recognition bycooperatives of the impacts of farmland loss on theirmembers and businesses, and the opportunity to work withthem on an issue of mutual concern.

The package of policies and programs pursued inWisconsin was pragmatic, respectful of local decision-making, sensitive to property rights and, above all, designedto promote farm viability and stability — a true complementto the missions and objectives of cooperatives.

Preservation issues national in scopeThe issues facing farmers and farmland that inspired

cooperatives to join Secretary Nilsestuen to act are by nomeans unique to Wisconsin. According to the USDA’sNational Resources Inventory, the United States lost

Rod Nilsestuen

Commentary Co-ops have a role in farmland preservation

continued on page 43

Features

Rural Cooperatives / September/October 2013 3

Volume 80, Number 5September/October 2013

Rural Cooperatives (1088-8845) ispublished bimonthly by USDA RuralDevelopment, 1400 Independence Ave.SW, Stop 0705, Washington, DC. 20250-0705.

The Secretary of Agriculture hasdetermined that publication of thisperiodical is necessary in the transactionof public business required by law of theDepartment. Periodicals postage paid atWashington, DC. and additional mailingoffices. Copies may be obtained from theSuperintendent of Documents,Government Printing Office, Washington,DC, 20402, at $23 per year. Postmaster:send address change to: RuralCooperatives, USDA/RBS, Stop 3255,Wash., DC 20250-3255.

Mention in Rural Cooperatives ofcompany and brand names does notsignify endorsement over othercompanies’ products and services.

Unless otherwise stated, articles in thispublication are not copyrighted and maybe reprinted freely. Any opinions express-ed are those of the writers, and do notnecessarily reflect those of USDA or itsemployees.

The U.S. Department of Agriculture(USDA) prohibits discrimination in all itsprograms and activities on the basis ofrace, color, national origin, age, disabili-ty, and where applicable, sex, maritalstatus, familial status, parental status,religion, sexual orientation, geneticinformation, political beliefs, reprisal, orbecause all or part of an individual’sincome is derived from any publicassistance program. (Not all prohibitedbases apply to all programs.) Personswith disabilities who require alternativemeans for communication of programinformation (Braille, large print, audiotape,etc.) should contact USDA’s TARGETCenter at (202) 720-2600 (voice and TDD).To file a complaint of discrimination, writeto USDA, Director, Office of Civil Rights,1400 Independence Avenue, S.W.,Washington, D.C. 20250-9410, or call (800)795-3272 (voice), or (202) 720-6382 (TDD).USDA is an equal opportunity providerand employer.

Tom Vilsack, Secretary of Agriculture

Doug O’Brien, Acting Under Secretary,USDA Rural Development

Dan Campbell, Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question?Call (202) 720-6483, or email:[email protected] This publication was printed with vegetable oil-based ink.

p. 6

04 Grain, farm supply sectors lead way as ag co-ops set sales,income records

08 Top 100 ag co-ops set sales, income recordsBy Sarah Ali and David Chesnick

18 Co-ops: an engine for rural progress

Departments02 COMMENTARY

06 CO-OPS & COMMUNITY

37 NEWSLINE

p. 18

ON THE COVER: Kim Krajicek Millikin, wrapping bundles of lilacs, issales manager for Z Callas/Oregon Coastal Flowers, one of the foundingmembers of the Seattle Wholesale Growers Market, a farmer-ownedfloral cooperative. See the Co-op Month special section, beginning onpage 18, for more on this and other new cooperatives around the nation.Photo by David E. Perry

p. 40

C O - O PMONTH

S P E C I A L S E C T I O N


Grain, farm supply sectors lead wayas ag co-ops set sales, income records

Against the backdrop of United Cooperative’s South Beaver Dam grain and agronomy facility, one of the co-op’s applicators works on a member’sfield near Beaver Dam, Wis. Photo by David Lundquist, courtesy CHS and United Cooperative

U.S. Farmer, rancher and fishery cooperatives set newrecords for sales, income and assets in 2012, buoyed bystrong prices for grain, farm supplies and many other ag

commodities. Sales by agricultural co-ops of nearly $235 billionsurpassed the previous record, set in 2011, by $18 billion, an 8.3-percent gain. Net (pre-tax) income of $6.1 billion was up nearly 13percent over the $5.4 billion recorded in 2011.“Agricultural cooperatives are a driving force in the nation’s thriving

farm economy, and because they are farmer owned and operated

businesses, the sales dollars and incomegenerated are much more likely to bereturned and spent in rural areas andcommunities,” says U.S. AgricultureSecetary Tom Vilsack. “Ag cooperativesare also vital to the rural economybecause they support 185,000 full- andpart-time jobs and are often the majoremployer in many rural towns.”

Net assets owned by farm co-ops —including everything from grainelevators and farm supply stores tomajor food and beverage processingplants — also showed a dramaticincrease in 2012, rising to $82.9 billion,up 4.4 percent from $79.4 billion in2011 (Table 1). Co-ops range in sizefrom a small handful of farmers orfishermen who join forces to markettheir crops and catch, to federatedcooperatives (a cooperative forcooperatives) with many thousands ofmembers.

USDA’s annual survey of the nation’s2,238 agricultural and fisherycooperatives shows that grain andoilseed sales by co-ops increased morethan $7 billion last year, more thanoffsetting a drop of $500 million indairy products marketed (Table 2).Bean and pea, fruit and vegetable, nut,poultry and sugar sales all increased atleast 3 percent over 2011 levels.

Sales by cotton, fish and tobacco co-ops all registered double-digit declinesin 2012.

Farm and ranch supply sales were upby $7 billion, primarily due to risingenergy prices. Widespread drought alsoincreased feed ingredient prices.Fertilizer, feed and petroleum sales byco-ops all increased by at least $1billion.

While 31 cooperatives recordedmore than $1 billion in sales, almost 34percent of ag cooperatives (749) hadless than $5 million in sales (Figure 2).

The overall farm economy saw salesincrease by at least 4 percent for feedgrains, oilseeds, fruits and nuts,tobacco, livestock, and poultry andeggs. Sales declined at least 5 percent


Figure 1 — Cooperatives’ Gross and Net Business Volumes, 1979 –2012Billion dollars

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.

250

225

200

175

150

125

100

75

50

25

0

Gross1

Net2

Table 1U.S. cooperatives, comparison of 2012 and 2011

Item 2012 2011 ChangeNumber Percent

Sales (Gross, Billion $)Marketing 138.1 131.0 5.42Farm supplies 91.9 81.4 12.95Service 4.7 4.4 6.38Total 234.8 216.8 8.27

Balance sheet (Billion $)Assets 82.9 79.4 4.43Liabilities 53.0 51.3 3.30Equity 30.0 28.2 6.50Liabilities and net worth 82.9 79.4 4.43

Income Statement (Billion $)Sales (Gross) 234.8 216.8 8.27Patronage income 0.9 0.6 46.56Net income before taxes 6.1 5.4 12.89

Employees (Thousand)Full-time 129.2 130.8 -1.25Part-time, seasonal 56.0 52.8 6.20Total 185.2 183.6 0.89

Membership (Million) 2.1 2.3 -7.39

Cooperatives (Number) 2,238 2,299 -2.65

continued on page 42


Editor’s note: This article is providedcourtesy Dairy Farmers of America. The“Co-ops & Community” page spotlights co-op efforts that fulfill the mission ofcommitment to community. If you know ofa co-op, a co-op member or co-op employeewhose efforts deserve to be recognized onthis page, please contact:[email protected].

Dairy Farmers ofAmerica (DFA)recognizes the power ofbringing peopletogether. Through its

nonprofit DFA Cares Foundation, thecooperative demonstrates itscommitment to community, a core co-op value that members and employeesstrive to fulfill every day.

The DFA Cares Foundation hasoperated since 2005 to assist DFAmembers and others in thecommunities DFA serves. Initiallycreated in response to HurricaneKatrina to provide disaster relief, thefoundation has since expanded to

encompass all of the cooperative’sgiving initiatives.

Through the DFA CaresFoundation, members and staff havecome together to create neighborhoodgardens, provide disaster relief to theagricultural community, advocate fornutrition policy, partner with foodbanks and invest in the future of thedairy industry with scholarships tostudents pursuing careers in dairy.

The foundation also offers servicesto its members in times need, including:The DFA Cares Hotline, which offersreferrals for financial and legalguidance; the Member AssistanceProgram, which offers professional

Co-ops & CommunityDFA Cares Foundation expandsco-op’s community focus

resources in a variety of areas; andfinancial assistance in the aftermath ofnatural disasters, among other services.

“With our plants and regionaloffices, DFA has a presence incommunities throughout the country,”says Kristi Dale, the co-op’s director ofpublic affairs. “Through the DFA CaresFoundation, we are able to maketangible contributions to improvepeople’s lives in the areas where wework and live.”

Fighting hunger One of the largest DFA Cares

Foundation events is an annual fightagainst hunger. In partnership with

Feeding America, DFA celebrates JuneDairy Month with food drives andvolunteer events at food banksthroughout the country. Each year, theeffort results in more than 100,000meals for those in need.

This year, the cooperative’s fightagainst hunger was especiallymeaningful, as volunteer andfundraising efforts helped answer theneeds of those affected by tornadoes inMoore, Okla.

“As a farmer-owned cooperative, weunderstand the impact severe weathercan have, especially on agriculturalcommunities,” Dale says. “Whentragedy strikes, food is directed where it

is needed most. But that may leave foodbanks elsewhere in even greater need.That’s an opportunity for staff at ourDFA plants and offices across thecountry to help fill a void.”

Other special projects and eventsbenefit various charities throughout theyear. At the annual Team DevelopmentConference, DFA staff and membersparticipate in a community volunteerevent. Last year, with the help of TheLeader’s Institute, 50 bikes were builtand handed out to children in the Boysand Girls Club of St. Louis, Mo.

Previous events have included workfor a youth development program inBaltimore, Md., and creatingcommunity gardens in New Orleans,La. In addition, DFA Cares serviceprojects have become a staple duringthe cooperative’s annual board strategyretreat, which includes a dedicatedprogram for DFA’s farmer leader andmanagement spouses.

Last year, a group dedicated anafternoon to sorting, packaging andpreparing donated goods to be shippedto various parts of the world.

In August, nearly 60 DFA volunteersassembled 2,000 lunch bags filled withnutritious, non-perishable foods for theRoadrunner Food Bank of NewMexico’s mobile food pantry. Thevolunteers were in the area for theCooperative’s annual July BoardMeeting and Strategic InformationConference.

“During the past several years, we’veput an increasing focus on helpingothers through the DFA CaresFoundation,” Dale says. “Ourcooperative spans a wide geographicarea, but service like this helps ensurethat we’re continually doing more todeliver on our core value ofcommunity.” n


The DFA Cares Foundation has been active since 2005, helping to support numerous communityprojects, such as turning out nearly 300 co-op members and employees to build 50 bikes for theBoys and Girls Club of St. Louis, Mo. Photo courtesy Dairy Farmers of America

By Sarah Ali and David ChesnickAgricultural EconomistsCooperative ProgramsUSDA Rural Development

The nation’s 100largest agriculturalcooperatives reportedrecord sales revenue of$162 billion in 2012, an

increase of almost 9 percent over 2011,when revenue totaled $148 billion(table 1). Net income for the 100 topco-ops also set a new record in 2012,reaching $3.5 billion, up from $3.1billion in 2011. The previous recordsfor sales and income were set in 2011.

Iowa is home to 16 of the top 100 agco-ops, the most of any state. It isfollowed by Minnesota with 13,Nebraska with 9, Wisconsin with 5, andCalifornia with 4 top 100 ag co-ops.

Farm supply and grain sales showedsome of the largest gains for the year,the latter due to higher grain pricesresulting from widespread drought in2012. Dairy, fruit and vegetable, andmixed (co-ops that sell grain and farmsupplies) co-ops saw sales decline in2012. Higher corn and soybean pricescontributed to higher input prices foranimal feed.

The Top 100 co-op sales representabout 68.9 percent of the $235 billionin sales made by all agricultural co-opsin 2012 (see related article, page 4).

Kansas co-op makes biggest jump

Farmway Co-op Inc., a grain co-opbased in Beloit, Kan., made the largest

Top100 ag co-opsset sales, incomerecords

USDA graphics by Stephen A. Thompson8 September/October 2013 / Rural Cooperatives


upward jump on the Top 100, risingfrom 114 in 2011 to 62 on the 2012 list.The next biggest “gainer” was WestCentral Cooperative, Ralston, Iowa, amixed co-op that handles grain andfarm supplies, which climbed from 69to 41 in 2012. As a sector, the biggestupward jumps on the list were made bygrain and mixed co-ops, due largely tohigh grain prices as a result of thedrought.

CHS Inc. in Saint Paul, Minn. — anenergy, farm supply, grain and food co-op — was once again the nation’slargest ag co-op, with $40.6 billion inrevenue in 2012. It was followed byLand O’ Lakes Inc., also based in St.Paul, with sales of $14.1 billion, whileDairy Farmers of America, Kansas City,Mo., ranked third with $11.9 billion inrevenue.

Cost of goods sold by the Top 100 agco-ops was up 9 percent in 2012,mirroring the increase in total sales.With marketing cooperatives — such asdairy, fruit and vegetables, cotton, sugarand grain co-ops — the cost of goodssold usually represent payments tomembers for their product.

Gross margins increased by 10

percent, to $13 billion in 2012.However, gross margins as a percent oftotal sales remained fairly steady at 8percent for both 2011 and 2012.

Service revenues were up 3 percent,to $1.5 billion in 2012, with mixedgrain/supply co-ops accounting fornearly half of that increase.

Interest costs add to higher expenses

Total expenses for the top 100 ag co-ops increased by 6 percent from 2011 to2012. The largest cost increase wasinterest expenses, which increased by$300 million in 2012, to $3.8 billion.Labor expenses also increased $200million from 2011, totaling $5.2 billionin 2012.

Nearly every cooperative type had todeal with higher expenses in 2012. Theonly exception was the “other” category(those cooperatives that do not fit in theother classification sectors used byUSDA for this report). Again, mixedgrain/farm supply cooperativesaccounted for nearly half of the totalincrease.

The top 100 ag co-ops paid $336million in income taxes in 2012, $137

million more than in 2011.

Net margins climb Net margins increased by more than

13 percent ($429 million) in 2012. Mostof the increase came within the mixedgrain/farm supply and farm supply co-op sectors. Dairy and fruit/vegetableco-ops had lower net margins comparedto 2011.

The asset base for the top 100 grewby $3.5 billion between 2011 and 2012,with a total of $53.4 billion in totalassets in 2012 (table 2). Nearly half ofthe increase was from mixed grain/farmsupply cooperatives.

The largest 100 co-ops ended 2012with $34.5 billion in current assets, up 4percent from 2011. Mixed grain/farmsupply co-ops, which include some ofthe largest farmer co-ops, accounted formore than 50 percent of the totalamount of current assets. Fixed assetsalso showed an increase of $1.2 billion,pushing the total asset value for the top100 co-ops to $12 billion.

Current liabilities increased by $874million for the largest 100 ag co-ops. Atthe end of 2012, total current liabilitiesfor these co-ops was almost $25 billion.Total liabilities increased by $2.2billion, ending the year at $36.2 billion.Equity allocated to members jumped 11percent in 2012, to $12.3 billion.Retained earnings also showed anincrease of 2 percent, ending the year at$4.8 billion.

Financial measures show little change

Table 3 provides the combinedfinancial ratios for the largest 100 agco-ops. These ratios are the averagevalues for all 100 co-ops and provide amore accurate reflection on theperformance of the co-ops, withoutbeing skewed by the largest of thegroup. For example, the largest five co-ops represent 50 percent of totalbusiness volume. Therefore, they willhave more influence on the combinedvalues in table 1 and 2.

Figure 1 — Total Business Volume, Top 100 Ag Co-ops

The debt-to-asset ratio illustrates what percentage ofbusiness assets are financed by debt. The ratio did notchange for 2012, remaining at the 2011 level of 0.68. Of allof the cooperative types, only the fruit/vegetable co-opsector had a lower debt-to-asset ratio than in 2011. Overall,the top 100 ag co-ops used more debt in 2012. However,some types — such as grain and farm supply co-ops — usedrelatively more short-term debt to finance operations whiledairy, mixed grain/supply and sugar co-ops relied more onlong-term debt for financing. As indicated above,fruit/vegetable co-ops were the only type to lower theamount of debt used.

The current ratio provides a view on how well the liquidassets of a business cover its current liabilities. Between2011 and 2012, the current ratio increased slightly, from1.36 to 1.38. This would indicate that a majority of the co-ops were more liquid in 2012 than in 2011.

Long-term debt and equity are generally used to financea business’ long-term assets. The long-term debt-to-equityratio focuses on this long-term financing. The ratio jumpedfrom 0.62 in 2011 to 0.65 in 2012. The higher long-termdebt financing was caused mostly by the dairy, mixedgrain/farm supply and sugar co-op sectors.

The times-interest-earned ratio shows how much abusiness can cover its interest expense on a pre-tax basis.The higher the ratio the better, as a low value could indicatetrouble paying obligations. In 2012, the ratio was 6.89, aslight decrease from 2011’s value of 6.93.

As a general rule, those co-ops with high amounts offixed capital — such as processing co-ops — will have alower fixed-asset-turnover ratio than some of those thatprovide mostly marketing services.


Figure 3 — Sales Revenue of Cooperatives By Function for Top 100, 2012

Figure 2 — Net Income Top 100 Ag Co-ops

Sugar3%

Other5%

Mixed49%

Dairy22%

Fruit & Vegetable3%Grain6%

Supply12%

Figure 4 — Assets of Cooperatives By Function for Top 100, 2012

Sugar5%

Other4%

Mixed54%

Dairy15%

Fruit & Vegetable5%

Grain6%

Supply11%


Profitability ratios show slight improvements

Profitability ratios are important forany business; an unprofitable businesswill obviously not survive very long.However, co-ops are in a uniqueposition in that they try to operate asclose to cost as possible. For example,gross margins will usually be somewhatlower than a non-cooperative businessof the same industry.

Between 2011 and 2012, co-op grossprofit margins increased slightly, from7.9 to 8 percent, while net operatingmargins held steady at 2 percent duringthe two years. There was not muchchange among the co-op types foreither of these two ratios.

Return on total assets measuresbusiness earnings before interest andtaxes against its total net assets. Theaverage return on total assets for thetop 100 ag co-ops slightly increasedbetween 2011 and 2012, from 7.8percent to 8.5 percent.

Return on members’ equitymeasures net earnings after taxesagainst total equity. This examines thereturns to members. In 2012, thereturn on members’ equity was 29.1percent. This is up slightly from 2011when it was at 28.4 percent.

Ranking of top 100 co-opsTable 5 lists the rank, name, revenue

and assets for the nation’s 100 largestagricultural co-ops. These co-ops havebeen identified by type as defined intable 4. The co-op types (and thenumber of cooperatives in each) are:farm supply (8); mixed farm supply andgrain (32); grain (15); dairy (22); sugar(7); fruit and vegetable (7); and othermarketing (9).

Historical comparisonComparing total gross business

volume of the top 100 co-ops from2006 to 2012 shows that there was apeak in 2008, then declining in 2009and 2010 before hitting new highsagain in 2011 and 2012 (figure 1). Totalbusiness volume increased by almost 9percent between 2011 and 2012. (Editor’s

Table 1Top 100 Ag Co-ops Combined Operating Statement

2012 2011 Difference Change............... $ billions ......................... Percent

Total Sales 162.095 148.676 13.419 9.0%Cost of Goods Sold 148.987 136.817 12.170 8.9%Gross Margins 13.108 11.859 1.249 10.5%

Service Revenue 1.519 1.472 0.047 3.2%

Wages 5.256 5.027 0.229 4.6%Depreciation 1.289 1.220 0.069 5.6%Interest Expense 0.665 0.565 0.100 17.7%Other Expense 3.884 3.595 0.289 8.0%Total Expenses 11.094 10.406 0.687 6.6%

Net Operating Margins 3.534 2.925 0.609 20.8%Patronage Funds Received 0.297 0.192 0.105 54.4%Non-Operating Revenue/Expenses 0.086 0.232 -0.146 -63.0%Net Margins Before Taxes 3.916 3.349 0.567 16.9%Taxes 0.336 0.198 0.137 69.3%Net Margins 3.580 3.151 0.430 13.6%

Table 2Top 100 Ag Co-op Combined Balance Sheet

2012 2011 Difference Change............... $ billions ......................... Percent

Current Assets 34.522 33.028 1.494 4.5%Investments in Other Co-ops 1.868 1.613 0.255 15.8%Property, Plant, & Equipment 11.838 10.617 1.220 11.5%Other Assets 5.215 4.607 0.609 13.2%Total Assets 53.443 49.865 3.578 7.2%

Current Liabilities 25.100 24.226 0.874 3.6%Long-Term Liabilities 11.197 9.811 1.386 14.1%Total Liabilities 36.297 34.037 2.260 6.6%

Allocated Equity 12.289 11.067 1.222 11.0%Retained Earnings 4.857 4.761 0.096 2.0%Total Equity 17.146 15.828 1.318 8.3%

Total Liabilities and Equity 53.443 49.865 3.578 7.2%


note: when making comparisons of data over afive-year period, it should be noted that themakeup of the top 100 changes between thevarious years.)

Net income hit a new peak in 2008,dipped in 2009 (figure 2) and then surgedin 2011 and 2012, reaching a record highof $3.5 billion in 2012. Net income (aftertaxes) grew by 13.6 percent, or $430million, between 2011 and 2012. The valueof crop and livestock production had amajor impact on the increase in net incomeduring 2012. Patronage income (incomefrom other co-ops) increased by $105million (or 54.4 percent) in 2012.

Figure 3 shows that mixed grain andsupply cooperatives account for 49 percentof the revenue of the top 100 whilecomprising only 32 percent of the numberof cooperatives on the list (the largestgroup). The mixed grain and supply groupalso accounted for 54 percent of the assetsof the top 100 ag-co-ops (figure 4).

Dairy (representing 22 of the top 100co-ops) accounted for 22 percent of therevenue, and 15 percent of the assets. Lastyear’s figures were 13 percent and 16percent, respectively.

Changes in the size of the type groupsbetween 2003 and 2012 are shown in figure5. Dairy co-ops were the most numerous(28 percent) in 2003, while mixed co-opswere most numerous (32 percent) in 2012.g

Table 3Combined Average Ratios, Top 100 Ag Co-ps

2012 2011

Current Ratio 1.38 1.36Debt To Assets 0.68 0.68Long-Term Debt-To-Equity 0.65 0.62Times Interest Earned 6.89 6.93Fixed Asset Turnover 13.69 14.00Gross Profit Margin 8.09% 7.98%Net Operating Margin 2.21% 2.12%Return On Total Assets 8.57% 7.85%Return On Member Equity 29.14% 28.47%

Table 4 Criteria used for sorting co-ops by segment

Type of cooperative

Supply

Mixed

Grain

Dairy

Sugar

Fruit and Vegetable

Other

Cooperative defined

Derive at least 75% of their total revenue from farm supply sales.

Derive between 25% and 75% of total revenue from farm supply sales; remainder from marketing.

Derive at least 75% of total revenue from grain marketing.

Market members’ raw milk; some also manufacture products such as cheese and ice cream.

Refine sugar beets and cane into sugar; market sugar and related by-products.

Generally further process and market fruits or vegetables, rather than marketing raw products.

Includes co-ops that market livestock, rice, cotton and nuts.

Figure 5 — Distribution of Cooperatives by Function for Top 100, 2003

Sugar8%

Other18%

Mixed12%

Dairy28%

Fruit & Vegetable13% Grain

18%

Supply3%


Table 5—Top 100 Agriculture CooperativesNote: Names withheld by request for the cooperatives ranked 43, 51, 69, 83, 90.

2012RANK

2011RANK

NAME

CHS Inc.Saint Paul, MN

Land O'Lakes, Inc.Saint Paul, MN

Dairy Farmers of AmericaKansas City, MO

GROWMARK, Inc.Bloomington, IL

Ag Processing Inc.Omaha, NE

California Dairies, Inc.Artesia, CA

Northwest Dairy AssociationSeattle, WA

United Suppliers, Inc.Eldora, IA

Southern States Cooperative Inc.Richmond, VA

South Dakota Wheat Growers Assn.Aberdeen, SD

Associated Milk Producers, Inc.New Ulm, MN

Countrymark Cooperative Holding Corp.Indianapolis, IN

Ocean Spray Cranberries Inc.Lakeville-Middleboro, MA

Prairie Farms Dairy Inc.Carlinville, IL

Foremost Farms USA, CooperativeBaraboo, WI

Dairylea Cooperative Inc.Syracuse, NY

MFA IncorporatedColumbia, MO

American Crystal Sugar CompanyMoorhead, MN

Innovative Ag Services Co.Monticello, IA

Farmers Cooperative CompanyAmes, IA

Mixed (Energy,Supply, Food, Grain)

Mixed (Supply,Dairy, Food)

Dairy

Supply

Mixed (Supply,Grain)

Dairy

Dairy

Supply

Supply

Grain

Dairy

Supply

Fruit & Vegetable

Dairy

Dairy

Dairy

Mixed (Supply,Grain, Livestock)

Sugar

Grain

Mixed (Grain,Supply)

2011ASSETS

2012ASSETS

2011REVENUE

2012REVENUE

TYPE

$ Billion

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

1

3

2

4

5

6

8

10

7

18

9

15

13

14

12

21

19

16

27

23

40.624

14.138

11.917

10.150

4.937

3.241

2.465

2.375

2.294

1.829

1.776

1.737

1.673

1.660

1.639

1.588

1.483

1.479

1.435

1.329

36.936

13.079

12.924

8.742

4.372

3.651

2.071

1.949

2.075

1.376

1.979

1.566

1.566

1.612

1.664

1.336

1.366

1.544

1.028

1.243

13.423

6.357

2.860

2.763

1.395

0.812

0.548

0.942

0.517

0.679

0.312

0.670

1.363

0.726

0.423

0.186

0.506

0.899

0.329

0.416

12.217

5.438

2.295

2.631

1.332

0.809

0.579

0.887

0.545

0.584

0.324

0.551

0.555

0.715

0.466

0.181

0.408

0.878

0.250

0.546


2012RANK

2011RANK

NAME

MFA Oil CompanyColumbia, MO

Maryland & Virginia Milk ProducersCoop Assoc., Reston, VA

Heartland Co-opWest Des Moines, IA

Staple Cotton Cooperative Assn.Greenwood, MS

Producers Livestock Marketing Assn.Omaha, NE

Co-Alliance, LLPAvon, IN

Riceland Foods Inc.Stuttgart, AR

Aurora Cooperative Elevator CompanyAurora, NE

United Producers Inc.Columbus, OH

Blue Diamond GrowersSacramento, CA

Sunkist Growers Inc.Sherman Oaks, CA

Farmers CooperativeDorchester, NE

Snake River Sugar CompanyBoise, ID

Lone Star Milk ProducersWindthorst, TX

Agri-Mark Inc.Lawrence, MA

Cooperative Regions of Organic ProducerPools (CROPP/ Organic Valley), La Farge, WI

Michigan Milk Producers Assn.Novi, MI

NEW Cooperative Inc.Fort Dodge, IA

Select Milk Producers Inc.Artesia, NM

Tennessee Farmers CooperativeLa Vergne, TN

Supply

Dairy

Grain

Other (Cotton)

Other (Livestock)


Other (Rice)


Other (Livestock)

Other (Nut)

Fruit & Vegetable


Sugar

Dairy

Dairy

Dairy

Dairy

Grain

Dairy

Supply

2011ASSETS

2012ASSETS

2011REVENUE

2012REVENUE

TYPE

$ Billion

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

22

20

30

29

24

26

25

32

17

38

28

43

35

34

31

42

36

48

33

41

1.310

1.298

1.284

1.258

1.199

1.112

1.108

1.061

1.016

1.007

1.004

0.946

0.936

0.896

0.884

0.858

0.854

0.840

0.839

0.827

1.307

1.356

0.962

0.963

1.153

1.042

1.109

0.892

1.473

0.828

1.019

0.716

0.876

0.879

0.899

0.716

0.871

0.637

0.888

0.726

0.386

0.163

0.350

0.251

0.131

0.378

0.613

0.453

0.036

0.310

0.168

0.240

0.826

0.100

0.319

0.216

0.168

0.271

0.110

0.278

0.381

0.159

0.483

0.354

0.115

0.382

0.574

0.427

0.040

0.297

0.183

0.265

0.699

0.097

0.316

0.180

0.167

0.257

0.107

0.278

Table 5—Top 100 Largest Agriculture Cooperatives


2012RANK

2011RANK


NAME

West Central CooperativeRalston, IA

Plains Cotton Cooperative AssnLubbock, TX

Name withheld by request.

United Dairymen of ArizonaTempe, AZ

Trupointe CooperativePiqua, OH

Central Valley Ag CooperativeO'Neill, NE

North Central Farmers ElevatorIpswich, SD

Frenchman Valley FarmersCooperative Inc., Imperial, NE

Upstate Niagara Cooperative, Inc.Buffalo, NY

United Farmers CooperativeYork, NE


United Sugars CorporationBloomington, MN

National Grape Cooperative Assn Inc.Westfield, NY

United CooperativeBeaver Dam, WI

Heritage Cooperative, Inc.West Mansfield, OH

Citrus World Inc. (Florida NaturalGrowers), Lake Wales, FL

Farmers Grain Terminal Inc.Greenville, MS

Sunrise Cooperative Inc.Fremont, OH

Watonwan Farm Service CompanyTruman, MN

Equity Cooperative Livestock Sales AssnBaraboo, WI


Other (Cotton)

Dairy





Dairy

Grain

Sugar

Fruit & Vegetable


Grain

Fruit & Vegetable

Grain



Other (Livestock)

2011ASSETS

2012ASSETS

2011REVENUE

2012REVENUE

TYPE

$ Billion

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

69

11

37

44

46

58

73

39

49

63

47

57

52

50

67

53

55

51

0.813

0.803

0.785

0.766

0.748

0.725

0.723

0.719

0.716

0.674

0.657

0.653

0.637

0.626

0.620

0.616

0.612

0.605

0.445

1.843

0.830

0.713

0.672

0.529

0.432

0.772

0.633

0.481

0.640

0.546

0.583

0.615

0.473

0.577

0.555

0.591

0.361

0.185

0.130

0.221

0.259

0.252

0.223

0.251

0.227

0.039

0.376

0.440

0.150

0.333

0.172

0.253

0.222

0.031

0.381

0.265

0.131

0.229

0.251

0.201

0.287

0.217

0.213

0.037

0.362

0.365

0.170

0.313

0.174

0.224

0.195

0.033


2012RANK

2011RANK


NAME

Michigan Sugar CompanyBay City, MI

Farmway Co-op Inc.Beloit, KS

Landmark Services CooperativeCottage Grove, WI

Key CooperativeRoland, IA

Ag Valley Cooperative Non-StockEdison, NE

NFO Inc.Ames, IA

River Valley CooperativeEldridge, IA

First District AssociationLitchfield, MN


Western Sugar CooperativeDenver, CO

Tillamook County Creamery AssnTillamook, OR

Pacific Coast ProducersLodi, CA

Hopkinsville Elevator Company Inc.Hopkinsville, KY

Five Star CooperativeNew Hampton, IA

Frontier Ag, Inc.Oakley, KS

Horizon ResourcesWilliston, ND

Producers Rice Mill Inc.Stuttgart, AR

Southern Minnesota Beet SugarCooperative, Renville, MN

Alabama Farmers Cooperative Inc.Decatur, AL

West Central Ag ServicesUlen, MN

Sugar

Grain




Dairy


Dairy

Sugar

Dairy

Fruit & Vegetable

Grain


Grain


Other (Rice)

Sugar

Mixed (Grain, Fish,Cotton)


2011REVENUE

2012ASSETS

2011REVENUE

2012REVENUE

TYPE

$ Billion

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

56

114

62

66

93

54

75

65

78

64

61

113

82

80

86

59

60

68

76

0.595

0.587

0.575

0.570

0.549

0.541

0.541

0.524

0.518

0.516

0.504

0.502

0.496

0.493

0.484

0.479

0.478

0.472

0.466

0.549

0.305

0.500

0.474

0.369

0.568

0.424

0.477

0.401

0.479

0.502

0.308

0.391

0.396

0.385

0.528

0.510

0.463

0.408

0.267

0.202

0.217

0.137

0.169

0.028

0.133

0.126

0.276

0.326

0.305

0.157

0.103

0.205

0.146

0.244

0.349

0.246

0.253

0.256

0.285

0.166

0.116

0.237

0.035

0.155

0.095

0.230

0.295

0.304

0.161

0.153

0.241

0.116

0.206

0.360

0.232

0.194


2012RANK

2011RANK


NAME

Western Consolidated CooperativesHolloway, MN

Premier Cooperative, Inc.Champaign, IL


ViafieldMarble Rock, IA

New Vision CooperativeWorthington, MN

Farmers Cooperative SocietySioux Center, IA

Gold-Eagle CooperativeGoldfield, IA

Harvest Land Co-opRichmond, IN

Ray-Carroll County Grain GrowersInc., Richmond, MO


Pro CooperativePocahontas, IA

Mid-Kansas Cooperative AssnMoundridge, KS

Alliance Grain CompanyGibson City, IL

North Central Cooperative Inc.Wabash, IN

Bongards CreameriesBongards, MN

NORPAC Foods Inc.Stayton, OR

Gateway FS Inc.Red Bud, IL

Swiss Valley Farms CooperativeDavenport, IA

MaxYield CooperativeWest Bend, IA

Producers Livestock Marketing AssnN. Salt Lake, UT


Grain






Grain



Grain

Dairy

Dairy

Fruit & Vegetable


Dairy

Grain

Other (Livestock)

2011ASSETS

2012ASSETS

2011REVENUE

2012REVENUE

TYPE

$ Billion

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

74

70

72

84

81

90

85

88

106

107

77

103

94

98

124

79

136

102

0.466

0.465

0.459

0.454

0.453

0.453

0.452

0.451

0.442

0.439

0.428

0.428

0.420

0.417

0.414

0.404

0.401

0.392

0.431

0.444

0.433

0.387

0.394

0.375

0.387

0.381

0.330

0.326

0.405

0.338

0.367

0.356

0.281

0.397

0.251

0.338

0.237

0.145

0.126

0.143

0.199

0.170

0.145

0.136

0.141

0.209

0.097

0.164

0.098

0.265

0.120

0.118

0.178

0.040

0.199

0.153

0.152

0.125

0.182

0.096

0.163

0.103

0.157

0.302

0.112

0.160

0.091

0.249

0.056

0.119

0.175

0.043

U N I T E D S TAT E SD E PA RT M E N T O F A G R I C U LT U R E

Office of the SecretaryWashington, D.C. 20250

NATIONAL COOPERATIVE MONTH

October 2013By the Secretary of Agriculture of the United States of America

A P R O C L A M AT I O N

WHEREAS cooperative businesses—arising from a sense of community and common cause—arethe ultimate economic self-help tool, helping member-owners market and process their crops andother products, obtain needed services, and acquire high-quality, affordable supplies; and

WHEREAS more than 130 million people own the Nation’s 30,000 cooperatives, which generate$650 billion annually in economic activity and provide a wide variety of goods and servicesranging from electricity and telecommunications to credit and other financial services; and

WHEREAS farm, ranch, and fishery cooperatives had record sales of $235 billion in 2012, andcooperatives, which create 185,000 full- and part-time jobs annually, are a key reason why theNation’s agricultural sector continues to thrive; and

WHEREAS USDA is proud to issue Rural Cooperatives magazine, now in its 80th year, and manyother publications to promote understanding and use of cooperatives and to support thecooperative business sector;

NOW, THEREFORE, in recognition of the vital role that cooperatives play in improvingeconomic opportunity and the quality of life in rural America, I, Thomas J. Vilsack, Secretary ofthe U.S. Department of Agriculture, do hereby proclaim October 2013 as National CooperativeMonth. I encourage all Americans to learn more about cooperatives and to celebrate cooperatives’accomplishments with appropriate ceremonies and activities.

IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2013, thetwo-hundred thirty-eighth year of the Independence of the United States of America.

THOMAS J. VILSACKSecretary


ON A WEEKEND thispast summer, I

attended the wedding of a friend’sdaughter. The setting was beautiful,looking out over Alaska’s Kachmak Bayto the snow-covered mountainsbeyond. The flowers used for theceremony were also beautiful — bigred, white and pink peonies.

For those knowledgeable about thecut flower industry, it might come as asurprise that these Alaska-grownflowers were available for a wedding on

Co-ops: Growing rural progress From Alaskan flower farmers tonew food hubs and brewpubs in Wisconsin; from a yoga studio in Montana to aquacultureoperations in Virginia, new cooperative businesses are helping to build a stronger ruraleconomy, creating jobs and providing needed services and products for their members. You

can read about these and many other innovative co-op businesses on the following pages inour annual Co-op Month salute. Each of the articles has been submitted by a rural cooperative

development center, which USDA Rural Development is proud to help support through the Rural CooperativeDevelopment Grant (RCDG) program. This past year, USDA awarded $6.5 million under the RCDG program, with a maximum grant amount of

$200,000. The primary objective of the program is to improve the economic condition of rural areas by assistingindividuals or entities in the startup, expansion or operational improvement of rural cooperatives and otherbusiness entities. Grants are awarded competitively to co-op development centers, which in turn providetechnical assistance. While cooperatives can be formed for a nearly endless variety of reasons, one thing they all have in common

is that they exist to meet the needs of their member-owners, rather than distant shareholders who may nevereven set foot in the community a cooperative serves. Those who benefit from a co-op are those who use it.Building more and stronger cooperatives is thus one of the best ways to build a better world. To find out more about the RCDG program and other USDA programs that assist cooperatives, visit:

www.rurdev.usda.gov.

Alaskan peonies are produced on a schedulethat allows them to fill a “window” in themarketplace.

Peonies rising star of Alaskan agricultureBy Andrew Crow, Director, Alaska Cooperative Development Program

C O - O PMONTH


Aug. 10. But peonies are oneof the rising stars of Alaskaagriculture.

In 2007, when theUniversity of Alaska Centerfor Economic Developmentmade its first presentationabout marketing cooperativesto the state’s peony growers,you could not have boughtpeonies in August. Not herein Alaska, not in the lowerstates and not even in theworld’s biggest cut flowermarket in Amsterdam.

Alaska peonies fillmarket gap

Peonies, like most cutflowers, are a worldwidecommodity. Israeli growerssupply the market from mid-September to December.New Zealand fills in fromDecember to March, and U.S.growers supply the market fromMarch until late July. There hastraditionally been no supplierfrom late July to September.

Around 2004, researchers at theUniversity of Alaska noticed that thisgap in supply occurs just when peoniesbloom here. So, they set about learninghow to grow peonies commercially inAlaska, then to convince people to getinto the business.

It has been a slow process, but thereare now several dozen growers inAlaska, all with plants at differentstages. It takes three years fromplanting the first roots to making thefirst commercial harvest. Alaska’s firstcommercial harvest was in 2011, withvolume rising steadily ever since.

Growers could see early on that acooperative might help them, but theywere unsure of what exactly theywanted from a co-op. Many did notwant to give up any control over their

flowers or their farm brands. Some growers thought that they

would just do everything — planting,weeding, cutting, sorting, marketing,shipping and billing — all themselves.As time went on, the pioneers in thebusiness have started to see theadvantage of marketing together.

Few farms have all the varieties thatbrides want. And it was an extra burdento have to call around to neighboringfarms to fill orders. By taking on suchduties, a co-op would let growers focusmore on their farms.

Dutch growers advise forming co-ops

The Dutch farmers who were sellingflower roots to the growers also startedto explain how the wholesale flowermarket works. They pointed out two

things: first, that the cut flower businessis extremely competitive; second, thatthe most successful flower farmers inthe world, the Dutch, use cooperatives.“If you want to stay in control, youneed to form a co-op,” the Dutchflower growers stressed.

After six years of talking andmeetings, the first Alaska peonygrowers’ cooperative was registered thispast spring. The co-op has a centralinventory and order desk.

Two other groups are at differentstages of formation, and the state peonygrowers association is talking aboutways to form a statewide federated co-op. So, if you are planning an Augustwedding, and want peonies, you cannow get them in Alaska. And soon, youwill be able to buy them convenientlyfrom a producer-owned co-op. n

Rita Jo Shultz checks on her flower crop, near Homer, Alaska.

“If you want to stay in control, you need to form a co-op.”

FOOD HUBS are popping up across thecountry as communities strive torebuild their regional food systems.Over the past few years, the Universityof Wisconsin Center for Cooperativeshas worked with two new food hubsthat are using the cooperative businessmodel in unique ways to aggregate,distribute and market local foods.

Fifth Season CooperativeFifth Season Cooperative is a multi-

stakeholder cooperative headquarteredin Viroqua, Wis. It was established in2010 to provide the infrastructure andcoordination needed to move locallygrown products into local institutions,such as hospitals, universities andschool systems.

The co-op includes six differentmembership classes: producers,producer groups, processors,distributors, buyers and co-op workers.Each class has a representative on theseven-member board of directors. Thefounders hoped that includingrepresentatives from the entire supplychain would facilitate the trust anddialogue needed to negotiate difficultissues such as pricing, seasonality andshared risk.

Now in its second full year ofsourcing regional foods, Fifth Seasonhas 41 voting members and is on trackto hit its sales goals for 2013. FifthSeason was launched with a $40,000Buy Local, Buy Wisconsin grant fromthe Wisconsin Department ofAgriculture, Trade and ConsumerProtection and support from OrganicValley, the nation’s largest organic foodcooperative.

Since then, however, nearly all of theco-op’s capital has been raised throughthe sale of preferred stock tocommunity members. One of the keysto the co-op’s success so far has beenthrough the use of existinginfrastructure.

Thus, instead of purchasing trucks todistribute co-op products, ReinhartFoodservice was recruited to be theprimary distributor member. Instead ofinvesting in food processing equipment,Fifth Season has built relationships withseveral existing processors. The gluethat holds all of this cooperation andcoordination together is thecombination of a strong manager andthe co-op’s set of core values that stressopenness, honesty, fairness andsustainability.

Wisconsin Food Hub Cooperative

The Wisconsin Food HubCooperative, headquartered inMadison, incorporated in 2012 and iscurrently in its first year of sales. LikeFifth Season, the Food Hub hasdifferent types of members thatrepresent a range of stakeholders in thefood system and have different equityrequirements and board representation.The four membership classes are:producers, founders, organizationalpartners and community supporters.

Producers elect seven directors,founders elect two directors and theremaining groups each elect onedirector. The goal of this structure wasto include outside expertise and supportwhile maintaining grower control of thebusiness.

The original idea for the projectemerged from Dane County’sInstitutional Food Market Coalition(IFM), an effort by the county toconnect local farmers and foodprocessors with institutions, such ashospitals, schools and other large-volume buyers. IFM found that therewas significant interest from bothgrowers and institutional buyers, but


New co-op ‘hubs’ help meet need for local food in WisconsinBy Courtney Berner, Cooperative Development Specialist, University of Wisconsin Center for Cooperatives

Wisconsin is one of the nation’s leading agricultural states and home to many local food co-ops. Photo by Bill Berry, courtesyAmerican Farmland Trust

C O - O PMONTH


the infrastructure to aggregate productwas lacking.

Responding to this, the countycommissioned a study to determine thefeasibility of opening a fresh producepackinghouse in Dane County. Thefeasibility study, which was completedin 2011, indicated demand for localproduce ranging from $18 million to$26 million per year.

Next, the county put out a “requestfor information” (RFI) seeking anowner/operator for the food hub. Theselected candidate would receive$28,000 for business planning services,detailed information from the feasibilitystudy and technical assistance from thecounty.

In response to the RFI, a uniquepartnership developed betweenWisconsin Farmers Union (WFU),which had been looking foropportunities to support new

cooperatives, and a small group ofvegetable farmers. The WFU/growerpartnership won the contract and spentthe next several months writing abusiness plan and fleshing out theirvision for the business.

Like Fifth Season, the Food Hubdecided to focus on developingrelationships with growers and buyersand leveraging existing infrastructure,rather than investing in a building ormajor equipment.

With 11 members and projectedsales of $3 million in its first year ofoperation, the Food Hub is far frommeeting the region’s demand for localproduce. However, with the goal ofrecruiting 30-40 new farmers membersin the next few years and relationshipsalready in place with several keydistributors and grocery chains, they arewell on their way. n

COOPERATIVES arealive and well in

Ohio. Thanks to state laws regulatingcooperatives in Ohio, any type ofbusiness can choose to be a cooperative— and many are so choosing. The OhioCooperative Development Center(OCDC) at the Ohio State Universityhas been assisting new and emergingcooperatives throughout Ohio andWest Virginia. During the past fiveyears, OCDC has assisted in theformation of more than 30cooperatives, nearly 75 percent ofwhich are involved with local foods.

Highlights of OCDC assistedcooperative successes include thefollowing co-ops.

Our Harvest. This co-op was formed in

2012, modeled on the co-ops of theMondragon region of Spain (home tothe world’s largest network of worker-owned co-ops). Our Harvest leadersbelieve it is the world’s first unionized,worker-owned cooperative. OurHarvest is a rapidly growing food hubserving the Cincinnati area, where itsupplies local foods produced by itsworker-owners, as well by other localgrowers. The co-op recently receivedfunding from CoBank and Farm CreditServices to help expand production,aggregation and distribution of locallyproduced foods. In addition, OurHarvest is working to increase thenumber of new growers through anapprenticeship program that includeshands-on training on a farm. Asparticipants of the program graduate,

they can then become worker-owners ofOur Harvest, ensuring futuregenerations of farmers for the region.For more information about the co-op,visit: http://ourharvest.coop/.

Fifth Street Brewpub Cooperative.Ohio’s first cooperative brewpub, whichformed in the St. Anne’s Hill HistoricDistrict in Dayton, held its grandopening Aug. 3. The foundingmembers of this cooperative had goalsof creating a place where neighborhoodresidents could come together in arelaxed and enjoyable atmosphere tocreate a sense of community. It is hopedthat the co-op will have a positiveeconomic and social impact on theneighborhood. Fifth Street Brewpubcurrently has 2,050 members and

From food hubs to brewpubs, cooperatives are growing in OhioBy Christie Welch, Program Manger, Ohio Cooperative Development Center, The Ohio State University

Carolyn Austin boxes jars of elderberry jamproduced by Austin’s Rush Creek Farm inFerryville, Wis. Her jams and jellies aremarketed through Fifth Season Cooperative,among other channels. Photo courtesyAustin’s Rush Creek Farm

C O - O PMONTH

continues to grow. In July, the co-opreceived the Preservation Award fromDayton History. For more informationabout the co-op, visit: http://www.fifthstreet.coop/.

Uni-Serve USA. This cooperative is anational network of commercial hood-cleaning companies that clean

restaurant vent hoods,especially for fast-foodrestaurants. The cooperativeallows its members to enjoythe convenience ofcentralized billing andreporting. It also helps themto provide improvedcustomer service, withimmediate response from alocal service provider. Uni-Serve USA currently has 20-plus companies ascooperative owner/membersand maintains a preferredvendors list that reduces thecost of doing business byhelping its members act asone company. Uni-ServeUSA cooperative also joinswith other cooperatives tooffer additional benefits andservices to owner/members,such as the ability toparticipate in benefitsoffered through the UnitedRegional PurchasingCooperative (URPC),

BizUnite and Employee Perks. Formore information about the co-op, visit:www.uni-serveusa.com.

Farmers Market ManagementNetwork. This is a cooperative of Ohiofarmers’ markets managers, vendors andproducers who have come together toprovide networking, shared services and

consistent messaging withregulators. Formed in2008, FMMN has workedto provide informationand training for therapidly increasing numberof farmers’ marketsthroughout Ohio. FMMNworks with many groupsthroughout the state tohelp educate managersand producers on foodsafety regulations, bestmarketing practices, and

shared services such as access toinsurance for Ohio farmers’ markets andtheir vendors/producers. For moreinformation about the co-op, visit:www.fmmn.org.

In addition to those listed above,OCDC is working with groupsexploring the cooperative businessmodel. These include: GoodnessGrows, a faith-based incubator/trainingfarm in the Youngstown area; the Mid-Ohio Valley Growers Cooperative, agroup of producers working together tomarket their produce to Charleston andParkersburg residents in West Virginia;and many more.

OCDC works with The Ohio StateUniversity and West VirginiaUniversity Extension Educators toprovide technical assistance to groupsexploring the development ofcooperatives in the two-state region. n


Tending plants that will eventually produce food to be sold through the Our Harvest Cooperative in Ohio, whichis structured based on the worker cooperative model used in the Mondragon region of Spain. Photo courtesyOur Harvest Cooperative


NEW HAMPSHIRE fishermen experienceda 78-percent cut in the groundfishquota allowed in 2013 and were furtherchallenged by low lobster prices andincreasing costs of fuel and bait. About98 percent of the groundfish landed inNew Hampshire are normally shippedout of state, with most being sold forlow prices at commercial fish auctions.

These factors put the NewHampshire fishing industry in aprecarious position; its very survival isthreatened. Josh Wiersma, NortheastFishery Sector XI and XII manager andFishues (rhymes with “issues”) bloggerSarah Van Horn decided that the timewas right to form a community

supported fishery (CSF) to helppreserve the industry. The objectives ofa CSF would be to help local fishermendiversify markets, meet the need ofconsumers for fresh, locally harvestedseafood and capitalize on an establishedinfrastructure of fishermen, producersand processors.

“The maritime fishing industry — avital element of the economy, cultureand history of the New Hampshireseacoast – is in crisis,” Van Horn says.“We are addressing this crisis byincreasing the recognition and appre-ciation of the interdependent roles thatthe fishing industry and the consumerplay in our local ecological economy.”

CSFs patterned on CSAsTaking a cue from local, community

supported agriculture (CSA) programs,in which farmers offer consumers sharesof the harvest for a pre-season, pre-paidprice, Wiersma and Van Horn workedwith local fishermen to develop abusiness plan for a communitysupported fishery.

Fourteen fishermen and crew fromSeabrook, Hampton, Rye andPortsmouth — representing just aboutall the active fishing boats in NewHampshire — decided to organize theinitiative as a cooperative that wouldreconnect local consumers withcommercial fishermen. That meant

Fishermen Neal Pike, president of the Yankee Fishermen Cooperative, and his son (also named Neal) begin the first trawl of the day onboard the Sandi Lynn. Photo by Sarah VanHorn

Multi-stakeholder co-op to bolster New Hampshire fishing industryBy Noémi Giszpenc and Lynda Brushett

C O - O PMONTH

WE HEAR a lot aboutthe demutualization

of cooperatives, but what about the flipside? How viable is it to convert aprivately owned business into acooperative? The Food Co-op Initiativehas been receiving inquiries from

independently owned grocery stores ofvarying size and product mixes duringthe past few years asking for advice onbecoming a cooperative.

Transitioning to a cooperative maybe a potential exit strategy for ownerswanting to retire or move on. In some

cases, the store may be in decline andthe community support of a cooperativeis seen as a way to gain investment andbuild loyalty and sales.

As independent grocers struggle tosurvive in an increasingly competitiveenvironment where large chains benefit


bringing consumers into the fishingbusiness.

Unlike traditional CSFs, NewHampshire Community Seafood is a“multi-stakeholder” cooperative.Instead of the fishermen being the solemember-owners, consumers are alsooffered an opportunity to become co-opmembers. “This way,” Wiersma says,“interested and engaged consumers canbe more directly integrated” into theCSF and its mission.

Consumers are offered theopportunity to buy a share in thecooperative in addition to their seafoodshare. Consumers who buy a share ofNH Community Seafood arerepresented by having a seat on theboard of directors. They are alsoentitled to receive a portion of anyprofits made at the end of the year.Buying a share of the co-op gives theconsumer a voice in the organization;both the fishermen and the consumersthus have a vested interest in seeing theorganization succeed.

Fifth fishing season may be added

NH Community Seafood consumerspre-pay for an eight-week “season” offresh seafood consisting of half, or full,allotments of a weekly delivery of afilleted groundfish share, a weeklywhole groundfish share, or a bi-weekly

“underdog” fish share (an underutilizedfish species). Four “seasons” areplanned, with a possible fifth season inFebruary and March that would featureshrimp and scallop.

Deliveries of freshly caught fish aremade weekly or every other week tofarmers' markets and other communitylocations. Cod, redfish, cusk, kingwhiting, monkfish, pollack, squid andlobster have been among the offerings.Tweets keep consumers up to speed onupcoming deliveries.

Taking cooperation a step further,NH Community Seafood developedpartnerships to support aggregation,processing and distribution with twobusinesses that are key to the state’scommercial fishery infrastructure.Yankee Fishermen’s Cooperative inSeabrook picks up the fish at the dock,sorts and grades it, and then sends thehighest quality fish to Seaport Fish, afamily-owned wholesale and retailmarket in Rye, N.H., which processesand packages fish for delivery thefollowing day. This means consumersreceive fish within 30 hours of its beinglanded.

NH Community Seafood’s mission isto: “provide local fishermen a fairmarket for all the species they catch andto provide the consumer with access toa wide variety of fresh, locally caughtseafood throughout the year; [this

provides consumers with] better insightinto the supply chain that bringsseacoast seafood to their table, and[gives them] direct input about thechoice and diversity of fish theyconsume.”

The co-op mission statementcontinues: “The cultivation andnurturing of this direct relationshipbetween local fishermen with localconsumers is intended to increasedemand for local seafood, to promotecommunity awareness and engagementin marine resource issues and to supportour local and regional economiesthrough the preservation of thelivelihoods of local fishermen and thesupporting of shore-side supportinfrastructure.”

Editor’s note: Giszpenc is the executivedirector of CDI (Cooperative DevelopmentInstitute), headquartered in ShelburneFalls, Mass. Brushett is the seniorcooperative developer at CDI specializing inagriculture and food systems: co-ops ofproducers (farmers, fishermen, foresters)and consumers (retail stores, buying clubs,institutions, etc.). CDI, a 501(c)3organization, was founded in 1994 withthe mission of developing a cooperativeeconomy in New England and New York. Itprovides direct business assistance, trainingand networking for established co-ops, start-ups and businesses considering conversion tocooperative ownership. n

Initiative helping convert grocery stores into co-opsBy Stuart Reid, Food Co-op Initiative

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from significant economies of scale, thenumber of owners looking for a way tosell or save their stores is increasing. Isthis a realistic opportunity for new co-ops to acquire ready-made storefronts?

Food Co-op Initiative decided that itwas important to understand the uniqueissues that arise when a new co-opforms around the desire to purchaseand convert an independently ownedstore. We identified two ruralcommunities that were exploring a co-op conversion and offered developmentfunds and support in exchange for theorganizers’ commitment to documentand share their experiences.

The Old Creamery (now OldCreamery Co-op) has had a longhistory in Cummington, Mass., where itserves an isolated population on theedge of the Berkshires. Noah’s Ark(now Placerville Natural Foods Co-op)was a more recent addition in thehistoric gold-mining foothills ofPlacerville, Calif. Both groups havesuccessfully completed their transitionsand are operating as consumercooperatives.

Patricia Cumbie interviewed the co-op organizers, previous owners and newgeneral managers in preparation forwriting the final study.

Some of the key lessons we learnedfrom these case studies include:• Support specifically designed to assistthe conversion process is minimal.

• Conversions require buyers, sellersand financial institutions to have astrong understanding of the needs ofcooperative financing.

• Sellers have to be patient with groupsthat need time to organize theircommunity, raise capital and carry outthe legal process of conversion.

• Changing organizational structureand transitioning operations to reflectcooperative best practices —including a chart of accounts,membership records and managementaccountability to a board — is anextensive undertaking.

The full study, Buying a Business toStart a Co-op: A Case Study of Food Co-opConversions, is available for freedownload on the Food Co-op Initiativewebsite: www.foodcoopinitiative.coop/content/co-op-conversion-case-study

There is another opportunity forsuccessful business conversions that wehave not yet addressed and may offersignificant advantages: the acquisition of

an independently owned grocery storeby an established co-op with financialresources and operational experience.Several such acquisitions have occurred,and more research needs to be done todocument the process and encouragesimilar efforts. Food Co-op Initiativeplans to continue its research and willinclude this and other options in afuture study. n

Co-op patrons enjoy a meal the Old Creamery Co-op in Cummington, Mass., (also seen in exteriorphoto), which serves members who live along the edge of the Berkshires. Photos by Stuart Reid,courtesy Food Cooperative Initiative.


MOST COOPERATIVES

form to helpmembers meet a specific need, such asreducing costs for supplies and services,or to perform processing andmarketing. Sometimes they arise to takeadvantage of a special marketopportunity. Regardless of what initiallysparks a new co-op, a criticalcomponent for the start-up and long-term success of any cooperative is theexistence of a group of people whobelieve that they can accomplish moreby working together than they can asindividuals.

The Seattle Wholesale GrowersMarket was born of a need and anopportunity. As individuals, thecooperative’s founding members werestruggling with the challenges mostproducers face trying to farm, marketand manage their farm businesses. Alltheir farms were located long distancesfrom the urban markets, where there isstrong demand for their unique, locallyproduced flowers and nursery stock.

Co-op builds own wholesale depot

To address their marketing needs andto take advantage of marketingopportunities for their niche products,the growers decided to open a “bricksand mortar” wholesale depot in theGeorgetown area of South Seattle. TheSeattle Wholesale Growers Marketincorporated as a cooperative inWashington state in February 2011. Itsnew, wholesale market opened twomonths later.

An unusually cold, wet winterdelayed many of the spring flowers thatyear. However, within a few months themarket was packed with an enticingdiversity of floral products. These

included much-sought-after, hard-to-ship items such as lilacs, snowball

viburnum, unusual bulb crops,blooming branches, poppies and manyforms of tulips.

Word about the co-op and itsofferings quickly spread throughSeattle’s community of floral designers,and business began to boom at the newwholesale market. Increased sales in thefirst year contributed to the creation ofsix new, full-time jobs.

“Our founding members were allfrom rural areas in Washington,Oregon and Alaska,” says DianeSzukovathy, co-owner of Jello MoldFarm and president of the cooperative.“There were a lot of flowers being soldin our region, but very few of themwere coming from local farms. Thetraditional wholesale houses hadchanged their buying habits in favor ofcheap imported flowers, mainly comingfrom South America.

“Many Washington and Oregonflower farms had already gone out ofbusiness, and the remaining ones werestruggling to find efficient and reliablechannels for distribution,” Szukovathycontinues. “We felt that the strong ‘buy

Business blooms rapidly for Northwest horticulture co-opBy Jeff Voltz, Project Manager, Northwest Agriculture Business Center, A USDA Rural Cooperative Development Center

Flowers grown near Washington’s MountBaker will be sold through the SeattleWholesale Growers Market (SWGM)cooperative. Photo by David E. Perry. Below:Co-op members’ flowers on display forwholesale buyers. Photo courtesy SWGM

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local’ sentiment in our region wouldwork in our favor, as it already had forfood farmers. We truly had no idea howquickly we would be embraced bySeattle’s professional floral buyers, whoappreciate the outstanding quality,diversity of products and warmcommunity atmosphere of our market.”

Co-op assisted by NABCSeeking help and guidance for the

development of a cooperatively ownedbusiness, Szukovathy connected withthe Northwest Agriculture BusinessCenter (NABC) in the fall of 2010.

“It was very helpful to have NABCas a resource to vet some of our ideasabout organizational structure,”Szukovathy says. “They also provided agreat service in support of our startupby providing an interim web page ontheir site and staff resources to help uspublish weekly ‘fresh sheets’ for ourcustomers during that critical first year.”

As a core service, the cooperative hasprovided the grower-members with afacility to market their products asindividual businesses. But thecooperative has also provided a venue inwhich the growers are able to sharecommon values and best practices. Thisopportunity led to the development ofthe co-branded “By the Bunch” floralprogram.

The grower-members have workedtogether with two key Seattle-areasupermarket chains to bring fresh,locally produced bouquets to market. Asa component of this program, SeattleWholesale Growers Market haspartnered with Salmon-Safe(www.salmonsafe.org), a PacificNorthwest regional eco-label whichallows qualifying member farms toachieve third-party certification forsustainable growing practices.

The Seattle Wholesale GrowersMarket has grown from an initial 14

members to its current 17 members.Gross annual revenues increased from$300,000 in 2011 to over $500,000 in2012. Sharp growth has continued in2013, with projected annual revenuesexpected to easily top $800,000.

Are the members pleased with theresults? “Most of us believe this effortwill be instrumental in the long-termviability of our farms and our entireindustry,” says Szukovathy. Because ofthis co-op and the market opportunitiesit has provided, our farm sales havemore than doubled in the past threeyears. And these sales are moreprofitable because marketing andtransportation costs have been reduced.

“We are preserving farmland and ourrural heritage, creating jobs andproviding a more environmentallyprogressive and safe product to themarketplace,” she continues. “Thiseffort is a big win for a lot of people!” n

THE IDEA behindKentuckyOrganic Farmand Feed Inc.(KOFFI) wasdeveloped by agroup of Amishand Mennonite dairy farmers insouthern Kentucky as they began toinvestigate their options for sourcingorganic feed.

The farmers, who were transitioningto organic dairy production, needed alocal source to mill their cattle feed. Atthe time of the transition, a fellowfarmer, John Troyer, was doing some

milling for the group and he was sellingsome organic products. Troyer agreedto expand his production of organicfeed, and he rented a building on thesame road as his farm to expandproduction to provide locally milledorganic feed for the dairy cattleproducers in the area.

“John was doing a great job, but he

had a lot of irons in the fire,” explainsMenno Beiler, KOFFI president. “Hehad reached a point where he wanted topass off the business or get more peopleinvolved. We decided to put together asteering committee to look at whatdirection we wanted to go, and that iswhen we decided to develop acooperative to run the feed mill.”

Dairy Co-op ensures feed supply by operating organic grain mill Courtesy Kentucky Center for Agriculture & Rural Development

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KCARD gives crucial assistance

The group decided to rent thebuilding Troyer had used as a mill andcontinued the operation. The KentuckyCenter for Agriculture & RuralDevelopment (KCARD) was brought tothe table early in the process to help thegroup of farmers navigate thedevelopment of the cooperative.

“There were a few [of the dairyfarmers] who had business experience,

but none of us had any experience witha cooperative,” says Beiler. “I can’tremember who recommended wecontact KCARD for help, but this co-op probably would have neverhappened if KCARD hadn’t been thereto guide us through the development.”

Coming in to assist the co-op duringthe early stages of development allowedKCARD to help the farmers draft theinitial bylaws and articles ofincorporation to establish thecooperative. The Center’s staff attendedmeetings for several months, helpingthe farmers as they developed a businessplan for the mill.

KCARD also worked closely withOrganic Valley, an organic milkcooperative that is the buyer of thefarmers’ milk, to develop the plan forsupplying grain to the mill.

“At this point, the grain is not ownedby KOFFI; it is on consignment fromOrganic Valley,” explains Beiler.“Organic Valley has the grain deliveredto the mill, KOFFI mills it in the feedration each producer needs, and thenOrganic Valley bills the farmer for thegrain. KOFFI bills the farmer for amilling and moving charge.”

Expanding customer baseKOFFI has grown its customer base

beyond the initial farmers that came

together to create the cooperative. SamJustice, KOFFI mill operator anddriver, says that while the core businessremains the organic dairy farmers, agrowing number of small poultryproducers and other livestock operatorsin the area are coming to the mill fortheir organic feed.

“I believe we are the only organicmill in about a 250-mile radius,” saysJustice. “The majority of our customersare in the southern Kentucky area, butwe do have farmers that come fromTennessee and even one that drivesfrom Georgia for organic feed.”

Justice and Beiler agree that runningan organic feed mill has offeredchallenges and successes. Unlikeconventional feed mills, Justice can’tjust run down to the local elevator topick up grain if the supply at the millruns low. Yet, farmers have also learnedto work with Justice to use the uniquemix of organic grains in their animalrations.

“It has been a learning experience forus all. But thanks to the dedication ofour farmers and the continuedassistance from KCARD, we aremoving forward,” says Beiler, “I believethat there is an opportunity for KOFFIto continue to grow to provide a muchneeded service to organic farmers in thearea.” n

Sam Justice, manager of the KentuckyOrganic Farm and Feed Inc. (KOFFI) feed mill(facing page) takes care of the office work.Photo courtesy KOFFI

INNOVATION is aliveand well in the

Upper Midwest, where cooperation is avital part of the rich fabric of theregion. Community leaders hereembrace collaboration, often involvingcooperatives, as a market solution thatbenefits people and their communities.

More co-ops are headquartered in

Minnesota and Wisconsin than in anyother states. The two states are home tomore than 1,500 cooperative businessesowned by more than 6.3 millionresidents.

Upper Midwest cooperatives includebusinesses that are on the Fortune 500— CHS Inc. and Land O’ Lakes Inc. —as well as co-ops that are leaders in the

fields of healthcare (HealthPartnersHMO) and financial services (Thriventcredit union), all headquartered in theTwin Cities area. The region is alsohome to cooperatives that operatecritical access hospitals in ruralWisconsin and to worker-owned co-ops, such as Union Cab and IsthmusEngineering, both in Madison, Wis.

Great Lakes Center pursues innovative co-op solutions By Bill Oemichen, President & CEO, Cooperative Network

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Electric and telecommunicationsutility co-ops provide service acrossrural and suburban areas of the region.The Great Lakes area is home to agrowing number of rural and urbangrocery and senior housing cooperativesas well hundreds of farm supply, fuel,and grain cooperatives; credit unions;mutual insurance businesses and FarmCredit associations.

Partnering with USDA, othersThe Great Lakes Cooperative

Center (GLCC) is a public/privatepartnership between the CooperativeNetwork, the University of WisconsinCenter for Cooperatives and USDA.The Center has received RuralCooperative Development Grantfunding from USDA the past two yearsand has leveraged significant privatefunds for cooperative developmentactivities.

This unique arrangement maximizesthe use of federal resources andgenerates a strong return on investmentthrough the Center’s economicdevelopment activity that is far greaterthan its federal, state or private partnerscould independently match. In its shortexistence, the GLCC has created orprevented the loss of more than 50 jobs.

During the past 18 months, GLCChas focused on assisting communityleaders in developing new cooperativebusinesses across the Upper Midwest, aswell as assisting established co-ops intaking advantage of new opportunitiesto better meet the needs of theirmembers.

The Center is focusing its work inseveral specific arenas, including energy,healthcare, senior housing, agricultureand local food. Assistance providedincludes conducting feasibility analysis,business plan and programdevelopment, co-op creation andgovernance, education/outreach andtechnical assistance.

Co-op approach to healthcareIn the healthcare sector, GLCC is

working to promote greater access toaffordable, quality healthcare foragricultural producers in Wisconsin andMinnesota. The Farmers’ HealthCooperative of Wisconsin (FHCW) isnow bringing a price-competitive,comprehensive healthcare plan toWisconsin farmers and agribusinesses,particularly in the state’s vitallyimportant, $26 billion dairy industry.

GLCC is working to create a similarhealthcare cooperative for Minnesotaagriculture: 40 Square CooperativeSolutions. The Center is also providingtechnical support to the newlydeveloped Common Ground HealthCare Cooperative in Wisconsin andother healthcare cooperatives that arebeing developed across the nation tomeet a fall deadline for offeringcompetitive, high-quality health careplans on new state health insuranceexchanges.

In the area of senior co-op housing,GLCC is playing a key role in hosting anational conference each year inMinnesota, conducting workshopsfeaturing key issues that senior housingcooperatives face and facilitating theexchange of “best practices” among thecooperatives' managers. This past year,the conference assisted about a dozenrural cooperatives through the exchange

of board policies and other technicalinformation.

Co-op roles in energy, local foods, education

In the energy sector, GLCC isworking with three Wisconsin electriccooperatives to create an energy-efficiency program that will providemembers (many of them low-incomefamilies) with access to energy-efficiency technologies that can savemoney for rural home and businessowners.

To promote local foods, GLCCoffers a diverse array of services todeveloping and existing cooperatives.These include the Deerfield GroceryCooperative, Wisconsin Food Hub,North America Aronia Cooperative andSpring Rose Growers Cooperative.Working with the University ofWisconsin Center for Cooperatives,GLCC is providing these important jobgenerators with business planninginformation, training and othertechnical resources.

Finally, the GLCC is working withWisconsin’s 12 CESA’s (CooperativeEducation Services Agencies) toconserve scarce K-12 school districtfinancial resources through thecommon purchase of transportation

Development of senior housing cooperatives, such as the Realife Cooperative of Coon Rapids,Minn., has been a major focus of the Great Lakes Cooperative Center. Photo courtesyCooperative Network


VIRGINIA is home to alarge, flourishing

agricultural community that includesmany small individual and family farms.Many farmers here experienced highstress and low income after the loss ofthe tobacco and peanut federalprograms, resulting in pressure to findnew crops and sources of income.

Small farms in the Old Dominioncontinue to confront obstacles as theytry to compete with larger agriculturalcorporations. But they often find thatthey need some type of assistance toremain viable.

VA FAIRS supports small farm sector

The Virginia Foundation forAgriculture, Innovation and RuralSustainability (VA FAIRS) is a ruraldevelopment center that provides helpto farmers and rural businesses. Thefoundation assists in the creation ofrural businesses, offering assistance toindividuals, cooperatives, smallbusinesses and other similar entities inrural areas.

The development center is funded inpart through the USDA’s RuralCooperative Development Grant(RCDG) program, which allowsrecipients to further develop theirbusiness goals and help other ruralbusinesses. According to the USDARural Development’s website, thepurpose of the RCDG program is to“improve the economic condition of

rural areas by assisting individuals orentities in the startup, expansion oroperational improvement of ruralcooperatives and other businessentities.”

“We have used these grants to helpcooperatives, which, in turn, havehelped other rural businesses byproviding services and outlets for theirproducts,” says Chris Cook, the center’sexecutive director.

VAN helps small aqua-farms Virginia Aqua-farmers Network

LLC (VAN) is a cooperatively

organized, producer-owned business ofindependent freshwater fish and prawnproducers. Though VAN is chartered asan LLC, the entity is operated, andfunctions, as a cooperative. Thenetwork provides an outlet for smallaqua-farmers, primarily in south-centralVirginia, who wish to provide theirconsumers with fresh, locally producedseafood. They can accomplish this bybringing together production resourcesand marketing opportunities for thebenefit of smaller aqua-farmers.

The idea behind the Virginia Aqua-farmers Network started with a desire

fuels and through development of amodel bus transportation contract. Thisactivity is consistent with the commonpurchasing role created for these schooldistrict cooperatives by the Wisconsin

Legislature in 1964.Most Upper Midwest cooperatives

had very humble beginnings, but nowserve as major economic anchors intheir communities. GLCC is working

with those cooperatives to ensure theregion’s strong cooperative traditioncontinues to provide the foundation fora strong rural economy. n

Aquaculture providing opportunities for Virginia farmers to diversifyBy James Matson and Jessica Shaw

Fish farming is proving to be a promising alternative “crop” for some producers in Virginia. ChrisBentley and Dr. Clarke Morton of Mid-Atlantic Aquatic Technology (MAAT) operate a fish farm onthe state’s eastern shore. The farm is a member of the Virginia Aquafarmers Network.

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to assist existing small-scale aqua-farmers and flue-cured tobacco growerswho were looking to use their existingfarm infrastructures to produce analternative income stream.

VAN supports the growth of theVirginia aquaculture industry and offersfarmers a means of furthering theirproduction. Before the dreams of VAN’sproject leaders could become a reality,the cooperative needed financial andorganizational help.

VAN’s initial development was aslow process, as there were manyobstacles to overcome. But the leaderswere determined, and the VirginiaAquaculture Association wasinstrumental in procuring funds fromUSDA’s Value-Added Producers Grant(VAPG) program, which led to thecreation of a feasibility study and aninitial marketing and business plan.After the completion of thesedocuments, VAN was able to hold itsfirst meeting with producers.

Many organizations — including VAFAIRS, Virginia State University,Virginia Tech University, Virginia FarmBureau Federation and others — tookinterest in VAN’s venture because of itspotential to help farmers move fromtraditional cash crops into new, value-

added niche marketing.“VA FAIRS has been an exceptional

partner and has been instrumental inguiding us to build from the ground up”says Lynn Blackwood, VAN chairmanand founding member. “We hope tofurther develop [the network] bybringing in new producers and continueto integrate vertically.”

VAN is currently working with anumber of producers to help expandseafood items produced. It continues toprovide producers with technicalassistance, training, purchasingopportunities, logistics coordination andmarketing opportunities.

MAAT develops unique fish farming practice

Mid-Atlantic Aquatic Technology(MAAT), which recently joined VAN,is operating a land-based fish farm onthe eastern shore of Virginia. MAAThas worked for years to develop its ownunique system of raising fish from eggsto market size, while maintaining ahealthy, sustainable environment for thefish.

As the business has grown, MAAThas partnered with many organizationsthat have helped it further develop itsgoals. “Through their pool of expertise,

Virginia FAIRS and VAN have onlyproven to make our business stronger asthey have helped expand and strengthenour collaborative knowledge,” saysMAAT Farm Manager Chris Bentley.“We hope to continue this partnershipas we grow.”

Although others had tried and failed,VAN persisted in its desire to help localfarmers and strived to make theirdesires a reality. With assistance fromVA FAIRS, the network has helpedsecure the future for smaller, ruralbusinesses, such as MAAT, that may nothave otherwise possessed the means tosucceed on their own.

Stephen Versen, project manager forthe Agriculture and ForestryDevelopment Services, part of theVirginia Department of Agriculture andConsumer Services, says that anaquaculture cooperative serves as animportant vehicle that helps existingand future members reach markets andgives them the marketing tools to besuccessful.

Editor’s note: Matson is a SouthCarolina-based business developmentconsultant with expertise in cooperativedevelopment. Shaw is an editor andconsultant with Matson Consulting. g

HOOSIER HARVEST

Market — the firstfood hub in central Indiana to focus onIndiana-grown products — opened tocustomers on May 31. The food hub isbased in Greenfield and will haveseveral delivery points throughoutcentral Indiana.

Hoosier Harvest Market is acooperative that is connecting Indianafood producers with consumers who

seek locally grown food products. Manyof our neighbors in surrounding stateshave enjoyed such a “local foodconnection” for several years, and nowHoosiers have the same opportunity tobuy local food and to support localproducers.

At the outset, Hoosier HarvestMarket will be operating as a “virtualmarketplace.” With the click of amouse, consumers can order their

Central Indiana’s first food hub goes “LIVE!”By Debbie Trocha, Executive Director, Indiana Cooperative Development Center Inc.

The Hoosier Harvest Market operates a “virtualmarketplace” via this website.

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locally produced foods any time, fromthe comfort of home or office. The foodhub is viewed as a complement to theregion’s farmers markets.

The co-op’s website, www.hoosierharvestmarket.com, explains how tobecome a member and to place ordersdirectly with producers. It also providesdelivery locations. Producers who wantto sell their local products can findmore information and join through thewebsite.

How does a food hub work?Farmers/producers update their

product availability and prices weekly inan online marketplace.

Consumers shop and fill their“market baskets” with products from thefarmers of their choice and pay online.

Farmers deliver their products to anaggregation point for rapid sorting and

packaging.Customized individual market bas-

kets are delivered to a pickup point thatthe consumer has previously selected.

Help from many sourcesPurdue University Hancock County

Extension spearheaded this initiative,with assistance from the IndianaCooperative Development Center(ICDC), Indiana State Department ofAgriculture, bankers, communityorganizations and farmers.

Planning for the initiative began inthe fall of 2011. A Specialty Crop Blockgrant was received through the IndianaState Department of Agriculture (withfunding from USDA) and a businessplan and feasibility study werecompleted in 2012. ICDC helped guidethe steering committee through its legalincorporation as a cooperative.

According to U.S. AgricultureSecretary Tom Vilsack, “Skyrocketingconsumer demand for local and regionalfood is an economic opportunity forAmerica's farmers and ranchers. Foodhubs facilitate access to these marketsby offering critical aggregation,marketing, distribution and otherservices to farmers and ranchers. Byserving as a link between the farm orranch and regional buyers, food hubskeep more of the retail food dollarcirculating in the local economy.”

In effect, the success of regionalfood hubs comes from entrepreneur-ship, sound business sense and a desirefor social impact, Vilsack said. USDAestimates that there are currently morethan 220 active food hubs across thecountry. g

GERMAN scientistsFritz Haber and

Carl Bosch created the Haber Boschprocess in the early 20th century formaking synthetic fertilizer. NatureMagazine says that these twoindividuals were the most influentialpersons of the 20th century, their workrivaled only by the germ theory ofdisease, developed by Louis Pasteur andRobert Koch, for having the greatestimpact on humankind in the past 200years.

The Haber Bosch process makesanhydrous ammonia (NH3), which isthe building block for other solid andliquid nitrogen fertilizers. The processcombines nitrogen, taken from ambientair, and hydrogen, most commonlytaken from methane or natural gas. This process was first employed for

New farmer-owned fertilizer plant being exploredBy Bill Patrie, Director, Common Enterprise Development Corporation

The Dakota Gasification Co. (DGC), a for-profit subsidiary of Basin Electric Power Cooperative, operates theGreat Plains Synfuels Plant, near Beulah, N.D. , the nation’s only commercial-scale coal gasification plant thatmanufactures natural gas. Photo Courtesy Basin Electric Cooperative

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commercial fertilizer production about1913. By the 1950s, farmers across theUnited States and Canada ownedfertilizer manufacturing facilities thatused the process developed by theGerman scientists.

When natural gas prices spiked inthe United States and Canada in 2008,many fertilizer production facilitiesusing natural gas shut down. Takingtheir place were fertilizer manu-facturing facilities developed in parts ofthe world where there were supplies of“stranded” natural gas (an undevelopednatural gas field). Over time, farmer-owned manufacturing plants wereclosed or sold. Now there are none leftin the United States or Canada.

In 1988, Basin Electric Cooperativeacquired Dakota Gasification Co.(DGC), which manufactures syntheticnatural gas and other high-value gasesfrom coal. DGC added an ammoniamanufacturing plant that uses theHaber Bosch process to add value to thenatural gas it was already producing.The Dakota Gasification plant and thefertilizer operation are operated on afor-profit basis without the opportunityfor farmer ownership (for more about it,visit: www.dakotagas.com).

With the discovery of the Bakken oilformation in North Dakota, natural gas

has once again become plentiful. Priceshave fallen to the point that when an oilwell begins producing, oil companiesflare (burn) the escaping natural gasrather than attempt to capture it. As aconsequence, a satellite image of theBakken at night has a light density of amajor urban area.

CEDC helping farmers explore new plant

Common Enterprise DevelopmentCorporation (CEDC) has been workingwith the North Dakota CornUtilization Council, the North DakotaSoybean Council and producer groupsfrom South Dakota, Minnesota and theCanadian Province of Manitoba to findways that farmers could once again gainan ownership position in a fertilizermanufacturing facility.

The initial feasibility studyconducted for the group by NorthDakota State University (NDSU)suggested that a facility located in theupper Great Plains accessing Bakkennatural gas would be cost competitivewith other manufacturing facilities inthe United States and Canada. It wouldalso likely have a transportation costadvantage for supplying the localfarmers.

Farmers operating as Northern

Plains Nitrogen LLP are currentlyorganizing an equity campaign toconvert the feasibility study into abusiness plan. Money raised would beused to build and operate a plant atGrand Forks, N.D. The farmers behindthis effort are not alone. There havebeen a number of press announcementsof major corporate expansions ofexisting fertilizer manufacturingfacilities in the United States andCanada. The largest cooperative in theUnited States, CHS Inc., has alsoannounced an engineering study for asite near Spiritwood, N.D.

The feasibility study completed byNDSU suggests that the smallestmanufacturing plant that would becompetitive on a cost-per-ton basismust produce about 750,000 tons peryear. Such a plant would cost up to $1.5billion. The largest fertilizer companiesin the world are state-operatedenterprises, so farmers are facing notonly multinational corporations, butforeign nations themselves.

Haber and Bosch started somethingbig 100 years ago, and it makes for awild ride for farmers trying to re-establish a producer-ownership stake infertilizer production. g

Simple Yoga &Wellness Cooper-

ative began as a sole-proprietor yogainstruction center in Hamilton, Mont.,in 2007. The founder, Meg McCracken,had a passion for the art and benefits ofyoga and soon developed a loyalcustomer base and a staff of talentedinstructors. She ran the Simple Yogastudio for six years.

Hamilton, population 4,100, is theRavalli County seat. The rural county is90 miles long with communities nestledbetween the Bitterroot and SapphireMountains. Businesses tend to be smallhere — 51 percent of businesses in thecounty have nine or fewer employees.

Montana ranks 38 among the statesfor average per capita wages. Accordingto the U.S. Bureau of Economic

Analysis, Ravalli County’s per capitapersonal income is $30,955, just 74.5percent of the national average. About15.3 percent of the county residents fallbelow the poverty line.

When “life’s changing tides” took thefounder of Simple Yoga to newopportunities in California, many of thepractitioners and instructors could notbear the thought of losing their yoga

Simple Yoga & Wellness Co-op promotes health in MontanaBy Julie Foster

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studio. However, there wasn’tmuch time to consider theoptions.

Two of the yogapractitioners — MarilynMorris and Alla Brooks —decided they had to try tosave their studio, so they madea deal with the owner to buythe business.

Co-op viewed as bestbusiness structure

The new owners, thecustomers and the instructorsknew that they wanted toform a cooperative. They haddone Internet research andfound that the co-op modelseemed to best meet theirneeds. They then soughtprofessional assistance froman attorney and a certifiedpublic accountant.

They found professionalswho wanted to help, but didn’tknow the first thing aboutstarting a cooperative. Thatled to the beginning of whatcould have been ongoing,costly research into how to incorporatea cooperative.

Fortunately, an article in the localnewspaper pointed the fledgling co-opto the Ravalli County EconomicDevelopment Authority (RCEDA) andthen to a cooperative developmentspecialist with the MontanaCooperative Development Center(MCDC).

“Without the technical assistancemade possible by the MontanaCooperative Development Center, wewould have spent a lot of time andmoney trying to create our cooperative,”says Brooks, now a co-chair of the co-op. “We sought help from a localattorney who specializes in assistingnonprofits, but was not familiar withthe cooperative business model. Onehour’s time for research into forming a

cooperative cost nearly $200.” Mounting legal costs such as that

would have soon exceeded the financialresources on the start-up co-op, shenotes.

A perfect fitRCEDA has been part of the

MCDC team for nearly eight years.MCDC provides training andcontinuing education for a statewidenetwork of cooperative developmentspecialists. Assisting the Simple Yoga &Wellness Cooperative was a unique,rewarding experience for RCEDA.

The co-op organizers said they hadgoals even beyond running a yogastudio, describing what the co-op worldknows as the “seven cooperativeprinciples.” These principles includegoals such as a commitment toimproving communities and to work to

help other cooperatives. The co-op organizers

had no knowledge that theseven core co-op principleseven existed. It was thatkind of perfect fit duringthe entire process that madeworking with this co-op somemorable.

The cooperative is asource of jobs, contractingwith six regular instructors,two substitute instructorsand a part-time bookkeeper.An additional yogainstructor will likely beadded to the staff this fall.The facility is in a leasedlocation, with the co-opbeing the “anchor” tenant.The customer base andrevenue are growing.

Co-op co-chair Brooksstresses how important themember/owners’ volunteerefforts have been in makingthe business work. Throughdonation of seed money andtime, many have stepped

forward to help. Volunteers clean thestudio, water plants, build studioaccessories and help with fundraising.During a recent workshop, one memberprovided housing for the guestinstructor.

While many people and peopleagencies — including USDA, MontanaState University and MCDC — havehelped the co-op succeed, co-opfounders Marilyn Morris and AllaBrooks havde played the biggest role bystepping up to save the business, takingthe risk and making the substantialinitial effort to turn this into a storyworth telling.

Editor's note: Foster is cooperativedevelopment specialist with the MontanaCooperative Development Center andexecutive director of the Ravalli CountyEconomic Development Center. g


Hamilton, Mont., (above), is the home of the Simple Yoga & WellnessCooperative. Here, students in the lotus position practice breathing andmeditation exercises. The co-op was formed to save the studio when closureappeared likely.

LOOK AROUND.What’s in the news?

The media is flooded with stories aboutan economy still struggling to restorejobs lost in the recession, the high costof living, wage stagnation and volatilegas prices.

But there are beacons of progress andhope, among them an increasingnumber of stories about the positiveimpact co-op development is having onour economy and within communities.It is work being supported, in part, bymembers of CooperationWorks, anetwork comprised by many of thenation’s rural cooperative developmentcenters. The impact ofCooperationWorks (CW) is not justillustrated with stories of humantriumph, but is proven in numbers.

During the past year, CW conducteda survey to measure the economicimpact of our members’ work, collectingdata from 18 member developmentcenters about business developmentperformance and job creation. Thissurvey is a continuation of a studyconducted in 2009.

Hundreds of businesses launched

Between 2009 and 2011, CWCenters assisted in the development of276 new businesses, of which 154 werecooperatives. During this period, 6,050jobs were created or saved and —equally important — essential serviceswere restored in many ruralcommunities. Thus, for every $1,362 infederal dollars invested in a CW Centerin 2011, a job was saved or created.

The ability of CW Centers to impactboth rural and, to a lesser extent, urbancommunities, is stretched by leveragingthese federal funds. In 2011, $2.84

million of non-federal funds wereleveraged. Additionally, the CWCenters assisted their clients in securing$79.7 million in federal funds between2009 and 2011 (this amount includes a$69.3 million federal loan secured byone Center to start a health carecooperative). The Value-AddedProducer Grant Program (VAPG) wasthe most common source of funding forprojects.

CW Centers typically work withclients for multiple years, relying onfederal funding through the RuralCooperative Development Grant(RCDG) program, administered by theCooperative Programs of USDA RuralDevelopment, for a significant portionof their annual revenue. The Centersthat received RCDG awards for five ormore consecutive years have developedmore businesses and impacted a greaternumber of jobs. These centers are alsobetter able to leverage a greater diversityof non-RCDG revenue sources.

The impact of CW Centers reachesbeyond new co-op development and jobcreation. In 2011, the median CWCenter used federal or matching fundsto provide assistance to 85 businesses,91 percent of them rural. Additionally,CW Centers offer non-job benefits,such as housing development andtraining/education. Three Centers alonehelped create 780 housing units.

Measurable impactsfor real people

Some recent projects supported byCW Centers reveal how these effortshave had a meaningful impact onimproving lives and communities:• In Parshall, N.D., the North DakotaRural Electric and TelecommunicationDevelopment Center assisted in the

development of a new daycare center,creating six jobs. For one family, localdaycare means their son no longer hasto live with his grandparents (five hoursaway) because adequate daycare is nowavailable in Parshall. • The Center for Cooperative ForestEnterprises worked on a forestryrestoration project that has led to theidentification of 30 different productsfrom forest byproducts, resulting in newbusinesses and job growth in theSouthwest.• The Food Co-op Initiative, with astaff of three, is in contact with morethan 100 communities that are home tonew, active retail food co-ops. It hasproduced a number of online resourcesto help these co-ops reach more peopleand have a greater impact (also see page25) . • The Cooperative DevelopmentInstitute, serving the Northeast, isworking with farmers and consumers torestructure local food systems, givingconsumers more access to fresh fruitsand vegetables while helping improveincome for small farmers (also see page24) . • CW member centers in Californiahave given an under-employedpopulation economic stability that isleading to a stronger community withthe creation of worker co-ops.

In these and many other ways, CWmembers leverage USDA funding toplay a major role in the economy,making life better for families andindividuals. g

CooperationWorks members working for job growth, stronger rural economyBy Sara Pike, Director, CooperationWorks


CO - OPMONTH

New agronomy unit atSouthern States; co-op closingsome stores, adding others

Southern States Cooperative isforming a new Agronomy BusinessUnit to better serve the needs of coreagricultural customers. Southern Statesoffers a range of products and servicesto help growers in the field.

“We have reorganized our wholesalecrops division, with 67 retail storeslocated in 13 high-volume agronomydistricts, to form the new AgronomyBusiness Unit. Our new growth strategywill enable us to be more streamlinedand efficient from sourcing products toapplication in our farmers’ fields,” saysTom Scribner, Southern Statespresident and CEO. “For yearsSouthern States has been organizedaround wholesale and retail businessunits. To ensure we create greatcustomer experiences, we are aligningour infrastructure and associates to meetthe evolving needs of our farmerproducers and rural lifestyle customers.”

As part of the multi-prongedstrategy, Southern States will expandofferings with branded dealers,independent dealers and commercialaccounts. Additionally, a small numberof retail locations — about two dozen(or less than 2 percent) of its 1,244retail stores in 17 states — are closing.Most of the store closures will be innorthern Georgia and northernAlabama.

Additional retail stores, as well asindependent dealers for SouthernStates-branded products, will be addedin the future. Stores will focus on ruralAmerica customers in high-growthmarkets, including cow calf operators,equine customers, gardeners and rural

enthusiasts. “As we celebrate our 90th

anniversary, we are recommitting ourefforts to provide farmers with the latestin technology and support,” saysScribner. “True to our mission ofhelping people grow things, it is ourbelief that an intense focus on theproducer will allow us to meet andexceed our customer’s needs. Theagricultural industry is changing rapidly,and we plan to be at the forefront ofthose improvements.”

Denver eyed for Ardent Mills HQ

CHS Inc., ConAgra Foods andCargill have announced that theirproposed joint venture flour millingcompany, Ardent Mills, plans toestablish its headquarters in the Denvermetropolitan area, contingent upon finalapplication and approval of state andlocal incentives. The transaction isexpected to be completed in late 2013,


NewslineSend co-op news items to: [email protected]

Co-op developments, coast to coast

Southern States Cooperative has formed an Agronomy Business Unit to better serve its agricultural producers.Photo courtesy Southern States Cooperative


following regulatory clearances,financing and the satisfaction ofcustomary closing conditions.

A specific office location andoperating date has not yet been set forthe new headquarters, but the newcompany is expected to have a presencein the Denver area starting in 2014.“Selecting the Denver area as the homefor Ardent Mills will allow us to offergreat quality of life for employees,provide excellent service to ourcustomers and position the business forlong-term growth,” says Dan Dye, whocurrently serves as president of HorizonMilling and will lead Ardent Mills asCEO once the new company is formed.

Ardent Mills is being formed byConAgra Mills and Horizon Milling, aCargill-CHS joint venture formed in2002.

NCB partnering with Spanishbank to bolster co-op sector

National Cooperative Bank (NCB),Washington, D.C., is teaming withLaboral Kutxa, the financial cooperativearm of Spain’s Mondragon Group, tobuild cooperative businesses throughoutAmerica. Mondragon is the world’slargest industrial, worker-owned andrun cooperative, having been foundedin the Basque region of Spain 55 yearsago. It is the winner of the 2013Financial Times “Boldness in Business”award.

The two co-op banks will collaborateto support each other’s customers,including subsidiaries of cooperativesoperating in the United States thatbelong to Mondragon Group.Predicated on similar “doing well bydoing good” principles, socialresponsibility values and a growingunderstanding that cooperative marketsextend beyond borders, both entitieshave pledged to support each other’scustomers with regard to charges,payments, financial services, onlinebanking systems and other commercialbanking practices.

NCB’s customers are cooperatives —including grocery wholesaler co-ops,food co-ops, purchasing co-ops, credit

unions and housing co-ops — that sharein the spirit of working cooperatively tomeet personal, social and businessneeds. Laboral Kutxa has 450branches with 1.3 million customers.Mondragon is Spain’s tenth largestindustrial group, with 80,000 personneland a presence in 70 countries,including expanding operations inNorth America.

In 2009, Mondragon agreed to workwith the United Steelworkers union todevelop a hybrid union/co-op modelthat has since been adopted by unionsin more than 10 U.S. cities. Theseprojects range from an organic/sustainable farm to a commerciallaundry and energy-efficiency business.Mondragon International USA is alsopartnering with the Ohio EmployeeOwnership Center (OEOC) and theCity University of New York (CUNY)School of Law’s Community EconomicDevelopment (CED) Clinic to create“reusable” union-co-op businesstemplates.

CVA, ADM joint venture to build Nebraska grain loading facility

Central Valley Ag Coopera-tive (CVA) and Archer Daniels Midland

(ADM) Co. have announced theformation of 81-20 Grain TerminalLLC, a joint venture that will constructa 5- million-bushel shuttle loader grainelevator near Randolph, Neb. Theelevator will originate corn andsoybeans from regional farmers,primarily for transportation by 110-carBNSF Railway shuttle trains to exportmarkets via the U.S. Gulf Coast, PacificNorthwest and Southwest.

CVA and ADM will each own 50percent of the grain facility, which willfeature two receiving pits and one railreceiving pit, each capable of dumping20,000 bushels of grain per hour. Thefacility will be located at theintersection of U.S. Highway 20 andU.S. Highway 81, three miles west ofRandolph. It is expected to beginoperating by fall 2014.

Pierce County — in which theelevator will be located — along withsurrounding Cedar, Knox and Waynecounties — have all seen corn andsoybean production increasedramatically since 2000. The facility’slocation at the intersection of two majorhighways will provide the area’sproducers with convenient access.

“Enhancing the ability of member-

Txomin Garcia Hernandez, president of Laboral Kutxa, and Charles Snyder, president and CEO ofNational Cooperative Bank (NCB), at a ceremony to announce that the two cooperative bankswill be working together to support members. Photo courtesy NCB


Citing his “crucial role in cooperative education overthe past two decades as editor of USDA’s RuralCooperatives magazine,” the Association of CooperativeEducators (ACE) has presented Dan Campbell with the2013 Outstanding Contribution toCooperative Education and Trainingaward. The magazine, now in its 80thyear, is dedicated to promotingunderstanding and use of cooperativebusinesses. ACE credited Campbell for

expanding the focus of the magazinebeyond agriculture to also includeother areas of cooperative innovationin the rural United States, as well asthe role co-ops play in internationaleconomic development. “UnderCampbell’s editorship, the magazinehas become an excellent vehicle forsharing information and ideas amongcooperators. He has kept the magazinerelevant, shepherding the publicationthrough changes in technology,changes in political administration and changes withinthe co-op movement itself,” according to nominators BillPatrie, executive director of Common EnterpriseDevelopment Corporation in North Dakota, and MargaretBau, cooperative development specialist with USDARural Development in Wisconsin. The award was accepted on Campbell’s behalf by

Miguel Ramirez of USDA Rural Development’s PuertoRico office during the ACE Institute in San Juan, P.R., inAugust. Campbell’s acceptance remarks emphasize thatthe magazine is a team effort that involves the efforts ofmany people, not only at USDA, but in the largercooperative community. “All of us at USDA Rural Development who work on

Rural Cooperatives magazine are deeply grateful to ACEfor this award recognizing our work,” Campbell said.“Like ACE, our goal is to increase the use andperformance of cooperatives. To receive this award fromACE — whose members have such dedication andpassion for promoting cooperatives as a powerful self-help economic development tool — makes it doublymeaningful.” The other award winners included: Jesús Andrés Aranda won the Outstanding

Contribution to Cooperative Education and TrainingAward, acknowledging his nearly six decades as acooperative leader. He was part of the Group for CriticalReflection and Cooperative Action Santiago Andrade

(GRACSA) that developed theManifesto of Castañer in the 1970s,which helped identify cooperatives asprotectors of Puerto Rican culture andpromoters of social justice.

William Patrie won the John LogueACE Award, named in honor of acolleague who shared Patrie’s passionfor cooperation and self-determination.For nearly 40 years, Patrie has helpedpeople find cooperative solutions infarm and fish marketing, workerownership, housing, energy production,communication services, healthcareand community regeneration. He is theauthor of “Creating Co-op Fever,” aguide for co-op developers, and “100Stories of Hope,” about North Dakotansovercoming poverty, among many other

publications and articles. Katie Campbell received the William Hlushko Award

for Young Cooperative Educators (under age 36) forcultivating Aynah, a student organization that works forinternational cooperative development. Aynah, foundedin 2010 on the campus of Iowa’s Luther College, helpsdevelop cooperatives to meet community needs,including two water co-ops in Ethiopia. It also raises theprofile of cooperatives on campus and is leading tocurriculum changes to include courses aboutcooperatives.

Cooperativa de Seguros Múltiples de Puerto Rico(CSM), an insurance company, received a special ACEaward presented to organizations or individuals whohave shown extraordinary leadership as associationmembers. The award coincided with CSM’s 50thanniversary in 2013.ACE members are educators, researchers,

communicators, students and developers of cooperativesand credit unions, primarily in Canada and the UnitedStates, including Puerto Rico. Its annual Institute allowsmembers to learn from one another and the host region,and highlights new learning about cooperatives and creditunions. Learn more about ACE at: www.ace.coop. n

Rural Cooperatives editor, four others saluted by ACE

Dan Campbell


owners to link to greater globalmarketing and transportationopportunities is what makes this jointventure so exciting,” says DougDerscheid, president and CEO of CVA.“The new elevator — along with ourglobal transportation fleet and networkof customers — will provide additionalmarketing opportunities for regionalproducers, which can help add value totheir crops,” adds Joe Taets, president,ADM Agricultural Services.

Established in 2003, CVA operates25 grain facilities with a capacity ofmore than 45 million bushels of grainin central and northeastern Nebraska.The co-op has 365 employees whoprovide agronomy and grain and feedservices to 10,000 farmers and ranchers.

Farmer Co-op Conference to focus on global, U.S. market trends

The 16th Annual FarmerCooperative Conference, to be heldNov. 7-8 in Minneapolis, will offerexpert analysis of the cutting-edgeissues facing agribusiness cooperatives.Strategic issues being highlightedinclude global and domestic economictrends, policy updates, cooperativefinance issues, productivity andintegrated data analysis, and consumer-driven markets.

The conference attracts cooperativebusiness leaders and industry expertswho come together to share the latestin research and innovative approachesbeing used by agricultural cooperatives.The conference is organized by theUniversity of Wisconsin Center forCooperatives, with assistance from aplanning committee of industry andacademic experts.

“The topics are practical yet alwaysexplore the frontiers of the cooperativemodel,” says Phil Kenkel, the BillFitzwater Cooperative chair atOklahoma State University. “Theinteraction between managers,directors, academics and other industryprofessions is truly unique.”

“As a longtime sponsor of theFarmer Cooperatives Conference,

CoBank appreciates the value theprogram provides to cooperatives thatare continually searching out ways todeliver value to their member-owners inan unpredictable economicenvironment,” says Peter Rudeen, ofCoBank’s Regional AgribusinessBanking Group. “We encouragecooperative leaders to attend theconference and to support its ongoingsuccess.”

In addition to CoBank, support forthe conference comes from: CHS,Dorsey & Whitney, Farm Foundation,GROWMARK, Land O’Lakes,Lindquist and Vennum, NCFCEducation Foundation, Stoel Rives,CliftonLarsonAllen, Gardiner Thomsenand the Ralph K. Morris Foundation.The conference will take place at theRadisson Plaza Hotel in Minneapolis.For more information, visit:www.uwcc.wisc.edu, or contact AnneReynolds at 608-263-4775 [email protected].

Minnesota electric co-op plans to acquire Alliant energy

Some 43,000 new electric customerswill be welcomed into the cooperativefamily if Minnesota and federalregulators approve Alliant Energy’s planto sell its Minnesota electric and naturalgas distribution businesses. AlliantEnergy Corp., based in Madison, Wis.,announced that it has reached anagreement to sell its electricdistribution service to SouthernMinnesota Energy Cooperative(SMEC), a group of 12 locally ownedand operated electric co-ops.

“Electric cooperatives already have along track record of serving member-owners in this area of SouthernMinnesota,” says Cooperative NetworkPresident and CEO Bill Oemichen. Infact, member-owned, not-for-profitelectric cooperatives were usually form-ed because for-profit utilities thought itwasn’t cost effective to serve low-density areas with so few customers.”

The state’s 44 electric distributioncooperatives cover 85 percent of thegeographic area in Minnesota. “If

approved, this deal will literally givepower back to the people who use thecooperative’s services,” Oemichen adds.

Electric cooperatives aredemocratically run, so members havethe opportunity to vote for directors;any revenues generated are returned tocustomers in dividends or improvedservices. Ownership changes fromAlliant to the Southern MinnesotaEnergy Cooperative are likely to takeeffect in six to 12 months, assumingregulatory approval is granted.

DFA acquires Dairy Maid,expands fluid milk business

Dairy Farmers of America (DFA) hasacquired Dairy Maid Dairy. Located inFrederick, Md., Dairy Maid is a family-owned processor of milk, juice and fruitdrinks. Dairy Maid has been owned andoperated by the Vona family since 1946and is currently led by brothers Jimmyand Jody. The Vonas will continue tomanage the day-to-day operations.

“The acquisition of Dairy MaidDairy aligns with DFA’s strategy toincrease its commercial footprint andexpand ownership in the fluid and freshdairy category,” says Rick Smith, DFApresident and chief executive officer.“The Vonas have built a solid businessand earned a reputation for qualityproducts and superior service; it isbusiness our dairy farmer member-owners can be proud of.”

Dairy Maid’s customers includemajor grocery chains, schools andgovernmental entities, such as prisonsand military installations. Milk to thefacility is supplied by a variety ofsources including DFA, Maryland-Virginia, Lanco, Land O’Lakes,Cumberland Valley and DairyMarketing Services.

Despite the change in ownership,there will be no disruption inoperations. It is anticipated that DairyMaid’s 110 employees will retain theirpositions and milk procurement will notbe disrupted, ensuring quality productsand service continue for Dairy Maid’scustomers.

“We are pleased to be able to


Quad County Corn Processors (QCCP) in Galva, Iowa,has broken ground on an $8.5 millionbiorefinery that will use new technologyit developed to process corn kernel fiberinto cellulosic ethanol. The new plant isbeing built next to the co-op’s existing,35-million-gallon-per-year corn ethanolfacility. The co-op is using ACE (Adding

Cellulosic Ethanol) pre-treatment andfermentation process technology,developed by Travis Brotherson, plantengineer at QCCP. The company hopesto add 2 million gallons of ethanolproduction per year with the plantexpansion.“With the addition of this new

cellulosic process, we will stretch theproduction capacity of each and everycorn kernel that passes through ourplant,” says Delayne Johnson, QuadCounty’s general manager. “We willincrease our ethanol yields by 6percent, increase our corn oil extractionthree times over, while also creating ahigher protein livestock feed. This isvalue-added agriculture at its best.”Renewable Fuels Association

President and CEO Bob Dinnen calledthe new plant “great news for thebiofuels industry,” during the groundbreaking ceremonyin August. “I applaud Quad County for proving that the first and

second generations of ethanol are literally ‘bolted’together,” Dinnen said. “The future is now and the

present is future. Cellulosic production will soon beginside-by-side with conventionalethanol. Delayne Johnson and histeam are to be congratulated fortheir vision, determination andinnovation.”

QCCP received $4.25 millionfrom USDA and the Department ofEnergy as part of the BiomassResearch and DevelopmentInitiative to develop the technology.The research and developmentprocess spanned four years.

The co-op plans for the newfacility to be in operation by thespring of 2014; it will create fivenew jobs. “The greatestbenefactors will be the Galvacommunity, our shareholders, theethanol industry and theconsumer,” Johnson said.

American Coalition forEthanol’s Executive Vice PresidentBrian Jennings praised QuadCounty for likely being “the firstproduction facility on the planet toproduce corn and cellulosicethanol from the same feedstock atthe same site."

Added Dinnen: “Milestoneslike the one we celebrate today demonstrate the U.S.ethanol industry’s barrier-breaking innovation andunparalleled ability to create jobs, particularly in smallcities and rural communities all across the country.” n

Iowa co-op to produce cellulosic ethanol

Shovels are readied for thegroundbreaking ceremony atQuad County Corn Processors,Iowa, where the plant is beingexpanded for cellulosic ethanolproduction. Photo courtesyAgWired

become part of the DFA family,” saysJimmy Vona. “DFA shares many of thesame values that my family does. Thistransaction ensures the business wehave built over the past four decadeswill continue to thrive in the future.”

Indiana grain facility rebuilding after explosion

Co-Alliance Cooperative isrebuilding a grain facility in UnionMills, Ind., that was the site of anexplosion in June, resulting in the death

of one employee. The co-op hopes tohave the facility open in time for graindeliveries this fall.

Safety inspectors with severalagencies — including, the U.S.Department of Homeland Security,

cotton, vegetables and dairy products. Farm production expenses registered

double-digit increases for feed and seed.Crop protectants, fertilizer and fuelsales increased 9, 6 and 2 percent,respectively.

Record net income (before taxes) of$6.1 billion eclipsed the previous highof $5.4 billion set in 2011. Net incomewas up almost 13 percent, $700 million,from 2011.

Prices are expected to remain strongto slightly lower in 2013, butcooperatives should maintain a strongpresence in the agricultural economy.

A closer look at the 185,000 workersemployed by ag co-ops shows that thenumber of full-time employee wasdown by 1,600 from 2011, while part-time and seasonal employee numbersincreased more 3,000.

The value of cooperative assets grewin 2012 by $3.5 billion, with liabilitiesincreasing by $1.7 billion and ownerequity gaining $1.8 billion. Equitycapital still remains low but is clearlyshowing an upward trend, with a 6.5-percent increase over the previous year.

Patronage income (refunds from


Co-op salescontinued from page 5

Table 2U.S. cooperatives net business volume, 2012 and 2011

Item 2012 2011 ChangeBillion $ Percent

Products marketed:Bean and pea (dry edible) 0.17 0.16 4.3Cotton 3.08 3.98 -22.5Dairy 40.17 40.67 -1.2Fish 0.19 0.25 -25.2Fruit and vegetable 5.75 5.57 3.2Grain and oilseed 62.72 55.28 13.5Livestock 4.02 4.23 -5.0Nut 1.10 0.91 21.3Poultry 1.45 1.30 11.7Rice 1.56 1.56 -0.2Sugar 5.34 4.76 12.2Tobacco 0.12 0.25 -52.4Other marketing 5.61 5.83 -3.8Total marketing 132.04 124.75 5.8

Supplies purchased:Crop protectants 7.17 6.59 8.8Feed 11.77 10.47 12.3Fertilizer 14.11 11.93 18.2Petroleum 22.91 20.32 12.7Seed 3.20 2.90 10.4Other supplies 5.70 5.57 2.3Total supplies 64.85 57.79 12.2

Services and other income 4.72 4.44 6.4

Total business 201.61 186.98 7.8

Department of Homeland Security,Indiana OSHA (Occupational Safetyand Health Administration) and theU.S. Environmental Protection Agency— determined that the explosion wascaused by a heavy steel pulley that cameloose and slid into a concrete wall. Theconveyor kept operating, and the pulleycontinued to rotate. The resultingfriction against the concrete wallgenerated enough heat to ignite graindust in the elevator, resulting in anexplosion.

James Swank, was on a work

platform outside one of the silos whenthe force of the blast caused him to fallmore than 100 feet to his death.

United Cooperative subsidiaryto merge with Hillsboro co-op

Members of Hillsboro FarmersCooperative, based in Hillsboro, Wis.,have voted in favor of a merger with awholly-owned subsidiary of BeaverDam, Wis.-based United Cooperative. “We look forward to serving thesepatron members with assets obtainedthrough the merger, as well as future

equipment and facility investmentsalready in the planning stages,” saysDavid Cramer, United Cooperativepresident and CEO. The mergerbecomes final Oct. 1, 2013.

Hillsboro Farmers Cooperative’sprojected revenue for the fiscal yearending Sept. 30, 2013, is about $60million. Hillsboro co-op has locations inHillsboro, Kendall, Wilton, Yuba,Wonewoc, Ontario and Cazenovia.United Cooperative had sales of $634million in 2012. It operates feed, grain,agronomy, fuel, lubricant and propane

other cooperatives due to sales betweencooperatives) increased by more than 46percent, to $899 million, up from $613

million in 2011. Farm numbers remained about the

same as in 2011, with USDA counting

2.2 million in both years. The numberof farmer cooperatives continues todecline — there are now 2,238 farmer,rancher and fishery cooperatives, downfrom 2,299 in 2011. Mergers accountfor most of the drop, resulting in largercooperatives.

Producers held 2.1 millionmemberships in cooperatives in 2012,down about 7 percent from 2011. Thenumber of cooperative memberships isslightly less than the number of U.S.farms, but this does not mean thatalmost every producer is a member ofan agricultural cooperative. Previousstudies have found that many farmersand ranchers are members of up tothree cooperatives, so farm numbersand cooperative memberships are notstrictly comparable.

Editor’s note: Information for this articlewas compiled by the Cooperative Programsstatistics staff of USDA RuralDevelopment: Sarah Ali and E. EldonEversull. n


Figure 2 — Distribution of Cooperatives and Volume, by Size, 2012

Billion dollars

70

60

50

40

30

20

10

0Less than 5.0 5 –9.9 10 – 14.9 15 – 99.9 100 – 499.9 500 and more

Gross business volume (Million dollars)

Dollar volumeCooperatives

agricultural land equivalent to an areathe size of Indiana to permanent, non-farm development from 1982–2007.While the Great Recession may haveslowed this conversion rate during thepast few years, rebounds from pastslowdowns in the housing andcommercial real estate markets haveshown that without carefulconsideration, the pressures to convertour farmland remain and will return.

These more traditional threats to ouragricultural land base are nowcompounded by new demands on oursoil resources, such as from mining and

oil and gas exploration. The permanentloss of farmland affects not only theproductive capacity of these soils butalso our associated agriculturalbusinesses, our rural communities andour farm families.

As we witnessed in Wisconsin,leadership and a vision born out of thespirit and principles of cooperativeswere the hallmarks of success. Thissame energy, resourcefulness andcollaborative approach can be harnessedin other states to achieve similarthoughtful and practical results.

We welcome the opportunity andstand ready to work with leaders ofcooperatives across the country toaddress the threats to our valuableagricultural land resources and to craftsolutions that strengthen our family

farms and their communities. Editor’s Note: In 2011, the Gathering

Waters Conservancy, a statewide servicecenter for Wisconsin’s land trustcommunity, established the Rod NilsestuenAward for Working Lands Preservation.The award celebrates an individual ororganization that exemplifies Nilsestuen’sextraordinary commitment to thepreservation of Wisconsin’s working lands.In September of this year, the award wasgranted to fellow National CooperativeHall of Fame member and formerAmerican Farmland Trust Trustee TomLyon for his tireless dedication to andinvolvement in the passage andimplementation of the Wisconsin WorkingLands Initiative. For more about AFT,visit: http://www.farmland.org. n

Commentarycontinued from page 2

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October is Co-op Month. Americans have longworked together in cooperatives to meet challengesthat were too big to overcome by themselves. Co-opsare a means for farmers and other people to attaineconomic and service benefits from businesses thatthey themselves own and control.

Today, co-ops are more relevant than ever. Helppeople in your community learn about the advantagesof belonging to a co-op. Spread the Word!