A Sea of Greens · farmers who own these co-ops. Our cover story, “A Sea of Greens,” is an inspiring story about how co-ops can also help small-scale, low-income farmers improve

A Sea ofGreens

Low-income farmers usevegetable processing,

marketing co-op to createnew opportunity in

north Florida

A Sea ofGreens

Low-income farmers usevegetable processing,

marketing co-op to createnew opportunity in

north Florida

USDA / Rural Development July/August 1999

As I write this message in early August, Congressis in the midst of work on legislation to deliver somedegree of financial relief to farmers who are facingdepressed prices in many commodity sectors. Otherproducers — particularly in the Mid-Atlantic and North-east states — have had to watch their crops witherunder the assault of what may become the worstdrought of the century.

There is not much farmers can do about theweather, and the marketing of commodities posessome tough challenges. But there are still manyactions producers can take to increase their probabilityof success. This publication is, of course, dedicated topromoting public understanding of one of the primarysteps farmers and others can take to improve their“financial odds” in the marketplace: creating and man-aging cooperatives.

Because the marketplace is ever changing, coop-eratives are also evolving with the times. That is thepoint of the article “Amber Waves of Change” in thisissue. This article focuses on actions being taken byKansas wheat co-ops to ride the wave of change,rather than be crushed by it. These co-ops are findingways to maximize the revenues they generate for theirmembers’ crops. New varieties of white wheat lookvery promising for export markets and greater use ofmarket pooling is paying off for many co-ops. As BobGales of the FCA co-op observes, some grain buyershave had to raise the price they pay farmers whenneighbors decide to cooperate, rather than competewith each other. This concept is the foundation of thecooperative movement.

Another good example of Kansas co-ops poolingtheir marketing is discussed in “Big Steps in thePlains,” which details how four wheat co-ops havemerged their grain marketing departments and arejointly constructing a 110-rail car loadout facility. Thisshould greatly increase the marketing clout of thefarmers who own these co-ops.

Our cover story, “A Sea of Greens,” is an inspiringstory about how co-ops can also help small-scale, low-income farmers improve their lot in life through collective action. The New North Florida Cooperative isprocessing and packaging vegetables and fruits grownby its 15 members, then marketing them to Floridaschools. While the farmers were well versed in the artof growing quality crops, they had little experience inhow to add value to their crops or in how to marketthem. These are the areas where USDA has been pro-viding the co-op with technical assistance. The co-ophas so far been a great success story.

Of course, we learn not only from our successes,but also from our failures. That’s the perspective USDAlivestock and marketing co-op specialists Brad Gherkeand James Matson take in their article “Planning toProsper,” which examines the lessons learned fromnearly a century of livestock processing co-ops. Live-stock processing remains an area of the farm economywhere co-op influence is fairly minor. But the interestlevel among ranchers remains intense. They feel thatthey must reach farther up the food ladder to reapmore of the profits generated from livestock if they areto be successful.

Strong cooperatives are an essential part of ahealthy rural economy. I hope the articles in this issuewill provide you with some ideas that will help youstrengthen your co-op.

Jill Long Thompson

Under Secretary, USDA Rural Development

2 July/August 1999 / Rural Cooperatives

Catching the Wave

4 Amber Waves of ChangeKansas grain cooperatives adapting to global marketplacePamela J. Karg

12 Hog-tied in Kentucky? No, thanks to a co-op helping small-scale hog producers survive ina depressed marketBill Brockhouse

14 Boosting Rural New Mexico Farmer co-ops key element in effort to help Hispanics and PuebloIndians build sustainable communitiesKristen Kelleher

16 A Sea of GreensLow-income farmers use vegetable processing, marketing co-op to create new opportunity in north FloridaPamela J. Karg

22 Co-op Member Education Needed in 21st CenturyWilliam J. Nelson

24 Planning to Prosper: Recalling lessons learned from livestock slaughter and meatpacking co-opsBrad Gehrke and James Matson

28 Co-ops Remain Major Players in Dairy IndustryK. Charles Ling

11 IN THE SPOTLIGHT

29 NEWSLINE

32 NEW PUBLICATIONS

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nity provider and employer.

Dan Glickman, Secretary of Agriculture

Jill Long Thompson, Under Secretary,

Rural Development

Dayton J. Watkins, Administrator,

Rural Business–Cooperative Service

La Jaycee Brown, Director,

Public Affairs & Legislative Staff

Dan Campbell, Managing Editor

USDA Design Center, Design

RuralJuly/August 1999 Volume 66 Number 4

Have a cooperative-related question? Call (202) 720-6483, or FAX: Information Director,(202) 720-4641.

This publication was printed with vegetable oil-based ink.

On the Cover: These collard greens picked bySpencer Lewis will be washed, chopped andpackaged before being shipped to one of 30schools in northwest Florida. Processing andmarketing are being performed by the New NorthFlorida Cooperative. USDA photo by Dorothy Staley


By Pamela J. KargField Editor

TT he winds of change are blowingacross Kansas, ushering inchanges that may seem small at

first glance. But when strung togetherlike bits of cloth on a kite’s tail, the com-pound impact of these changes is helpingfarmers and their cooperatives re-directtheir efforts to meet the challenges of anexpanding global marketplace.

One cooperative literally made chick-en feed of a disaster and created newmarkets for farmers and jobs for a ruralcommunity. State legislators haveamended tax laws, providing incentivesthat encourage construction and repair ofgrain storage facilities. Farmers arefunding research into new varieties ofwheat and their potential uses by foodmanufacturers around the world. USDAis also helping them, examining a pro-gram to encourage cleaning wheat boundfor export markets.

The king of Kansas

Wheat rules over the economy ofKansas. Amber waves of grain dominatenot only the physical, but also the cultur-al landscape of the region. Tourists andnative Kansans alike stop to watch teamsof combines move through the country-side in June and July. Wheathearts, anauxiliary organization of the KansasAssociation of Wheat Growers, stages anational annual Bake-and-Take promo-tion the fourth Saturday in March toencourage people to make baked foods forneighbors. Dozens of similar events andcelebrations are held across the stateeach year in honor of the state’s top crop.Kansas wheat groups even sponsor Websites to help kids learn about wheat.

Of its 31 million acres of cropland,Kansas farmers harvested 495 millionbushels of wheat last year, down 1 per-cent from the 1997 record crop of nearly502 million bushels. The ‘98 harvest was

94 percent above the 1996 crop, whichwas devastated by exceedingly wet condi-tions that prevailed in large portions ofthe state. The 1998 crop would makenearly 34.6 billion loaves of bread, orenough to provide every person on earthwith nearly six loaves of bread. Kansas isalso tops in wheat flour milled and wheatflour milling capacity.

Mennonite immigrants from southernRussia introduced Turkey Red wheatseed in Kansas during the 1800s. Today,hard red winter wheat dominates theKansas countryside. However, crop priceshave been seriously depressed in recentyears, so farmers are experimenting withhard white wheat varieties. This year’sfield trials should yield some answers tofarmers’ and marketers’ questions abouthow these varieties will fare in theKansas soils.

“Farmers want to know if there’s goingto be anymore money in these varietiesand buyers want to know how they aregoing to mill,” says Bob Gales, presidentand chief executive officer of FarmersCooperative Association (FCA), a grainmarketing and farm supply cooperativeheadquartered in Lawrence.

Red vs. white wheat

Two-thirds of the Kansas wheat cropis exported even though the world wheatdemand is far greater for the white ker-nels. That makes some people wonder ifthe entire state should convert to whitewheat. But if the conversion happens tooquickly, premium payments for whitewheat could be lost. Others believe totalconversion to white wheat — combinedwith a strong marketing program, a com-mitment to identity preservation of indi-vidual grain deliveries and investmentsin cleaning facilities — would positionthe state’s farmers as global players.

Foreign buyers take white wheat fromother countries before purchasing redwheat from the United States, accordingto trade reports. So Kansas agricultural

experts are encouraging farmers to plantheir transition to white wheat as redwheat clogs shipping channels.

“Hard white wheat is a tool we can useto regain our presence in the world wheatmarket,” says Eldon Lawless, a BellePlain farmer on the Kansas WheatCommission. “We can become competi-tors again, rather than the suppliers oflast resort.”

A handful of elevators have been des-ignated for white wheat deliveries thissummer. That number will rise over thenext two years it will take producers toswitch while maintaining the integrityand purity of their new white wheatstands. Government and agribusinessare opening communication with eachother and with global buyers in the hopesof producing a product that will sell bet-ter in the global market.

More consolidations

Meanwhile, business consolidationsare impacting the Kansas countryside.

“I have been saying for a long time thegrain industry would consolidate, like thelivestock industry,” says Ron Koehn, gen-eral manager of Midwest Cooperative, agrain marketing and farm supply co-op inQuinter. “If this happens, it will give us astronger cooperative presence in thegrain industry,”

This spring, the nation’s two largestregional grain marketing and farm sup-ply cooperatives, Farmland Industriesand Cenex Harvest States, announcedplans to consolidate. A feasibility studyand governmental review of the proposalcould be completed by late this year. Ifthe proposal passes this review, membermeetings would take place in early 2000,followed by a vote of the memberships ofboth cooperatives. The cooperatives havetentatively set June 1, 2000, as a goal forcompleting the transaction to create a$20 billion cooperative.

Like Koehn, Gales also applauds theannouncement of the consolidation. If

Amber Waves of ChangeKansas grain cooperatives adapting to global marketplace

Rural Cooperatives / July/August 1999 5

grain farmers hope to be equal playerswith multi-national corporations, theircooperatives need to grow to at least thesize Farmland and Cenex Harvest Stateswould achieve through their proposedconsolidation, he says. The market powerthat size offers to growers is also the rea-son Gales’ FCA has redesigned its grainmarketing strategies.

FCA farmers were already takinggrain to Farmland’s Topeka and KansasCity facilities when the two cooperativesdecided to work out a new arrangement.Farmland allocated one million bushelsof its terminal storage at the two sites toFCA. Farmers now delivering grain toeither location receive a term price, earnpatronage on the delivery and stillreceive settlement from FCA — theirlocal cooperative that they know best.The move also means FCA will not haveto invest in railroad infrastructure,which saves its members money. Galesestimates about one-seventh of the coop-erative’s assets would have been tied upin building a new rail loading facility ifthe arrangement had not been workedout. At the close of its 1998 fiscal year, theagreement between FCA and Farmland

also meant 2 cents per bushel in patron-age on grain delivered directly to the ter-minals.

At the same time, FCA’s grain mer-chandiser moved to Farmland’s KansasCity marketing office. The move hasopened up communication and improvedmarketing programs at FCA, as well asat other local cooperatives. The FCA mer-chandiser can sell grain from any of thecooperative’s locations to anyone. He isnot limited to marketing exclusively toFarmland.

“Our grain merchandiser, Larry Coffman,has over 30 years of experience andFarmland has always tried to get the bestprices for us,” Gales says. “But moving upthere to work side-by-side with Farmlandhas shown us more places we can marketour grain.”

Farmland also holds regular market-ing strategy conference calls, which theFCA merchandiser and merchandisersfrom other local cooperatives attend.They gain market intelligence on a global

perspective while providing Farmlandwith current information about what’shappening on Kansas farms, he says.

Because of the Farmland terminalallocation combined with the increasedmarket intelligence, FCA can offereffective “price later” and “minimumpricing” contracts to farmers, as well ascash markets. “Price later” contractsallow the cooperative to take title of thegrain so it can sell or move it. Producersare then paid on request. “Minimumpricing” contracts allow producers tosell grain to the cooperative to stopstorage charges. The cooperative thenpurchases “calls” on behalf of farmers,who pay the costs incurred in purchas-ing the call.

Says Gales, “Local buyers have hadto raise their prices paid to farmers abit because it was their job to pit meagainst my neighbor. But now we’reworking with our neighbors throughFarmland. We’re doing what we weresupposed to be doing all along — coop-

Most grain growers in Kansas say they are supportive of the consolidations occurringamong grain co-ops, which they feel are necessary to help growers match themarketing power of large multi-national and foreign grain companies. USDA photo


By Kent MillerCommunications Director

Farmway Co-op, Inc.

Four Kansas cooperatives took a giantstep this spring when they formed a jointventure which will benefit grain produc-ers throughout the north-central region ofthe state.

Farmway Co-op of Beloit, Delphos Co-op, Cloud County Co-op of Concordia andRandall Farmers Cooperative Unionmerged their grain marketing depart-ments into AgMark LLC. It will be locat-ed in Beloit. At the same time, the jointventure between the cooperatives beganconstruction on a 110-car load-out facilityin Concordia. The site was formerlyowned by Cloud County Co-op, which soldit to the limited liability corporation.

When completed in early 2000, thenew facility will be capable of handlingabout 1.6 million bushels. Its fiveemployees will be able to load out 110 railcars at one stop in 10 hours.

AgMark LLC will generate efficienciesfor producers by combining warehouselicenses and marketing efforts, standardiz-ing grain accounting systems and by hav-ing a cooperatively owned train loader/ter-minal facility. These translate into profitsdistributed back to local co-ops to paypatronage dividends, cooperative leadersnote.

According to Byron Ulery, chief executiveofficer of Farmway Co-op, the most worth-while projects are not simple. “These fourcooperatives have stayed together andformed AgMark LLC for the common goodof the members of the cooperatives,” Ulerysays.

The cornerstone of this project, notesPat Breeding, chief executive officer atDelphos, is to do together what the fourcooperatives could not accomplish alone.“The four local cooperatives will continueto operate their own facilities,” he says.“Checks will be written on AgMark LLCchecks and will continue to be written ateach location, as they are now.”

Jeff Bechard manages grain market-ing for the LLC. He says the venture will

improve the grain prices relative to his-torical values. “The difference in freightand/or handling fees could result in a dif-ferent bid at each elevator location of thecooperatives,” he says. “We will becomemore aggressive in picking up on-farmstored grain, price improvement and wewill have the ability to load big trainsplus still be able to utilize the short-linerailroads at the different elevator loca-tions.”

Mark Paul, who joined AgMark in fall1998 as manager of the Concordia termi-nal, says the facility is being built for thefuture. Everything is computer-controlled— from unloading farm trucks to loadinggrain onto rail cars. “I see this as one ofthe best grain facilities around. It has theability to get the grain shipped out, whichhas been a glut to them in the past. Thenew facility also allows the four coopera-tives involved to be in a new market andto get the grain to a market where it isgoing to make them even more produc-tive. It also helps the four cooperativesbecause they are working together as agroup instead of as competitors.”

The State Grain Inspection Service willhave a grain inspection lab at theConcordia facility. Paul says theincreased rail traffic makes the lab a sen-sible addition. Inspectors also can servicesurrounding area elevators. “There willbe a lot of samples brought here fromother elevators that can be graded herejust like they do at Salina or Topeka. With(inspectors) on site, it gets them a lot closer to where the grain is being loadedand where the main volume ofgrain is being shipped,” Paul says.

The economic impact on thenorth-central Kansas area due tothe AgMark terminal will be sig-nificant, according to a feasibilitystudy conducted by the fourfounding cooperatives prior toentering into the joint venture.Up to 14 counties could feel itsimpact.

“The trickle effect will amountto approximately $7.5 million a year com-ing back to the local economy,” says Paul.

“You will see a grain price increase insome areas due to the freight difference.A producer will still need to get the grainto the terminal. It doesn’t matter if youare a member of Farmway, Randall,Delphos or Cloud County — any profitAgMark makes goes back to the localcooperative and they can utilize the profitto their advantage to help their producers.”

Adds Paul, “You don’t get an opportuni-ty like this very often to come in and setup an elevator to do what it’s supposed todo, and that is to move grain in a hurry.This facility is designed to run fast andeasily. I believe the producers will be veryhappy.”

In 1996, Farmland, MidlandCooperative of Hays, Kan., and MidwestCooperative of Quinter, Kan., completedconstruction on a 100-car grain load facilityat Ogallah, Kan., called WestlandTerminal.

Big steps in the PlainsKansas grain producers create new venture

Mark Paul, manager of the AgMarkterminal in Concordia, stands at thefuture site of a 110-railcar loadout facility.Photos courtesy Farmway Co-op Inc.

Farmway Co-op board membersdiscuss plans to expand facilities atAgMark’s Concordia terminal.


erating with our neighbors!”Grain marketings through Farmland

by FCA had dropped off before these newcommunication systems were put inplace. Today, the amount marketed byFCA through Farmland has doubled.

Golden egg emerges from ashes

“There’s been a lot of internal growthas well as mergers among cooperativeshere,” observes Bob Nattier, general man-ager of Mid-Kansas Co-op Association. Hisorganization has experienced both. Inrapid succession, Nattier runs throughthe steps his cooperative has taken in ashifting Kansas agricultural environ-ment.

Headquartered in Moundridge, thecooperative went through a growth spurtin 1992 and today includes 16 grain ele-vators with combined sales volume of $90million. Wheat receipts average 9 millionbushels annually. The co-op also handlesgrain sorghum, corn and soybeans.

The feed grains raised by members fillthe needs of a local, diversified livestockindustry. In fact, after a fire destroyed aco-op mill in 1986, Mid-Kansas formed abusiness alliance with egg processor Cal-Maine. The commitment between the twoallowed the cooperative to justify re-build-ing the mill. Now it runs two shifts a dayand the cooperative supplies the processor

with 25,000 tons of feed annually.The cooperative is also part of Haven

Commodities LLC, a pork productionsystem. It annually markets 150,000hogs which are fed with 55,000 tons ofMid-Kansas feed.

In a partnership with Farmland In-dustries, Mid-Kansas has access to a100-car rail loader. Members don’t haveownership in the loader, yet their cooper-ative does gain a stronger position to domore grain business.

Three years ago, the cooperative startedworking with cooperatives in Walton andAndale to do joint grain merchandising.Other arrangements, including mergers,could be in the offing between the organi-zations. Nattier believes anything is pos-sible as local boards of directors andfarmers consider the future.

“Kansas farmers are getting a betterunderstanding of global marketing,” heexplains. “They’re looking at ways toreach out to those markets. When theyget to that point, they can cut out themiddle people and capture more forthemselves.”

Mid-Kansas is one of 11 cooperativesthat formed Cen-Kan LLC. The company

collects the problematic straw left afterwheat harvesting and converts it intostrawboard.

“It’s been a painful experience becausewe all thought we had a better handle onthe market,” Nattier explains. Everyonethought it was enough to be a “green”product. No trees are cut down to producethis board. No formaldehyde is used in itsprocessing. Unlike its wood chip fiber-board cousin, though, strawboard is stillconsidered a new product in some marketsegments.

“We could just sell it to builders andcontractors, but that’s a very commodity-based market. We want to develop aniche market,” Nattier explains.

There were equipment problems andmajor production down-times. But themanufacturing system is now in its thirdyear. Slowly, a market is being built forthe strawboard.

“I think members appreciate thatwe’re trying. Anything we can do that’snew or innovative, members and direc-tors will give us a certain honeymoonperiod to try it. They want us to look out-side the box — and inside the box, too.”

At FCA in Lawrence, Gales agrees

Kansas farmers harvested just under 424 million bushels of wheat this summer, abumper crop, but grain quality in some areas suffered because of a late harvestcaused by wet weather. USDA photo


that farmers are willing to examineoptions that lie both inside and outsidethe traditional realm of agricultural coop-eratives. His grain marketing and ag

supply association was founded in 1953and grew through six mergers to nowserve over 12,000 rural and urban cus-tomers in 13 Kansas counties and twoMissouri counties. FCA owns 19 eleva-tors with a combined grain storagecapacity of 12.1 million bushels andshipped 15 million bushels of grain dur-ing the past fiscal year.

In 1997, members of Pauline FarmersCooperative in Pauline established aclosed cooperative called P&B Pro-cessors. In turn, P&B became majorityowner of Soy King, a limited liabilitycompany that produces and sells soy-bean oil and meal from an expulsion-extrusion mill derived from its members’soybeans. It was one step taken by pro-ducers to add value to their soybeans.The Pauline cooperative merged intoFCA in late 1998.

Today, Soy King ownership is splitbetween farmers (50 percent), privateinvestors (30 percent) and FCA. As thePauline facility went up, soybean crushmargins narrowed.

“Every idea farmers and their cooper-ative come up with is worth considering,but timing is everything,” Gales says.“Any new venture needs to assure it hasadequate start-up capital to weatherthose first years of operation.”

Adding more value

“A major challenge facing farmersand other rural people is the need tomake the transition from being produc-ers of raw commodities to producers ofvalue-added products, thereby keepingmore of the profits from their labor athome,” says USDA Under Secretary forRural Development Jill Long Thompson.

The members of 21st CenturyAlliance would agree.

After years of reading about the suc-cess stories of other closed farmer coop-eratives in North and South Dakota andMinnesota, 750 producers from Kansasand six other Midwest states decided it

“Every idea farmers and theircooperatives come up with isworth considering,” says BobGales, president and CEO ofFarmers CooperativeAssociation (FCA) in Lawrence.FCA has grown through anumber of mergers, and todayoperates 19 elevators with storagecapacity of 12.1 million bushels. USDA

photo by Bill Tarpenning


was time to make their own movestoward the marketplace through value-added products. They invested $750each to develop value-added businessesand were given the first opportunity topurchase delivery rights with U.S.Premium Beef Ltd., a vertically inte-grated beef cooperative (see Jan./Feb.1998 issue of Rural Cooperatives). TheAlliance has started five new-generationcooperatives in the past three years,including a flour mill, two commercialdairies, a dry edible bean cooperativeand a cooperative to procure straw fornew value-added ag fiber companies.

Recently, 21st Century’s ChiefExecutive Officer Lynn Rundle said that“getting farmers to build relationshipswith consumers is the future of agricul-ture. It won’t be for everyone, but forfarmers who have a vision of being truefood farmers and not just commoditygrowers, it’s going to be a big part oftheir future. I think we’re just at thevery beginning of it.”

In 1997, 375 of the Alliance memberscreated 21st Century Grain ProcessingCooperative, a wheat delivery coopera-tive, and then bought and renovated aRincon, N.M., flour mill. Farmers invest-ed $5,000 per share of stock andpromised to deliver 2,850 bushels ofhard red winter wheat for each share.The membership stock drive raised $3.2million to buy the mill.

Its formation is part of a trend bywheat farmers to get into the millingbusiness and closer to consumers.Thirteen southwest Oklahoma coopera-tives formed Southwest Grain MarketersLLC, and invested $16 million in a flourmill in Saginaw, Texas, near the Dallas-Ft. Worth area. The other partners inthe LLC formed in 1996 are FarmlandIndustries Inc., of Kansas City, Mo., andfamily-owned Bay State Milling Co. inQuincy, Mass.

Hispanic and Native Pueblo grainfarmers in New Mexico are also eyeing

an organic milling operation (see page14 of this issue).

Back at the Alliance, value-addedventures continue. On the heels of themill acquisition announcement camenews that the Alliance would build a1,500-head dairy with farmer invest-ments. This summer, cooperative offi-cials announced that a 2,800-head dairywas expected to be up and running byyear’s end. It will employ 32 people withan annual payroll of more than$600,000.

The Alliance has formed 21st CenturyAgriculture Fiber Procurement Coopera-tive, also known as Golden Forest AgFibers. It aims to be a front-runner inthe development of the agriculture fiberand wheat straw particle board indus-tries, Rundle says. The cooperativemembers will contract to deliver strawto manufacturing companies. The coop-erative could even expand into other agfiber such as corn stalks for paper.

“There are a lot of opportunities outthere for farmers,” Rundle says. “I couldspend all my days talking to new cus-tomers working on new ideas wherefarmers can make money in this system,but the key part is building credibilitywith the customer.”

USDA provides loans

Late last year, USDA made $200 mil-lion available to support the creation ofcooperatives and stimulate rural eco-nomic development. Several Kansascooperatives have invested in infrastruc-ture through use of USDA funds, includ-ing its Business and Industry Guaran-teed Loan program.

“We are convinced that producer- andconsumer-owned cooperatives can pro-vide a powerful economic vehicle to helprural people meet the challenges theywill face in the 21st century,” USDA’sLong Thompson says.

Rather than duplicating services andinvestments, north-central Kansas coop-

eratives are striving for more cooperationand communication between cooperatives.

For example, Farmway Co-op ofBeloit, Delphos Co-op, Cloud County Co-op of Concordia and Randall FarmersCooperative Union merged their grainmarketing departments into AgMarkLLC. The joint venture is now constructinga 110-car loadout facility in Concordia.The site was formerly owned by CloudCounty Co-op which sold it to AgMark.When completed in 2000, the facility willhandle 1.6 million bushels. Its fiveemployees will load rail cars in as littleas 10 hours (see related story, page 6).

While some cooperatives are invest-ing in loading facilities, another Kansascooperative has sold its rail line. GardenCity Co-op sold short line Garden CityWestern Railway to Pioneer Rail Corp,of Peoria, Ill. The cooperative had oper-ated the line since 1982.

With five grain facilities and one fer-tilizer facility on the lines, the railwaywas purchased to ensure service to thoseoperations. The co-op made certain theline went to a company capable of run-ning it, General Manager Irv Clubinereported to members in a recent newslet-ter. Selling the line enables the coopera-tive to focus on upgrading its grain stor-age and fertilizer facilities, he added.

Changing never stops

Remember this: When you’re throughchanging, you’re through. So says a signthat sits on Gales’ desk. He repeats theslogan often to himself, fellow employeesand the cooperative’s members.

“We’re not going to be — in five or 10years — the same as we are today, “ saysGales. “We know that. And our jobs, ascooperatives, are going to be to managerisk and help our members understandhow to manage risk. If the lean times inagriculture haven’t brought this fact tolight yet, the next year or two will. Andit’s the people who can manage that riskwho will survive.” ■


By Doug OhlemeierMarketing Specialist

Kansas Wheat Commission

Two Kansas hard white wheats haveexcellent baking characteristics for panbreads and rolls, according to a researchupdate by Kansas State University(KSU). The project, funded by wheatproducers through the Kansas WheatCommission, examines hard whitewheats — Betty and Heyne — for quali-ty breads, Asian noodles and tortillas.

A KSU-bred variety being consideredfor release in 2000, KS96HW115, alsoshows promise for Asian noodle produc-tion. KS96HW115 represents a new gen-eration of Kansas hard white wheats inthat it produces bright, white Asian saltnoodles, and bright, pale, yellow alka-line noodles. None of the current Kansashard white or hard red wheat varietiesproduce low-browning doughs. To Asianconsumers, noodles must not turn brownor dark.

Asian noodles are broadly classified assalt (Japanese-style) and alkaline (Chi-nese-style). Salt noodles are made withsoft wheat flour and appear bright white.Alkaline noodles are made with hardwheat flour and appear bright yellow.White wheat must produce doughs thatremain bright white or bright yellow afteraging.

Noodles account for a third of Asianwheat consumption, similar to the entireKansas crop.

“The cooked texture of the alkalinenoodles from KS96HW115 was similar toa commercial Japanese alkaline noodleflour. Moreover, the Wheat QualityCouncil ranked its bread-baking qualityas high. KS96HW115 is a multi-purposewheat suitable for several sizable mar-kets including bread, Asian noodles andtortillas,” said Paul Seib, KSU grain sci-ence industry professor.

Betty and Heyne are not only as goodas their red counter-parts in standarddough-mixing texts, but they producedbread with greater loaf volumes and awhiter crumb color. “It is critical that

any white wheats developed for interna-tional markets and for specialty productsalso be superior in terms of their bread-making quality,” notes researcher FinlayMacRitchie.

“This data confirms that the new hardwhites are excellent wheats for use in thebread-making industry. For wheat pro-ducers, this is reassuring news asKansas moves toward increased produc-tion of hard white wheat. It means thenew white wheats can be used to producealmost any bread or roll product on themarket today, as well as compete ininternational and specialty markets,”says MacRitchie.

Tortillas and flat breads are nichemarkets for Kansas hard white wheatsand currently the fastest growing U.S.

flour-based product market. Betty andHeyne, milled to an 80 percent extrac-tion rate, produced high-quality tortillascomparable to tortillas produced from 72percent extraction red wheats.

Bran color is critical because hardwhite wheat bran in tortilla flourimproves a number of the textural prop-erties of a tortilla. Due to the absence oftannins, white wheat bran can impart asweeter taste. White bran from thesetwo varieties appears to improve a tor-tilla’s textural properties of strength,tearing and the ability to be rolled with-out cracking. Tortillas produced fromBetty and Heyne also better retainedmoisture during storage and maintainedtheir textural properties for a longerperiod of time.

The study indicates the new whitewheats can be milled to very high extrac-tion rates to produce superior qualitywheat food products, resulting in addedvalue for producers and processors.

For a complete report on the produc-er-funded KWC research project, go towww.kswheat.com or call 1-785-539-0255.

Meanwhile, Kansas-based marketingand farm supply cooperative FarmlandIndustries and AGvantage IP Inc., aKansas cooperative of seed growers,announced this past spring that Farm-land would offer production contractsand guaranteed minimum premiums of10 cents a bushel for farmers to switchfrom the traditional red wheat to thenewly released Betty and Heyne vari-eties of white wheat. Between 20,000and 50,000 acres of white wheat areanticipated.

Kansas wheat goes whiteBetty is ready to produce better bread, noodles and tortillas

Wheat field trials are showing that new hard white wheats such as “Betty,” “Heyne”and “KS96HW115” can thrive in Kansas. Photos courtesy Kansas Wheat Commission


Ron LienemannPresident & ChiefExecutive OfficerRushShelby Energy RuralElectric Cooperative

“The electric utili-ty industry willchange more in thenext five yearsthan it has in my20 years in thebusiness. We mustbe leaders todirect the change,rather than let ithappen to ourcooperative and itsmembers.”

Co-op description:RushShelby Energy RuralElectric Cooperative is a new-ly formed electric system ineast central Indiana.RushShelby Energy came intoexistence March 1, 1999, withthe consolidation of the for-mer Rush County REMC andShelby County REMC. Thenew organization serves morethan 13,000 members in partsof nine counties. In additionto the traditional electric busi-ness, RushShelby Energy hasformed a for-profit subsidiarycorporation to offer new ser-vices and products to mem-bers and non-members. Thesubsidiary currently is a 50percent partner in a propanegas business, markets a med-ical monitoring system, andsells personal pagers as part

of the Cooperative PagingNetwork. RSE Service, Inc. isthe fastest growing area of theRushShelby Energy corpora-tion and is expected to providerevenues to lower the electricrates over the next decade.

Background: Lienemanngrew up in western Nebraska.The son of a Nebraska elec-tric cooperative general man-ager, Lienemann earned hisdegree at Wayne State Col-lege of Nebraska. He spent15 years working in variouspositions at a Nebraska elec-tric cooperative, includingpower use advisor, memberservices manager, and assis-tant general manager. Hecame to Rush County REMCin 1987 as the general man-ager. In 1996, he became ashared manager, leading bothRush County REMC andneighboring Shelby CountyREMC through the consolida-tion process.

What developments aretaking place at RushShelbyEnergy? “Like nearly everyindustry, rapid change is com-ing from all directions. Theelectric utility industry is thelast legalized monopoly andstate legislators are changingthat. Many states havealready made moves towardderegulation and customerchoice. In Indiana, it looks asif our legislature will addressthat issue in January 2000.As an electric company, wemust be ready for thosechanges. As a cooperative, webelieve we have always beenmore ‘customer’ focused thanother utilities so we should seepositive effects from deregula-

tion. The other strategic plan-ning item is diversification.We know it will be difficult tosurvive as just an electric dis-tribution company. Byexpanding into other servicesand products, we will demon-strate our enhanced value toour consumers and the com-munity at large. Electricityand those member/owners willremain our priority, but wewill use the revenues of theseother activities to maintainour primary focus. We hopethat when consumers have achoice of their utility that theywill believe that they can’t livewithout RushShelby Energyand will make us their choice.It will take service and rea-sonable prices to accomplish,but that’s what we have beenall about since 1935.”

Goals for RushShelbyEnergy: “Our primary goal isto provide unequaled serviceto our member/owners.Whether it be electricity,pagers, propane, the Internet,or something that comes overthe horizon later, we wantconsumers to think of us first.We will rarely be the lowestcost provider, but we need toprovide superior service forthe premium the consumermay pay. As we investigatesubsidiary activities, we mustnot lose sight of the fact thatwe are an electric cooperativefirst. The goal of these activi-ties is to enhance what we doas an electric utility, not toreplace it.”

Biggest RushShelbyEnergy concerns: “As welook into the next 12 months,

our focus is on the Indianalegislature. We will workwith the other electric cooper-atives of Indiana to makesure that our organizationsare equal players in the leg-islative action. We also wantto make sure that deregula-tion protects the weakest ofour members while openingup opportunities to those con-sumers who wish to makechanges. We support cus-tomer choice, as long as eachcustomer has the same safe-guards and choices. Protect-ing our member/owners is atop priority and helping themunderstand and participate inthe process is a concern wewill address in the shortterm. Long-term concernswould fill more space than thepublication has. Sweepingchanges in the industry meanthey are hard to get a handleon and we are planning to hita moving target. That isalways a concern.”

Key rural developmentissues: “We are fortunate tobe in areas that have plannedfor growth of the industrialsector and are working tomake it fit into residentialand agricultural areas. Thebiggest issue is how our citiesand counties can provide theinfrastructure necessary tomake the growth work. Thepayoff in the long term isexciting, but the up-frontcosts can sometimes be terri-fying. We need to strengthenour public and private part-nerships to keep our commu-nities on the grow.” ■

IN THE SPOTLIGHT


By Bill BrockhouseUSDA Agricultural Economist

TT he hog industry is wallowing ina tough market. Hog prices havebeen severely depressed and

many producers have gone belly up.But, for some small-scale Kentucky hogproducers, their cooperative has pre-vented them from sinking. The co-opmay help them ride out the current cri-sis and be poised for new opportunitieswhen the hog market improves.

According to USDA’s EconomicResearch Service, hog slaughter was upalmost 10 percent in 1998 compared to1997. As a result, hog prices plunged toan average $32-$33 per hundredweight(cwt.), just $5 ahead of the 1972 averageof $27 per cwt. By mid-December 1998,hog prices were as low as $10 per cwt.Input costs declined substantially, butnot nearly as low as hog prices haddropped. While prices have recoveredsomewhat this year, they are predictedto only average in the mid-$30 range.

Small producers, in particular, arefeeling the squeeze. But a group of pro-ducers began working seven years ago torealize a vision that makes it more likelythey’ll survive roller-coaster marketprices.

This effort initially began in 1991,when Phil Lyvers and Johnny Medley,small-scale hog producers in Springfield,Ky., talked about pooling loads of hogsfor shipment to an area packer as oneway to save on costs. Their vision led tothe creation of the Central Kentucky HogMarketing Association (CKHMA), a pro-ducer-owned and -controlled hog mar-keting cooperative. Today, Lyvers andMedley are members of CKHMA’s boardof directors. Members are saving on ship-ping costs, benefiting from packer incen-tives for hog quality, and obtaining oth-er services to improve their operations.

A changing marketplace

Before CKHMA, producers did notthink in terms of quality. They receivedspot prices on a live-weight basis. Theydidn’t know much about base prices orpay attention to market conditions. Thenpackers started offering yield and gradeprograms based on quality. Forward-thinking producers like Lyvers and Med-ley soon realized the potential forimproved returns through genetics, aswell as lower transportation costs.

Consumer preferences also changed.Today, leaner is better. CKHMA helpsmembers steadily improve hog leannessthrough improved genetics, productionmanagement education, and packer feed-back. As a result, members’ average lean-ness (as measured by percent backfat)has improved from 48-49 percent in 1992to about 52.5 percent at present.

Leadership and marketing

When CKHMA formed in 1992, USDAco-op specialists provided organization-al guidance, surveyed producer interestand wrote a business plan. With 25 mem-bers, CKHMA marketed about 20,000hogs that first year. Today, 13 members

market about 31,000 hogs. Most of themembership decline was due to farmersgoing out of business, but those remain-ing actually enlarged their operations,in spite of low hog prices.

“CKHMA has helped us stay inproduction even with historically low hogprices. It has helped members under-stand that they have to produce qualityto get the highest returns,” says Lyvers.

Tom Congleton, a vocational agricul-ture teacher at Springfield High School,agreed to assist the producers, in effectbecoming a part-time manager. Hetalked to packers, along with board mem-bers, to determine who could offer thebest deal. He also coordinated members’hog shipments to a central stockyard inSpringfield, where they were keptovernight and hosed down beforeloading. Members originally paid 90cents per hog for loading and marketingservices.

However, Congleton repeatedly toldproducers that “just putting togetherloads of non-similar animals isn’t goingto cut it. If one or two producers weregetting higher returns because theyspent a little more time and money on

Tom Congleton, manager of the Central Kentucky Hog Marketing Association(CKHMA), and board member Phil Lyvers, helped form the co-op in 1992 to enablesmall producers to survive the market “roller coaster” by earning more for improvedherd genetics. Photos courtesy National Hog Farmer

Hog-tied in Kentucky?No, thanks to a co-op helping small-scale hog producerssurvive in a depressed market

producing higher-quality hogs, other pro-ducers would be embarrassed becausethey knew they could do the same thingif only they’d put in a little more effort.There was no reason not to do it. It did-n’t make economic sense.”

The five CKHMA directors were thedriving force. With Congleton, they heldweekly educational meetings where killsheet data was summarized and freelyshared. Peer pressure was instrumentalin getting producers to improve quality.

Members benefited in another way. Itwas much more time-efficient to let Con-gleton arrange the marketing and coor-dinate shipments. Producers could thenconcentrate on their farm operations.

The biggest advantage during theworst periods last year was access topackers, Congleton says.

“The biggest advantage the coopera-tive offers is the ability to get pigs in thedoor. For some smaller producers whoweren’t members, packers were bookedout. But the cooperative never had aload of pigs turned down,” he explains.

The cooperative has no “bricks andmortar,” since costs such as stockyardand loading fees are variable and hogsaren’t actually purchased by the cooper-ative. Little startup capital was need-ed. However, the directors agreed to put$30,000 toward a marketing bondrequired by the Packers and StockyardsAdministration. After a year of opera-tion, CKHMA reimbursed directors.

More benefits realized

Another member service includes thepurchase of feed ingredients in bulk atlower prices. The cooperative takesorders, buys the feed, and arranges formembers to pick it up. To promote uni-form feeding practices, members are alsorequired to purchase feed ingredientsthrough the cooperative.

In 1995, USDA Rural Business-Coop-

erative Service staff conducted a strate-gic planning session with the directors.As a result, Congleton was hired insteadof continuing on a volunteer basis. Tohelp pay his salary, the members agreedto raise the fee they pay the co-op to 2percent of the sales value of their hogs.At first, the steeper fee drove some mem-bers away and others went out of busi-ness due to economic conditions. But ulti-mately, hog marketings stabilized.

Al Tank, chief executive officer of theNational Pork Producers Council, recog-nizes CKHMA’s success. He spoke atCKHMA’s annual meeting in March.

CKHMA members say the futurelooks hopeful in spite of low hog prices.USDA projects that farrowings willdecline later this year, and prices willcontinue their slow improvement. Somemembers are even talking about expan-sion. The cooperative will continue look-ing for the best terms possible with pack-ers. Members will continue improvingquality. Other producers in the area may

join the cooperative and it’s possible thatanother collection point will be opened,Congleton reports.

CKMHA is always looking for newopportunities on the horizon. With thepotential for closure of area packingplants looming, members see a need forexploring alternatives for adding valueto pork. Custom processing, targetingniche markets and even ownership in aslaughter facility could eventuallybecome a reality for a cooperative.

“Small-scale producers need to get themost out of their hog operations,” saysLyvers. “There’s no reason CKHMA can’tbe duplicated by small producers any-where in the country, with a group of pro-ducers dedicated to improving quality,lowering transportation costs, and sav-ing time. It may be the only way forsmall producers to survive.” ■


Hog producer Phil Lyvers says other small-scale hog producers should be able toreplicate the success his co-op has had in central Kentucky.

By Kristen KelleherInformation SpecialistUSDA Sustainable Agriculture Research andEducation

NN orthern New Mexicans remaindeeply linked to the dramaticlandscapes and histories of

their lands. Amid the Sangre de Cristomountain range and in the path of theRio Grande lie communities with firmties to the cultures of ancient NativeAmericans and 16th-century Spanishsettlers, both of which highly valuedagriculture.

Even so, the influences of modern lifeand competing economic developmentnow challenge the rural health of thearea. The pull of such boom-or-bustindustries as mining and tourism lured ageneration of people away from theirland and agrarian way of life. As in otherareas, the newer industries have provento be less stable and lucrative for manylocal inhabitants.

Now, through a strong partnership ofnorthern New Mexico producers, commu-nity development leaders and agricultur-al professionals, a promising mix ofsmall-scale farming and value-addedenterprises is emerging and reconnectingthe community to its agriculturalresources.

“This year, we expect to bring in$100,000 of agricultural income to thispart of New Mexico, where there wasessentially none a year ago,” says CraigMapel, a marketing specialist from theNew Mexico Department of Agriculture(NMDA).

Team leverages SARE funds

Mapel leads a project funded byUSDA’s Sustainable AgricultureResearch and Education (SARE) pro-gram to revive agricultural production inthe region. He and a team from the NewMexico State University CooperativeExtension Service and the Taos CountyEconomic Development Center are lever-

aging SARE funds with other public andprivate assistance to make a significantchange in the quality of rural life forHispanics, Native Pueblo Indians andother families on limited incomes.

Mapel’s six-figure estimate refers tothe market value of a recent harvest oforganic wheat made by a farmer cooper-ative in Costilla, N.M. It’s the inauguralcrop for the growers after a generation oflocal people stopped farming. Thefarmer cooperative has also served as theimpetus for members’ spouses to worktogether to build a greenhouse in whichthey grow plants and flowers for sale tolocal residents.

“The cooperative has become muchmore than just a small grains project,”explains Rey Torres of the Taos CountyCooperative Extension Service.

The small grain production project inCostilla is one of three hands-on efforts tore-teach Hispanic and Native Pueblofarmer cooperatives how to grow andmarket products to boost their annualincomes and improve their quality of life.

Other initiatives to enhance sustain-able agriculture in the region include acommunity garden project and food pro-cessing and marketing assistance at theTaos County Economic DevelopmentCenter, both of which intend to jump-start value-added agribusinesses.

“This revitalization project got startedbecause the local people came to us andasked for help to make it happen,” addsTorres. “It’s been successful becausewe’ve combined the grassroots desiresand interests of the community with aleadership team that emphasizes thestrengths of its players.”

The technical expertise of CooperativeExtension linked with the marketingknow-how of NMDA and the communityactivism of development center directorsTerrie Bad Hand and Pati Martinsonhave combined to create diverse, de-cen-tralized “incubators” for long-term eco-nomic success in the region, says Torres.

Farming adds stability

Lonnie Roybal, a Costilla landownerand first-time wheat grower, says farm-ing is the only thing he and his neighborscan rely on.

His friend and cooperator JuanMontes agrees. “We’re after a strong sus-tainable community that’s not dependenton tourism or other up-and-downeconomies,” he says.

Del Jimenez, extension agent for thegrains project, expects far-reachingeffects from the agricultural productionefforts. “This work benefits more thanjust a few small towns. The organicwheat produced by the growers fuelsniche markets for local mills and bakers,and launches a state product of organicflour that can be labeled as made andmilled in New Mexico.”

In another part of northern NewMexico, in the commercial kitchen at theTaos County Economic DevelopmentCenter, “High Desert Delights” pastry


Boosting Rural New MexicoFarmer co-ops key element in effort to help Hispanics and Pueblo Indians build sustainable communities

Chili peppers are an essential ingredientfor many of the southwestern dishescreated in a commercial kitchenoperated by the Taos CountyDevelopment Center to help createsmall food processing and marketingbusinesses that add value to local crops.Photos by Jeff Caven

chef Leslie Pedlar has fashioned a busi-ness out of baking brownies, cakes, cook-ies and other sweets for local restaurantsand shops.

“I probably would have quit by now ifthis kitchen was not available. It’s verydifficult to find a restaurant kitchen thatwill accommodate a small operation likemine,” says Pedlar.

The kitchen is part of a gleaming, up-to-code food processing center housed atthe Taos County Economic DevelopmentCenter. Pedlar says combining reason-ably priced, accessible work space withthe legal and financial services offered atthe business park is a great way to givesmall enterprises like hers a fightingchance to succeed.

The dynamic team behind the devel-opment center business park are co-direc-tors Bad Hand and Martinson. Theycarved out a strategy for communityaction in Taos County by investigatingthe desires and strengths of its citizens.

“You have to go to the people,” saysBad Hand. “In this area, we learnedthat agriculture could be a seed ofchange because of its link to the people’sheritages.”

Looking to the future, Bad Hand andMartinson say they aim to get the devel-opment center’s commercial kitchenfunctioning 24 hours a day with locallyproduced goods. They also plan to haveits companion community garden act as acatalyst for more food business opportu-nities for limited-income people, as wellas an entry point for healthy eating andnutrition education.

Co-op to buy mill

On the wheat production front, Torressays the farmers had to learn how towork together just as they needed torenew their agricultural skills. Afterseven years of assistance and advice fromoutside sources, the cooperative membersare about to take a big step. They willmill their own flour for sale to restau-

rants and bakeries. The farmers want tocapitalize on the consumer trend of shop-ping local to support rural America.

“Because of the changing face of ruralAmerica, people realize that, unless yousupport the local economy — farmers,producers and processors — your com-munity is not going to survive,” Torressays. “This is not just about supportingan industry, though. It’s about supportinga lifestyle.

“A few years ago,” he adds, “these pro-ducers would have just marketed theirwheat on the open market. Now thesesame producers have moved on to some-thing unique — their own mill. We knowthe stamina is there. The will is there.Moving to this critical point has giventhese cooperative members great hopesfor their futures.”

First funded by Congress in 1988,

USDA’s Sustainable Agriculture Researchand Education the SARE program helpsincrease knowledge about — and helpsfarmers and ranchers adopt — practicesthat are economically viable, environ-mentally sound, and socially responsible.To learn more about how to apply for aSARE grant, access SARE research find-ings or obtain SARE books and informa-tional bulletins, contact Valerie Berton,(301) 405-3186; [email protected] visit www.sare.org. ■


Crops flourish in the Taos County Economic Development Center community garden,created to improve local food production.

By Pamela J. KargField Editor

““AA s a small farmer, you’realready on the bottom, so youhave no way to go but up,”

Spencer Lewis says. “With this new coop-erative, it’s a lot better. It makes you feelgood. You know you’re moving up.”

When Lewis plants his seeds today inthe soils of Florida’s panhandle, he essen-tially only worries about the weather. Heand his wife, Melvina, know exactly howmany acres to rent, how much collard orturnip seed to plant, what to do for pestcontrol so the greens can be harvested ontime and who’s going to purchase his pro-duce. The Lewises and their fellow farm-ers credit New North Florida Cooperativefor bringing stability to their lives andtheir operations.

Historically, these small-scale, blackfarmers have been price takers, saysGlyen Holmes of USDA’s Natural Re-sources Conservation Service (NRCS) inFlorida. Farmers sold produce fromroadside stands or to local restaurants.What wasn’t sold within days of pickingusually spoiled. One neighbor had noidea what another neighbor was plantingor harvesting. This turned friends intodirect competitors in an already flat localmarketplace. And these producers feltthere was no hope on the horizon.

“These are small-scale producers,”says Holmes. “They have limited land,limited capital, limits to their experiencewith marketing, and even limits in localmarketing opportunities. Some are onlypart-time farmers, with jobs in town.These people were raised on farms andknew the production side of business,but they had never organized to markettheir products.”

That changed when 15 small-scalefarmers put their own “sweat equity” towork in the co-op. Helping them in thiseffort have been USDA’s AgriculturalMarketing Service, USDA’s Natural

Resources Conservation Service, FloridaA&M University (FAMU) and the WestFlorida Resource Conservation andDevelopment Council.

Not all is sunshine

The number of black U.S. farmers hassteadily declined, even more rapidly thanthe trend for all farmers. In 1910, therewere one million black farmers whoowned 15 million acres of land. By 1998,that number was down to fewer than20,000 farmers who owned about twomillion acres.

At the same time, the farmer’s shareof the consumers’ food dollar had shrunkfrom 37 cents in 1980 down to 23 cents in1998. One reason for the decline is con-sumers who increasingly want conve-nient, quick, ready-to-eat products. Con-sumers want their cabbage washed,sliced and packaged so that they onlyneed to add a few sliced carrots, mix inthe dressing, toss it all in a bowl andserve up “homemade” coleslaw. Small-scale farmers such as Lewis don’t have

access to the processing and packagingequipment to give consumers exactlywhat they want. As a result, income hasbeen shifting away from farmers towardcompanies that process, package andmarket food the way consumers want tobuy it.

While most people see Florida for itsbeautiful beaches, thirst-quenching glass-es of cold orange juice, Disney World andas a winter haven for snowbird senior cit-izens, the northern Florida region isexperiencing financial difficulties. Fed-eral and state officials studied the envi-ronment within which producers wantedto form a new marketing cooperative.Their reports indicate that increasedurbanization of southern and centralFlorida has left northern Florida as theonly region where small farming opera-tions continue to exist in large numbers.

Small farmers are further confrontedwith major problems as they attempt tocompete in today’s rapidly changing polit-ical, economic and technological environ-ment. Add to this a lack of profitability,


A 54-row acre of greens provides enough fresh vegetables to serve lunch to eachstudent in all 30 schools served by the cooperative.

A Sea of GreensLow-income farmers use vegetable processing, marketingco-op to create new opportunity in north Florida


and small farmers are leaving their oper-ations for non-farm employment.

“This growing trend is resulting in thesurrounding community becoming over-whelmed with a demand for employmentthat it is unable to meet. The search foremployment is also taking many away toseek employment in other communities.Thus, the extinction of this very impor-tant agricultural group, small farm andranch operators, is a possibility in thenorthern Florida area,” one study noted.

In eight of nine counties in westFlorida, unemployment rates range fromfive to nine percent. These same countieshave between 11 and 25 percent of theirpopulation living below the poverty rate.The per capita income ranges from$10,400 to $11,900. Only Leon County,where the state capital of Tallahassee islocated, has a healthier unemploymentfigure (3.9 percent), poverty rate (9.4 per-cent) and per capita income ($15,724).

Birth of a co-op

Committed and informed, producersestablished New North Florida in 1995 totry to increase their income through

innovative marketing. They knew therewere no guarantees for the cooperative’ssuccess, even with technical assistancefrom USDA and local organizers. Eachfarmer had to commit sweat equity for ashare in the new organization, whichthey hoped would help lift them up theeconomic ladder through innovative mar-keting. USDA and community develop-ment personnel provided managementassistance, but the farmers did notreceive any large financial grants.

The cooperative’s first delivery was3,000 pounds of greens to the GadsdenCounty School District. Food ServiceDirector and Registered Dietitian J’AmyPetersen remembers the free samples.

“I met Glyen Holmes at a USDACommodity Food Program meeting inAtlanta,” she says. “We started talkingabout the use and how important fresh,local produce is in feeding programs in thepublic schools,” she recalls. “When driving

to the various schools, I saw fields of cab-bages, tomatoes, and grapes/berries, freshfood items that students would enjoy withmeals and salads.”

A short time later, Holmes coordinatedthe delivery of cabbage, strawberries andwatermelon to the district’s central ware-house. The produce was distributed to 15schools that daily feed about 7,000 pre-school through high school students, aswell as educators and administrators.The district also serves nearly 4,000breakfasts daily through the NationalSchool Breakfast Program. About 80 per-cent of the district’s students receive freeor reduced-price meals through theNational School Breakfast and NationalSchool Lunch programs, the largest ofthe federal child nutrition programs interms of spending and the number of chil-dren served nationally.

“The quality of the produce was top-notch,” Petersen says. “The leaves were

Dinner is served: packages of co-op produced and processed collard greens are aboutto meet the public at the Havana North Side High School cafeteria. From the left are:Dan Schofer, USDA Agricultural Marketing Service; Alonza McBride, cafeteriamanager; Joe Ann Yumas, lunchroom assistant; and Glyen Holmes, USDA NaturalResources Conservation Service. USDA photos by Dorothy Staley


clean with no holes, rot or wilt. Theberries and melons weren’t mushy, whichmeans they were freshly picked. Glyenwas in constant contact with me, askinghow the produce looked, what the staffthought and how the kids liked it. He stilldoes that today, which is real important.”

More importantly, the kids responded.They loved the taste and texture in theirmouths of the fruits and vegetables. Forsome of the smaller children, it was theirfirst time ever trying fresh strawberries.The smell of fresh cooking cabbagepiqued everyone’s taste buds so they atemore. Petersen and her local food servicemanagers have noted increases in stu-dent participation in the School LunchProgram, which they attribute to theefforts to provide children with high-quality fruits and vegetables. There haseven been an increase in the number ofteachers, district staff members, andmaintenance crews who opt to stay atschool for lunch.

Working through Holmes and NewNorth Florida, Gadsden County schoolsnow contract shipments of strawberries,watermelons, turnip and collard greens,cabbage, blackberries and Muscadinegrapes. Jackson County School Districtfood service director Linda Wright alsopurchased produce from the cooperative.New North Florida continues to workwith Jackson County schools throughAramark Food service, a private manage-

ment firm the district has retained. TheDepartment of Defense’s Direct VendorDelivery payments enable districts to buymore fresh produce without the schoolfood service fund footing the bill. Allinvoices are sent to the state’sCommodity Food Programs, whichretrieves money from the Department ofDefense food fund to pay the local pro-duce bills.

New North Florida cannot supplyeither district’s complete fruit and veg-etable needs all year long.

“In school food service, you learn to gowith the flow, be flexible and to work withwhat you have. Our menus include manyfruit and vegetable items,” Petersenexplains. “One vendor, like the NewNorth Florida Cooperative, cannot fulfillall of our needs, just like one vendor can-not fulfill all the milk, bread and frozenfood items. We have to learn to work witheach specialized distributor.”

Of course, pizza and cheeseburgersare just as popular in Gadsden County asthey are anywhere else, and Petersen’sstaff has learned to complement theseitems with fresh lettuce, tomatoes,coleslaw and fruit cups as a dessert.

“Those are definite favorites, but thefat content can already be high in chil-dren’s diets, so the addition of fresh fruits

and vegetables with the needed high fiberand nutrient content can be assets andcomplement our school meals,” statedPetersen. “For many of our children,school breakfasts and lunches providemost of the needed nutrients for brainand body growth, and unfortunately maybe the only well-balanced meals they eatthroughout the day. We are especiallyconscious of the nutritional values indaily meal planning. By following theUSDA Dietary Guidelines and FoodGuide Pyramid, I am assuring they eatproperly therefore resulting in lower dis-ciplinary problems, better school atten-dance and higher learning activity.”

The majority of fresh produce is pur-chased from non-cooperative sources,local produce vendors, Petersen says. Thecooperative’s prices for some of its itemsare often lower than those of local pro-duce companies, even after the manage-ment team factors in the costs incurredduring production, post-harvesting han-dling, delivery and a reasonable profitlevel. With strawberries, the cooperativedoes not set its selling price. Rather, themanagement team monitors weekly anddaily market prices and then sets its owncompetitive prices.

But Petersen’s preference is to do busi-ness locally, adding North Florida farm-

If collard greens are clean, with no holes or wilt, producers will cut and bag them fordelivery to customers.


ers’ Muscadine grapes or melon chunks toa breakfast fruit cup, or with seasonedcooked greens, cornbread and barbequedor baked chicken for lunch.

A holistic approach

There’s something deeper, even holis-tic, about Petersen’s commitment to thebusiness arrangement. “I’m originallyfrom North Dakota,” she says. “Myupbringing assisted in understandingthe importance of locally grown itemsand utilizing them wherever possible.The USDA Buying Guide was sharedwith the cooperative and we talkedabout how it is used to figure portionsizes. We also shared prices paid foritems, the number of breakfasts andlunches served at each school and theirlocations.

Lewis, for example, plants about 54rows of collard greens per acre of land.The yield from his field provides enoughgreens to serve during one lunch at the30 schools across Gadsden and Jacksoncounties.

“But my rural roots also create in mea deep appreciation for local farmers,”Petersen continues. “I was really glad tobe able to buy produce from our farmersbecause, in a rural area, they’re ourbackbone. I know the importance of giv-ing back, helping the community. Andnowhere is that truer than in an eco-nomically disadvantaged area.”

Dan Schofer, an agricultural engineerwith USDA’s Agricultural MarketingService, says the genuine concernexpressed by Petersen and others in thelocal community about the cooperative,its members and their success was cru-cial to coordinating this pilot project.

“I can’t emphasize enough the per-sonal relationships that have beenformed between the cooperative’s mem-bers, the farmers and the managementteam, the cooperative and its customers.That helped foster J’Amy’s willingnessto go with this new cooperative before it

was even standing on its own two feet.She took a chance on us when no oneelse would,” Schofer says.

Turning over a new leaf

Cooperative members now have cus-tomer demands to meet through strictproduction schedules. That was a chal-lenge at first.

“It’s one thing to grow a few greens inyour garden for use on your family’s din-ner table or to sell to the neighbors,” saysSchofer. “But it’s quite another to have ahigh-quality product that meets all thecustomers’ expectations and is ready on aparticular date. If J’Amy wants some-thing delivered on Monday, members hadto learn that they must deliver.”

Only once since it started has NewNorth Florida missed a delivery. Thegreens didn’t arrive, but Petersen hadsome frozen ones she could distribute toher school cooks. Another time, through amix-up on the delivery dock, a fruit deliv-ery wilted under Florida’s summer sun.

“The cooperative replaced the ship-ment, and it wasn’t even really their

fault,” Petersen says.Holmes, especially, remains intimate-

ly involved in the cooperative’s daily busi-ness. He makes contacts with customers,talks to potential customers, developsdelivery schedules and ensures that oper-ations are moving forward. VondaRichardson, with FAMU’s Small FarmerOutreach Project, works on-farm withthe members, assisting them with pro-duction issues and management ques-tions. She acknowledges that New NorthFlorida is slowly learning to crawl, whichit needs to do before it can walk.

“We’ve seen in our area that the tradi-tional way people start cooperatives —with heavy involvement from members— doesn’t necessarily work here,” sheexplains. “These farmers want servicesso they can concentrate on what they dobest — growing produce. We’re trying itthat way, giving them what they want,the way they want it. That means Glyenand I put a lot of intensity into the effortevery day. But we see it as part of thecareers we already have working forUSDA and Florida A&M.”

Glyen Holmes, (left) and Dan Schofer of USDA help load packaged greens into theco-op’s air-conditioned trailer.


Growing into the future

Lewis thinks about the future, too.He knows the cooperative has given hisfamily immediate financial gains. ButLewis also knows local farmers willeventually need to make some toughdecisions about building equity in theorganization, expanding marketingopportunities and dealing with the chal-lenges growth brings.

“The future does cross my mind, whenI’m out there tending to my plants orturning my watermelons, but I haven’tsat down to think about it much,” Lewisexplains.

As members gain self-confidence,they’re expanding their knowledge,building their marketing skills and real-izing the power that cooperation hasgiven them, says Holmes. They are slow-ly pushing forward.

New North Florida received its firstlarge financial assistance from a localbank and the Jackson CountyDevelopment Council, a non-profit orga-

Producers such as Spencer Lewis knowhow to grow high-quality vegetables andfruit, and their new cooperative providesprocessing and marketing services.

“The future (of the co-op) does cross my mind when I’m out here,” says Lewis.


nization that helps implement thePresident’s Empowerment Zone pro-gram. The loan was used to buy a newcutting/chopping machine and a refriger-ation storage system. These improve-ments, along with a packaging/process-ing shed to house them, were essential tothe cooperative’s survival, Holmes says.

Meeting with success

“We’ve had many successes andlearned a few valuable lessons,” Schofersays. “We’ve shown that you can bringdifferent organizations and different peo-ple with different expertise together towork on a project that makes a positivedifference in people’s lives. And you don’thave to worry about who gets the credit

because, when it’s as successful as NewNorth Florida has been, there’s plenty ofcredit to go around.”

In addition to the innovative partner-ship between farmers and outsidesources, the cooperative has shown pro-ducers and advisers how north Floridaproducers work best when organizingand educating themselves to new ideasand changes. New markets have beendeveloped and income to small-scalefarmers has increased. New NorthFlorida Cooperative has developed a goodreputation for itself among state and fed-eral agencies, as well as heightenedawareness in local communities of howmuch people can achieve when they worktogether.

“And I think we have a model herethat can be implemented in other com-munities across the U.S. where small-scale, limited-resource farmers want toform a cooperative,” says Schofer.

“We’re making things better all theway around,” Lewis says. “The more peo-ple see you do things, the more they’llwant to come in to what you’re doing.The younger generation wants to knowabout the cooperative and what we’redoing. It makes me feel good when peo-ple pay attention. Then we can plantmore because we’ll have to send out moreand we’ll make more money. We’re work-ing hard and we’re being a success.That’s all good for small farmers.” ■

Timely deliveries to customers have added to the reputation of the New North Florida Cooperative. Co-op members say the biggestkey to their success is hard work.


William J. NelsonExecutive AdministratorAssociation of Cooperative Educators

II s anyone surprised that we are see-ing significant change occurring inthe economic and social systems in

which cooperatives are involved as the20th century ends? And should we besurprised that cooperatives themselvesare undergoing significant change? Wehave known for some time that change atthe close of the 20th century would accel-erate. We should not be surprised thatthe accelerating rate of change is alteringthe very structure of the cooperative sys-tem, and will continue to do so.

In an article in Rural Cooperatives(September/October 1998) RandallTorgerson described several “drivers”behind the rapidly changing cooperativesystem, including: the implications of theglobal economy; the combined pressuresof specialization and economies of scale;reduction of the “safety net” provided bythe federal government; the desire formore control over quality and definedproduct characteristics leading to verticalcoordination of production and distribu-tion; and the need and opportunity forcooperatives to play a critical role in thisnew marketplace on behalf of their mem-bers. This leads to the critical question ofwho will control our destiny, and — in aproducer or consumer-owned cooperative— will the members, directors and staffbe prepared to meet the challenge?

He closed the article by calling atten-tion to a key issue: among the many chal-lenges these changes create, a veryimportant one is “keeping the member-owners informed, involved and empow-ered so that benefits are clearly orientedand delivered to them.”

While today’s changes may seemgreat, even overwhelming, this is not thefirst time this has happened in the coop-erative system to either producers or con-sumers. We might be able to learn a lit-tle about how to proceed by looking back.

The modern cooperative businessstructure, and the system it became,grew out of tumultuous and difficultsocial and economic stress created by therevolutionary new technologies being cre-ated by the industrial revolution. Ofcourse not everyone agreed on the valueof the new technologies and, in retro-spect, the “revolution” never reallyended. We emerged into a new era of civ-ilization in which industrialized technol-ogy became a driving force, rather thansimply an extension of previous small,incremental adaptations of tools andtechniques to meet specific human needs.

The changes in technology and thestructure of industry created significantsocial, economic and political turmoil,which — like the change in the structureof commerce and industry — neverended, either. As we progressed into the19th and 20th centuries, the pace ofchange began to accelerate. Social, polit-ical, and economic change is a little moredifficult to see, describe or measure, butthe impact is nonetheless significant.

As one very important solution to theproblems created by this change, ordi-nary people created a new type of busi-ness structure to meet their needs: thecooperative. From the perspective of con-sumers, and later as producers, they tookcalculated risks in a difficult environ-ment, knowing very little about what wasahead of them. They started co-op busi-nesses designed to reduce expenses,increase income or provide a needed ser-vice, using a new strategy of combiningentrepreneurship with collective action,in a formal business structure. Whenthey got it to work at the local level, theyexpanded the idea into regional, national,and even global structures and systems.

The cooperative system has been ableto function in a range of economic, politi-cal and social systems for over 150 years.It promotes desirable competition, cre-ates value, adds value, meets needs andresponds to the needs and objectives of

member-owners. Is there somethingunique about the system that has made itso sustainable through so many changes?If so, what will it take to continue?

A closer look at the formation of theRochdale cooperatives, the prototype ofour modern system, reveals that alongwith all of the obvious business chal-lenges they faced, they realized theyneeded to know a lot more than they did,and they devised their own elaboratelearning system, including a library,adult education programs and a commit-ment from the business to support thiseducation effort.

They devised a way to have the busi-ness pay for it, as an investment in thefuture of their business and livelihood.When they created their mission state-ment with a set of business principles toguide them, they included educationabout their business as a key guidingprinciple for future success.

As the system grew, and as basic gen-eral education became the responsibilityof the public school system, the tasks andresponsibility for education on the uniquefeatures of a co-op business graduallyshifted to what cooperative historianBrett Fairbairn of the University ofSaskatchewan has called “the agencies.”

These are organizations such as stateand national trade associations, universi-ties, and government agencies, and pro-fessional associations. This worked rea-sonably well for a long time, even thoughthe commitment and capabilities of “theagencies” fluctuates over time, dependingon resources and a host of other factors.

The leadership and commitment of“the agencies” today are on an upswing.For example, we have a rejuvenated fed-

William J. Nelson

Co-op Member Education Needed in 21st Century


eral research and information servicethrough the Rural Business CooperativeService of USDA Rural Development andrejuvenated and expanded universitycenters for cooperatives and endowedchairs, with excellent leadership andstaff. We have very strong professionalassociations of cooperative educators andcommunicators, including the Agri-cultural Communicators in Education(ACE) and the Cooperative Commun-icators Association (CCA), and we havenew models of collaboration on coopera-tive education emerging between statecooperative councils.

Foundation support of cooperativeeducation has increased, new electronictechnologies are being used for informa-tion delivery and increased coordinationin the development of new or updatedcurriculum materials is improving com-munication efficiency and effectiveness.We have some very strong co-op educa-tional programs in place, including theGraduate Institute for CooperativeLeadership (GICL) and the Legal, Taxand Accounting (LTA) conference of theNational Council of Farmer Cooper-atives. Consumer cooperatives have sim-ilar educational programs.

One key area of cooperative education,leadership development, is beingimproved on several fronts, includingprograms such as GICL, and a new pro-gram for defined membership coopera-tives created through a partnershipbetween the Quentin Burdick Center andseveral other agencies, foundations and—most importantly — the cooperativesthemselves. Other leadership develop-ment and support programs include theFuture Co-op Leaders Program of theNational Cooperative Business Asso-ciation and the New Cooperative LeadersScholarship program of The CooperativeFoundation, which supports professionaldevelopment in cooperative education.

The Cenex Harvest States Foundationhas made a commitment to co-op educa-tion, including support for professionaldevelopment of co-op educators. Two newdirector training series are available, andyoung farmer programs emphasize lead-ership development.

But this is only a part of the story.While it is important, necessary andreassuring that “the agencies” are aliveand well in actively looking after theprinciple of cooperative education, it can’t

fully substitute for a full commitment bythe cooperative businesses themselves.We need to take another look back, to seewhat we might need to do now.

When the early cooperatives made acommitment to their own ongoing educa-tion, they ensured that they would con-tinue to be risk-takers, innovators, suc-cessful competitors in their cooperativemarketplace. This approach, which theysupported as a necessary businessexpense and investment, is what wetoday call “a learning organization.”

A learning organization is an organiza-tion which is continually expanding itscapacity to create its future, throughlearning as well as earning. Cooperativesused to do this — it was how they gotstarted and what they had to do to createa new niche market in a very difficultbusiness environment. They started atthe most basic level and grew into a sys-tem that is locally, regionally, nationallyand globally competitive, ensuring a placeand future for member-owned and con-trolled business. But we have graduallylost much of our inherent advantage.

Today, we tend to follow the rest of thebusiness world through one management“innovation” after another: total qualitymanagement (TQM), re-engineering, re-invention, systems models, networkingvs. hierarchical models of leadership andmanagement, niche marketing, customerorientation, shared profits, incentives,give-backs, adding value and even tryingnew technologies to sell things. Welament that our democratic system some-times slows us up, because it takes toolong to get the buy-in of members whodon’t understand where we need to go ontheir behalf. We try to “communicate”more, we provide (what sometimesamounts to remedial) education toattract and train directors, we increaseour legal and lobbying budgets and wetry to find new ways of explaining ourunusual capitalization and financialstructures to new types of investors.Sometimes we even consider giving upthe cooperative business model becausewe aren’t sure if it is up to the challengeof today’s business environment.

Isn’t “adding value” what we weredoing when we started? Weren’t coopera-tives learning organizations, innovators,risk-takers, networkers, partnership-builders, profit-sharers, customer serviceproviders, niche marketers, investor-con-

trolled business innovations? Wasn’t thesystem able to transcend local, regionaland national boundaries when it was theappropriate and necessary businessthing to do (still done in service to mem-bers)? How did we do this? What wasthe key ingredient? Could it have beenongoing cooperative education? Was thisthe reason it was included as a principle?

Where, then, do we go from here? Notbackwards, except to learn what we canfrom the past. Just as the originators ofany cooperative — whether in Rochdale,England in the 1840s, the Upper Midweststates, the West and East Coasts in theearly 1900s or in the Midwest again inthe 1990s — we in the cooperative systemneed to rethink the commitment to coop-erative education.

We need to capitalize on the invest-ments made in “the agencies”: the uni-versity centers, endowed chairs, stateand national councils and USDA. Weneed to continually re-invest in them tokeep them strong and future-focused,emphasizing the “learning organization”aspect of a member-formed, owned, andcontrolled business. But we also need tomake a stronger commitment within ourcooperative businesses themselves tomake sure we have a membership whichfully understands the power and poten-tial of a member-owned and controlledbusiness in today’s global competitiveeconomic environment.

We may need to set priorities: can we,or do we, need to educate the pubic aboutcooperatives, which some co-op educationadvocates believe should be the top prior-ity? If we want to build strong, informed,dedicated members, at what age do westart? What is the best access point, theoptimal curriculum, the most efficientand effective delivery system? What doesthe content for cooperative education inthe 21st century need to be?

Some of these questions are beingaddressed by the agencies, but that isnot enough. We need the cooperativesthemselves to re-claim their roots asauthentic learning organizations. A keystep in this direction would be a renewedcommitment to member education, aspart of a business investment in cooper-ative education. This may be necessaryto, as Torgerson suggested, “keeping themember-owners informed, involved andempowered so that benefits are clearlyoriented and delivered to them.” ■


“Many farmers and farm groups con-tinue to be interested in handling somelivestock through cooperative meatpacking plants. This desire to own andoperate their own slaughter, process-ing, and merchandising facilitiesincreases during periods of low live-stock prices and small feeding margins.”

R. L. FoxUSDA Farmer – Cooperative ServiceApril 1957

By Brad Gehrke and James MatsonUSDA Livestock and Marketing Specialists

At the dawn of the 21st century, R.L.Fox’s words are no less true than theywere 42 years ago. Fox lamented that thefarmers’ share of the consumers’ meat dol-lar declined from 73 percent in 1946 to 52percent in 1956. In December 1998, farm-ers’ share of each consumer retail pork dol-lar had dropped to 12 cents. During thesame period, beef producers received 44 to50 percent of the consumer retail dollar.While beef producers may appear to be ina stronger position than pork producers,note that the 44 percent share at the feed-lot gate must compensate cow-calf produc-ers and backgrounders in addition to feed-lot-operators.

Increased marketing margins can bepartly explained by the addition of consumer-driven characteristics addedbeyond the farm gate, including suchready-to-cook items as grilling kabobsand marinated steaks. Still, many con-sumer-desired characteristics are insepa-rable from the production process, suchas leanness, tenderness and flavor.Market-oriented pricing and procure-ment methods have not always compen-sated producers for the value of charac-teristics inherent in genetics or produc-tion processes. Cooperative involvementin value-added processing is one methodproducers can be compensated for the

true value of their production.Recent interest in cooperative slaugh-

ter and meat processing among farmers,ranchers and feeders is driven by lowprices and smaller profit margins, as wellas by significant changes in the structur-al and institutional environments thathave increased risk among independentproducers. Recent changes to a moremarket-oriented federal farm policy haveexposed producers to increased price risk.Continued vertical coordination and inte-gration can potentially reduce marketaccess for some producers. While theglobalization of markets increases oppor-tunities, participation in these marketsalso makes U.S. producers susceptible toadditional risk.

Randall Torgerson, deputy adminis-trator of the Rural Business-CooperativeService of USDA Rural Development,summarized the underlying interest incooperative slaughter and meat process-ing in an article he wrote for the UnitedKingdom 1999 Yearbook of Agriculture:

“Two processes are influencing howthe food industry is organized and deal-ing with this marketing margin situa-tion: more integration and coordination.Cooperatively-owned businesses are anatural vehicle for turning these process-es into members’ benefit. Through jointownership of marketing, farm input orservice assets, cooperatives become theoff-farm business — the business beyondthe fence line, in an integrated sense.The key is that the driving force behindthis integration is the entrepreneurialbusiness unit — the farmers’ operationand not some outside dominating force.”

Successful cooperative organization

As producers attempt to move closer tothe consumer and increase their share ofthe retail food dollar through the forma-tion of off-farm businesses, they faceopportunities and risks. These opportuni-ties and risks differ from those theyencounter as producers. To successfully

manage these risks, producers need todevelop a well-defined organizational plan.

Producers benefit if cooperativestrategies take advantage of changes ininstitutional processes. Careful planningallows producers to effectively recognizerisks. Once these risks are identified, thecooperative can develop business strate-gies that limit these risks to an accept-able level.

In 1996, Galen Rapp and Gerry Ely,USDA cooperative development special-ists, codified years of experience in a 16-step sequence for cooperative organiza-tions. The plan may take up to two yearsto develop and implement, but only aftercompletion of the planning steps should acooperative commence operations. In“How to Start a Cooperative” (CIR 7,available from USDA Rural Develop-ment) Rapp and Ely state that business-es are most susceptible to failure soonafter organizing. The two provide a list of10 actions cooperative organizers shouldfollow to avoid common organizationalpitfalls.

10 actions to avoid cooperativeorganizational pitfalls

1. Identify a clear mission for the cooperative with definite goals andobjectives.

2. Create detailed plans for achievingthe defined goals.

3. Make use of persons experienced incooperative development.

4. Involve cooperative members orselected leaders in all decisions.

5. Develop board support among thepotential member-users.

6. Hire experienced and qualified management.

7. Identify risks early in the organizational process.

8. Use realistic business assumptions.9. Raise sufficient capital to survive

the start-up period.10. Keep the membership, suppliers and

financiers informed.

Planning to Prosper:Recalling lessons learned from livestockslaughter and meat packing co-ops


Livestock slaughter and meat packingcooperatives are just as likely to fall preyto these pitfalls. Perhaps, given theircompetitiveness and slim operating mar-gins, these industries are even more sub-ject to these potential problems.Therefore, a lapse in only one area couldleave the cooperative vulnerable and sus-ceptible to failure. With this in mind, it isprobably good to review the lessonslearned since the first cooperativeattempts to enter these industries 85years ago.

Early livestock processing co-ops

The first recorded cooperative meatpacking endeavor took place in LaCrosse, Wis., in 1914. Twelve additionalgroups attempted to establish coopera-tive meat packing operations between1914 and 1920. Of these efforts, only onelasted more than three years, and exceptfor one, all ceased operations by 1923.

In 1957, when Fox looked back onthese initial ventures, he saw some fac-tors that contributed to their lack of com-mercial success. He summarized those hebelieved to be most critical in “FarmerMeat Packing Enterprises in the UnitedStates.” A review of these factors showsthey still have lessons to teach for thosewho plan to organize cooperatives today.

Fox found that the most common prob-lem associated with cooperative meatpacking efforts was lack of sufficient cap-ital. He did not always attribute this toinsufficient producer participation.Promoters were paid from 15- to 30-per-cent commissions on the capital theyraised, which significantly reduced thenet value of producers’ investments.

Excessive valuation of existing facili-ties resulted in some cooperatives payinghigh prices for worn-out plants thatrequired renovations, which further dilut-ed the leverage of producer capital. Insome cases, producers did not fully fundtheir stock subscriptions. Lack of produc-er support was exacerbated when farm-

ers, ranchers and feeders became dis-couraged because immediate profits anddividends did not materialize as expected.

As with any business venture, capablemanagement was an essential issue.Cooperatives often hired inexperiencedand inefficient management, which man-ifested itself in overpayments for live-stock, meat spoilage, inaccurate records,inability to collect accounts payable,extravagance, and lack of aggressiveness.These conditions further eroded producersupport because producers lacked confi-dence in management.

Another area where these organiza-tions had difficulties was their marketposition. In some cases, unsatisfactorysales outlets, keen competition and lowprices also contributed to losses. Otherprojects were challenged by irregular andinadequate supplies of desirable live-stock, or unfavorable freight rates forprocessed meat.

These conditions undermined thecooperative’s ability to compete withestablished investor-owned firms.Because of these commercial failures,producer interest in cooperative livestockslaughter and meat packing remaineddormant until 1930.

Meat Processing Co-ops, 1930-1948

Five of 13 slaughter and meat process-ing cooperatives started between 1930and 1948 were still operating when Foxcompleted his analysis. Of the eight that

failed, six operated for less than a year.Most of these failed attempts succumbedto the same factors that plagued earliercooperative livestock slaughter and meatpacking operations. Insufficient capital-ization by producers, lack of producercommitment, inadequate marketingoperations and inadequate managementall contributed to their demise.

The factors identified by Fox havebeen corraborated by the experiences oflater cooperative developers andresearchers. The lessons from the com-mercial failures, coupled with thosegained from commercially successful ven-tures, provide insight for people present-ly interested in organizing livestockslaughter or meat packing cooperatives.These lessons have been incorporatedinto the recommendations included in the10 actions to follow during the develop-mental and planning process.

Unfortunately, not all the difficultiesin cooperative organization remain in thedistant past. Some recent organizationalefforts did not result in commercial suc-cess. Several groups have repeated pastmistakes. A review of some of these effortsshows the continued importance of care-ful planning before initiating operations.

Lamb co-op failures studied

Roland D. Smith and a team of othersfrom Texas A&M University funded byUSDA Rural Business-CooperativeServices completed a case study of produc-

Livestock producers in need of profits beyond the farmgate continue to eye co-opowned slaughter and meat packing operations as a primary option. USDA photo


er-owned lamb processing ventures start-ed in 1989 and 1993. They found that lambproducers did a lot of things right in study-ing and preparing for the launching of thecooperatives. However, each business oper-ated for less than two years.

Smith’s team identified many of thesame causes for failure that Fox had foundmore than 40 years earlier. The re-searchers categorized these factors intofive areas: 1) inadequate financing; 2) lim-ited management expertise; 3) misguidedmarketing efforts; 4) lack of consistentsupply; and 5) the failure of the low-costcontract slaughter operation.

In describing lessons learned from thesheep experiences, the case study refers toplanning as a critical element needed forsuccess: “Had the contingency planningand effective evaluation been conductedas a proactive strategic process ratherthan as a reactive response to the existingeconomic environment, some of the per-ceived problems with financing, opera-tions, marketing and management exper-tise would have been better addressed.”

Indiana Family Farms, a pork cooper-ative, faced similar challenges. It initial-ly purchased an old plant to renovate.But sufficient capital was not available.Probability of success was limited furtherby lack of producer support.

Indiana Family Farms estimated that300 members were necessary for the pro-ject, while only 60 producers joined. It

began custom slaughter, processing anddistribution operations in November1997. These operations were suspendedin July 1998. In his column in“Feedstuffs,” Steve Marberry concludedthat “Buoyed by $60 per hundredweighthog markets [in 1996-97], producersdecided to ride the spot market into anuncertain future.”

Despite several unsuccessful efforts inorganizing slaughter and processing

cooperatives, a number are commerciallysuccessful. Farmland Industries enteredthe pork processing industry in 1959 bypurchasing a plant. Today, Farmland isthe fourth largest marketer of pork prod-ucts in the United States and a leader ininternational value-added marketing.

In December 1997, U.S. PremiumBeef initiated operations as a new-gener-ation marketing cooperative. Operationsbegan after 28 months of planning. Early

Producers did many things right in launching lamb processing cooperatives, but oldproblems plagued the operations. Photo courtesy American Sheep Industry Association Inc.

Interest in forming beef cooperatives remains high all across North America asproducers seek higher profits and stability. USDA Photo by Ken Hammond


this year, Chief Executive Officer StevenHunt said the cooperative paid out morethan $4.8 million in premiums over thecash live cattle market. This represents a$9 per head premium. During its firstyear of operation, the cooperative paid atotal average return of 34 percent to its675 members.

Producers continue to eye marginsbeyond the farm gate. Hog producers inNorth Carolina, Georgia, Illinois SouthDakota and Minnesota; beef producers inplains and mountain states; as well asintermountain sheep producers are con-sidering the potential for producer-owned, cooperatively governed slaughterand processing operations.

Prospering with co-ops

“Cooperatives are responding to thechanges in one of the most aggressiverestructuring periods in the history ofAmerican cooperation,” says USDA’sTorgerson. The current interest by pro-ducers to increase their share of the con-sumer’s retail dollar through coopera-tives offers them an opportunity to bene-fit from changing market processes. Withcare, producers can take advantage ofthese changes to prosper through cooper-atives. Lessons learned from more than85 years of cooperative slaughter andprocessing show how to avoid organiza-tional pitfalls through planning. ■

The annual survey of farmer coopera-tives conducted by USDA’s RuralBusiness-Cooperative Service (RBS) isthe only source of detailed informationon cooperatives and their service toAmerican agriculture. This data source,the only one with a national scope, pro-vides an important view of cooperatives’progress, growth and trends.

Data are collected annually to gaugecurrent cooperative activities, developtrend lines, and obtain needed informa-tion for important research, education,and information on cooperatives.

How are the data collected?

The data are collected through theuse of questionnaires. Similar ques-tions are asked each year so thatimportant data series can be main-tained. Periodically, additional ques-tions are included for conducting spe-cial studies of various aspects offarmer cooperatives. The 1999 sur-vey will collect additional informationfor a special study of local coopera-tives’ involvement in providing cropprotectants to their members.

Forms are mailed in earlySeptember to all cooperatives endingtheir business year between Januaryand June. Cooperatives whose busi-ness year ends from July throughSeptember receive a questionnaire inearly December. Those whose busi-ness year ends in the last quarterreceive questionnaires in early Marchof the following year. Cooperatives areencouraged to furnish a copy of theirannual or audit report along with thecompleted questionnaire. Such reportsprovide important information notrequested on the questionnaire.

USDA/RBS staff maintain data for

use in research, education and techni-cal assistance. Any data used in pre-sentations or publications are combinedto maintain the confidentiality of indi-vidual cooperatives. Individual reportforms are kept strictly confidential.

How are the data used?

Data collected from the annual sur-vey of farmer cooperatives are com-bined, expanded to represent the totalpopulation, and selected data are pub-lished in reports such as: RuralCooperatives, Statistical Abstract ofthe United States and AgriculturalStatistics. Farmer cooperative statis-tics are used by cooperative leaders,educators, researchers, policymakersand others interested in farmer coop-eratives. Agency staff frequently usethe information for important studiesand presentations. Educational mate-rials, from pamphlets to college text-books, rely heavily on statistics col-lected by the agency. Many people,including foreign visitors, contact theagency when they want to learn aboutthe structure and operation of U.S.farmer cooperatives.

How can farmer cooperativestatistics be acquired?

A copy of the annual statisticsreport is sent to each cooperative.Additional copies of the report can beordered from RBS. If you have ques-tions regarding farmer cooperativestatistics, please call, e-mail or writeCharles A. Kraenzle at (202) 720-3189, or [email protected], orUSDA/RBS/Statistics, STOP 3256,1400 Independence Ave, SW,Washington, DC, 20250-3256.

Cooperatives’ Response Needed for 1999 Survey


By K. Charles LingAgricultural EconomistUSDA Rural Development

DD airy cooperatives continue toplay a major role in the U.S.milk industry. While dairy

products represented 30 percent of thevalue of all agricultural cooperativemarketings during 1997, dairy coopera-tives received or bargained for 83 per-cent of all milk sold by farmers to theNation’s plants and dealers. It is themajor finding from a survey of dairycooperatives’ operations for the fiscalyear ending in 1997.

The number of dairy cooperativesdecreased 15 percent, from 265 to 226,between 1992 and 1997. Similarly, coop-eratives that processed and manufac-tured dairy products dropped from 86 in1992 to 63 in 1997. Following the samepattern, the number of cooperatives sell-ing raw whole milk fell from 230 in 1992to 204 in 1997. But cooperatives’ shareof total milk volume sold by farmersinched up from 82 percent to 83 percent.

Sixty-one percent of total cooperativevolume was sold as raw whole milk in1997 compared to 60 percent in 1992.The other 39 percent was manufacturedat plants operated by cooperatives.

There were 87,938 producers deliver-ing milk to 222 dairy cooperatives withdirect members. Three regions—EastNorth Central, West North Central, andNorth Atlantic—together accounted for83 percent of all member-producers and55 percent of cooperative milk volume.

In 1997, dairy cooperatives owned298 plants, 91 of which were shippingand receiving facilities only. The cooper-atives operated 62 plants for manufac-turing American cheese, 30 for Italiancheese, 54 for packaging fluid milk prod-ucts, 43 for manufacturing dry milkproducts, and 35 for churning butter.

While net sales of butter and dry milkproducts decreased from 1992 to 1997,

those of cheese increased. However,cooperatives’ shares of these productsdeclined.

Cooperatives’ shares of butterdecreased from 65 percent to 61 percentduring the five-year period. Dry milkproducts (nonfat dry milk, dry butter-milk, and dry whole milk) also de-creased, from 81 percent to 76 percent.

Cheese marketed by cooperativesgrew 3 percent, from 2.82 billion poundsto 2.907 billion pounds, while totalcheese production increased 13 percent.Cooperatives’ shares of the naturalcheese market declined from 43 percentto 40 percent by 1997.

Sales of packaged fluid milk productsby cooperatives decreased both in vol-ume and in share of market. The 7.73billion pounds marketed was 14 percentof the Nation’s production, down from 16percent in 1992. Cooperatives’ sales ofcottage cheese as a percentage of nation-al production, at 10 percent, was alsolower than in 1992. Share of ice creamdecreased from 10 percent to 6 percent.

In 1997, cooperatives marketed 11 per-cent of the Nation’s ice cream mix, 4 per-cent of yogurt, 65 percent of bulk con-densed milk, and 48 percent of dry wheyproducts.

Most dairy cooperatives continue tobe relatively small business organiza-tions. However, through consolidationsand mergers, an increasing amount ofdairy products were sold by larger coop-eratives. The 20 largest dairy coopera-tives received 77 percent of all producermilk marketed through cooperatives.And 89 percent of cooperative milk pro-cessing and manufacturing was conduct-ed by the 20 largest cooperatives withplant operations.

To obtain a copy of the full report,please order RBS Research Report No.173, “Marketing Operations of DairyCooperatives.” ■

Co-ops Remain Major Players in Dairy Industry

Most dairy cooperatives con-

tinue to be relatively small

business organizations.

However, through consolida-

tions and mergers, an

increasing amount of dairy

products were sold by larger

cooperatives.

A new report from USDA provides anoverview of the marketing operations ofthe nation’s dairy cooperatives. To ordera copy, send a check for $5 ($6 forforeign orders), payable to USDA, to:USDA Rural Development, Co-opPublications, Stop 0705, 1400Independence Ave. SW, Washington D.C.20250-0705.


Michigan producers receive USDA grants

The Michigan Potato Industry Commission and theMichigan Allied Poultry Industries have each received fund-ing from USDA Rural Development through its RuralBusiness Enterprise Grant Program (RBEG). The potatocommission will use its $90,000 to assist in construction of along-term storage bin for Michigan-grown potatoes. AlliedPoultry Industries received $95,000 so the newly formedturkey growers cooperative can conduct a feasibility studyon creating a West Michigan turkey slaughtering plant.

“The development of a more advanced storage facility willbe a great benefit to Michigan’s potato producers,” saysDonald L. Hare, state director for USDA Rural Developmentoperations. “USDA Rural Development’s mission is to helpagricultural producers find ways to enhance the profitabilityof their products. Agricultural producers can no longer relyon simply producing a raw product to succeed. They mustlook toward the process of adding value to their product andincreasing their bottom line profits.”

USDA’s RBEG program is designed to help public bod-ies, non-profit corporations, and federally recognizedIndian tribal groups finance and facilitate development ofsmall and emerging private business enterprises located inrural areas.

Small Farm Conference Oct. 12-15

“Building Partnerships for the 21st Century” is thetheme of the second National Small Farm Conference, spon-sored by USDA, the Environmental Protection Agency andfour other organizations. It will be held Oct. 12-15 at theRegal Riverfront Hotel, St. Louis, Mo. Registration is $125,due by Sept. 17, 1999. Hotel reservations should be madedirectly by registrants, and the deadline for special grouprates is Sept. 10.

The conference provides an opportunity for public andprivate sectors, including community-based organizations,the land-grant university system, and small- and medium-sized family farmers, to strengthen collaboration and part-nerships to work more effectively with the small farm com-munity. In addition to workshops, participants will tourfarms and ranches which emphasize direct marketing, alter-native and sustainable agriculture.

Twelve USDA agencies, including USDA RuralDevelopment, are co-sponsors of this project. In addition tothe EPA, other sponsors include Lincoln University,University of Missouri, W.K. Kellogg Foundation and FarmFoundation. For more information, visit the conferenceWebsite at www.luce.lincolnu.edu/nsfc or contact DenisEbodaghe, USDA-CSREES, in Washington, D.C., at (202) 401-4385; fax (202) 401-5179; or [email protected].

St. Paul Bank and CoBank merge

The stockholders of the St. Paul Bank for Cooperativesand CoBank overwhelmingly approved a plan to merge thetwo banks, effective July 1, 1999. The results of the May 24stockholder vote were jointly announced by the chairmen ofthe two banks. The merged bank will have assets of approxi-mately $22 billion with about $1.7 billion in capital and$17.8 billion in loans outstanding.

Michigan FCS may consolidate

The four Farm Credit Services associations in Michigan’sLower Peninsula continue their plans for statewide consoli-dation with the announcement of a joint management agree-ment. Under joint management, the four associations willoperate as one, but will remain as separate legal entitiesuntil stockholder-members approve the consolidation. Thatvote is expected later this year. If approved by stockholders,the new FCS organization would have assets of $1.5 billionand a surplus that exceeds $200 million. The association isexpected to save $2 million in annual operating expenses,which will translate into reduced stock requirements andmore favorable interest rates for customers. The target datefor the consolidation is Jan. 1, 2000.

Cleberg on U.S. Treasury’s IMF Committee

Farmland President and Chief Executive Officer H.D.“Harry” Cleberg has been selected to serve on the U.S.Department of Treasury’s Advisory Committee onInternational Monetary Fund (IMF) policy. The IMF hasbeen at the center of the effort to resolve the internationalfinancial crisis that began in 1997. The committee is tomeet with and advise the secretary and deputy secretary ofthe Treasury on the extent to which IMF programs meet pol-icy goals set forth in the policy advocacy provisions of theIMF funding legislation. This legislation includes strength-ening financial systems in developing countries, encouragingthe opening of markets for agricultural commodities andproducts, and promoting greater transparency and account-ability. One of eight committee members, Cleberg will rep-resent the agricultural industry.

Diamond Walnut forms German subsidiary

Diamond Walnut Growers Inc., Stockton, Calif., hasformed a new joint venture subsidiary company in Cologne,Germany, under the name of Diamond of Europe, GmbH.The new entity will be primarily responsible for Diamond’sconsumer retail business in Germany and Austria, formerlymanaged by another German retail broker. Diamond ofEurope will assist Diamond in providing distribution, cur-rency conversion and local market packaging services for

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shelled and inshell customers in Germany and the Europeancontinent. The cooperative’s leadership reports the new struc-ture provides Diamond with a low-risk yet potentially high-return entry into the European retail distribution business.

California growers fight Greek peaches

At a late June meeting of the California Canning PeachAssociation, growers voted to fight against the intrusion ofsubsidized Greek peaches into a key market Golden Stategrowers invested heavily to establish. The association’sboard will investigate all options, including export incentiveprograms for shipping fruit to Mexico, to safeguard thatvital market, says CCPA President Ron Schuler. Presently,California supplies nearly 10,000 tons of peaches to Mexicowith an estimated value of $10 million.

The U.S. government has taken both formal and informalactions against the European Community for its subsidies tothe Greek peach industry and currently includes Greek cannedpeaches on the Beef Hormone retaliation list, which is beingformally announced by the United States and Canada. Whilethis may protect domestic and Canadian markets, Schuler saysit does not impact the vitally important Mexican market.

Chiquita to buy Agripac Division

Agripac Inc., a bankrupt Oregon-based vegetable pro-cessing cooperative, sold its frozen food division earlier thisyear for $90 million to New York-based Pro-Fac CooperativeInc. and thought they were selling their canned food divisionto Norpac Foods Inc., a Stayton, Ore.-based cooperative.Among other items, the sale to Norpac was contingent onreaching agreement with the union representing the can-nery workers. Agreement could not be reached, thus Norpacwas unable to complete the purchase.

It now appears that Chiquita Brands International Inc.,will purchase the division. If the bankruptcy court acceptsthe Chiquita offer, about 100 farmers who grow beets, carrots,beans and corn will get a contract for their produce, but with-out any ownership in the further processing of their products.

Dakota Dairy Specialties files for bankruptcy

Dakota Dairy Specialties Cooperative shut down itscheese plant in Hebron, N.D., and filed for bankruptcy thisspring, two years after beginning operation. Most of the 40farmer-members now ship milk through Dairy Farmers ofAmerica. The plant made its first batch of cheese inFebruary 1997. It had been operating sporadically sinceOctober 1998 as it tried to finance $1 million of equipment toimprove operating efficiencies. The bankruptcy may affectRural Business-Cooperative Service’s guaranteed loan expo-sure to the cooperative. Dakota Dairy Specialties is the onlyso-called “new generation” cooperative in the dairy sector.

FCA purchases LCCA’s Oskaloosa assets

Farmers Cooperative Association, Lawrence, Kan., haspurchased the assets of the Oskaloosa branch of theLeavenworth County Cooperative Association. The acquisi-tion gives Farmers Co-op a total of 19 elevators and increas-es its grain storage capacity to nearly 12 million bushels.The cooperative provides complete grain handling, market-ing, crop production services, feed manufacturing and deliv-ery, and supplies to about 9,500 members and 12,000 cus-tomers in one Missouri and 20 Kansas communities.

Golden Oval Eggs to expand

Golden Oval Eggs, a farmer-owned cooperative based inRenville, Minn., announced it has raised more than $5 millionnecessary to expand into Iowa with a house for 1.8 million lay-ing hens. The Iowa site could eventually house up to 5.4 millionhens if additional equity is raised. Golden Oval now has abouttwo million hens producing about 500 million eggs annually.The cooperative, formed in 1994, is now owned by more than600 farmers. It ranks within the top 30 enterprises in U.S. eggproduction and within the top 10 in egg processing. The mini-mum initial investment for new members was $10,000.

American Growers offers chemical-free food

American Growers Foods, Sioux Falls, S.D., is offering 13grain-based, chemical-free foods to consumers. Farmer-members of the cooperative receive a base price of $5 for abushel of corn, far above the typical market price of $2.Similar premiums are received for oats and wheat. Thegrain is tested at harvest and delivery for 300 differentchemicals. Despite the higher prices to producers, retailprices are about the same as national brand-name productsand, in some cases, even less. Products from the one-year-old cooperative can be found in about 700 stores nationwide.

Plains, Yazoo Valley oil mills merge

Plains Cooperative Oil Mills, Lubbock, Texas, and YazooValley Oil Mill Inc., Greenwood, Miss., have announced theirintentions to merge. The new cooperative will serve over20,000 cotton growers in eight southern states and market30 percent of the U.S. cottonseed. Combined sales areapproximately $250 million from vegetable oil for cookingand the by-products of cottonseed production. Cottonseedmeal and hulls are primary ingredients in livestock feed andthe linters are used in manufacturing mattresses, uphol-stery padding and high-quality paper.

Gerry represents U.S. in Ireland

Michael Gerry, president of the Idaho Wool GrowersAssociation, was selected to represent the American sheepindustry at the World Meat Congress in Ireland. TheCongress has met 12 times in the past 25 years.


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Representatives from all participating countries discuss beef,sheep and pork marketing situations. U.S. Secretary ofAgriculture Glickman also addressed the meeting. Gerry’strip was sponsored by the U.S. Meat Export Federation.

Bison Co-op members to promote

Members of the North American Bison Cooperative, NewRockford, N.D., voted to use 7 percent of what they get fortheir bison as a promotion fund for the cooperative. Thecooperative’s marketing focus will fall in three areas: pro-duction of numerous products, a national distribution sys-tem and restaurant chain accounts. The cooperative hasmembers in 15 states and four Canadian provinces.

ECLSA elects three to board

Three new directors have been elected to the board atEquity Cooperative Livestock Sales Association, Baraboo,Wis. The 10-person board welcomed Larry Brandemuehl,Lancaster, Wis., George Roemer, Hartford, Wis. and JoeSchaitel, Sparta, Wis., following 10 district annual meetingsacross Wisconsin and Iowa.

President and Chief Executive Officer Gregory A. Beckreported membership attendance at the annual meetingswas up 20 percent from the 1998 meetings. Beck believesthe increased attendance was because “today’s producersare facing the same issues which their forefathers faced 77years ago when they formed the cooperative: price volatility,packer concentration and lack of government supports.Producers may be once again turning to their cooperativefor help.” The ECLSA had gross sales of $450 million lastyear, making it one of the top two livestock marketing asso-ciations in the U.S.

NSAC recognizes Duft

Ken Duft, professor of agribusiness management andfinance at Washington State University and a director onthe Washington State Council of Farmer Cooperatives,received the Martin L. Black award from the NationalSociety of Accountants for Cooperatives. Duft received theaward for his journal article, “Patron Demand DepositAccount Financing by Cooperatives: Prospects and Pitfalls.”As part of his recognition, Duft received a cash award and atrip to NSAC’s annual meeting.

EPA Offers Sustainable Development Challenge Grants

The Environmental Protection Agency (EPA) is solicitingproposals for the Sustainable Development Challenge Grant(SDCG) program, one of President Clinton’s “high priority”actions described in the March 16, 1995, report,“Reinventing Environmental Regulation.” Approximately$9.4 million will be available for the SDCG program in fiscal

year 1999-2000. This includes $4.7 million already autho-rized by Congress for FY 1999 and an additional $4.7 mil-lion requested for the program in the president’s FY 2000budget request and subject to Congressional authorization.

The SDCG program challenges communities to invest ina sustainable future that links environmental protection,economic prosperity and community well-being. It providesan opportunity to develop place-based approaches to prob-lem solving that can be replicated in other communities.The program strongly encourages community members,business and government entities to work cooperatively todevelop flexible, locally oriented approaches that link place-based environmental management and quality of life activi-ties with sustainable development and revitalization.

These challenge grants are intended to be a catalyst forcommunity-based projects to promote environmentally andeconomically sustainable development; build partnershipswhich increase a community’s capacity to take steps thatwill ensure the long-term health of ecosystems and humans,economic vitality, and community well-being; and leveragepublic and private investments to enhance environmentalquality by enabling community efforts to continue beyondthe period of EPA funding.

Applicants may compete for funding in two ranges: (1)requesting $30,000 to $100,000 with a total project budgetof $125,000 or less; and (2) requesting between $100,001and $250,000 with no limit on the total project budgetamount. Proposals will compete with other proposals in thesame range. Applicants in each category are required toprovide a minimum 20-percent match from non-federalfunding sources. Project proposals must be postmarked bySept. 29, 1999, to be considered for funding during fiscalyear 1999-2000.

Editor’s note: Please see the full text of the FederalRegister notice (published July 1, 1999) for complete infor-mation about applying for a Sustainable DevelopmentChallenge Grant. ■

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Y2k Resources AvailableJan. 1, 2000, is only a few months away. So for all you

procrastinators, there is no more time to delay making sureall your computer-controlled systems are Y2k ready. Thereare a number of resources that can assist you withinformation on this task. They include:

• USDA Y2k Program Office: www.ocio.usda.gov/y2k/index.htm

• President’s Council on Year 2000 Conversion: www.y2k.gov

• National Software Testing Lab: www.nstl.com/html/nstl_y2k.html

• Small Business Administration: www.sba.gov/y2k

• Federal Emergency Management Agency: www.fema.gov/y2k

The President’s Council on Year 2000 Conversion may alsobe called toll free at 1-888-872-4925.

What is a Cooperative?CIR 50-SSpanish TranslationGalen RappTranslated by Jim Matson4 pages. 1999

A new, Spanish-language versionof a pamphlet that covers thebasics of cooperatives: what theyare and how they are organized. Itis intended to introduce the coop-erative concept to someone whoknows nothing of cooperatives, oras a quick refresher for those whomay have forgotten some of thebasic principles which co-ops arefounded upon. It covers why coop-eratives are organized, cooperativebusiness principles, the 10 steps inorganizing a co-op and sources ofinformation and technical assis-tance from the Rural Business-Cooperative Service of USDA Rur-al Development.

Free

Member Participationin Ag Co-ops:a Regression and Scale AnalysisResearch Report 165Tom Gray/Charles Kraenzle 30 pages. 1998

This research report identifiescharacteristics that influence mem-ber participation in cooperatives.Participation measures includeattendance at meetings, serving oncommittees or as elected officers,and recruiting other farmers to jointhe co-op. Nineteen characteristicswere found statistically related tomember participation in co-ops.These include: farm characteris-tics, member demographics, beliefsin cooperative principles, collectiveaction, member influence on the co-op, cooperative impartiality towardmembers and satisfaction withfarming and cooperative officers.

Price: domestic: $5; foreign: $6

Lessons Learned:Contemporary Producer-OwnedLamb ProcessingVenturesRBS Research Report 167Roland D. Smith, et.al18 pages. 1999

This case study evaluates two pro-ducer-owned lamb processing andmarketing ventures, one in Texasand the other in Virginia, and whythey failed. Findings have rele-vance to future vertical coordina-tion efforts in the lamb processingand marketing arena in an indus-try characterized by significantconcentration among a few estab-lished marketing firms. Theresearchers focus on organization-al background for the developmentof each venture, factors that con-tributed to failure, positive out-comes and challenges for produc-er-owners in future ventures.

Price: Domestic: $5; foreign: $6

A New Approachto Measuring DairyCo-op PerformanceResearch Report 166K. Charles LingCarolyn Liebrand21 pages. 1998

This report describes a newmethod to evaluate and compareoperational performance of dairycooperatives. A business perfor-mance measurement was modifiedto fit cooperatives. A cooperative iscreating extra value if its net oper-ating margin can more than coverits operating cost, including thecost of operating capital (the sumof fixed assets and working capi-tal). The extra-value measure canbe “common-sized” by operatingcapital to create an extra-valueindex. The scale-neutral index isan objective measure for compar-ing operating efficiency betweendairy cooperatives and dairy-investor-owned firms.

Price: Domestic: $5; foreign $6

NEW PUBLICATIONS FROM USDA

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Co-op Member Education Is Needed in 21st CenturyRun-over