From Eggs to Electricity: Types of Cooperatives in Wisconsin

From Eggs to Electricity: Types of Cooperatives in Wisconsin

I - Introduction to Wisconsin Cooperatives

II - A Brief History III - Types of Co-ops (by Industry) in

Wisconsin Today

I - Introduction to Wisconsin Cooperatives

II - A Brief History III - Types of Co-ops (by Industry) in

Wisconsin Today

I - Introduction to Wisconsin Cooperatives

I - Introduction to Wisconsin Cooperatives

What is a cooperative business? Historically, communities have worked

together to meet their needs for resources, products, and services.

While a variety of types businesses today work towards meeting our needs, co-ops follow unique principles

What is a cooperative business? Historically, communities have worked

together to meet their needs for resources, products, and services.

While a variety of types businesses today work towards meeting our needs, co-ops follow unique principles

Rochdale Principles of Cooperation

Rochdale Principles of Cooperation

Voluntary and Open Membership Democratic Member Control Member Economic Participation Autonomy and Independence Education, Training, and Information Cooperation Among Cooperatives Concern for Community

Voluntary and Open Membership Democratic Member Control Member Economic Participation Autonomy and Independence Education, Training, and Information Cooperation Among Cooperatives Concern for Community

II - A Brief HistoryII - A Brief History

A Brief HistoryA Brief History

Ann Pickett of Lake Mills started the first WI co-op in 1841

She pooled milk from neighbors’ farms to make cheese.

Proceeds were returned to her neighbors in proportion to the amount of milk they provided

Ann Pickett of Lake Mills started the first WI co-op in 1841

She pooled milk from neighbors’ farms to make cheese.

Proceeds were returned to her neighbors in proportion to the amount of milk they provided

Initially, the government ignored or was hostile to cooperatives.

But in 1887 Wisconsin became one of the first states to legalize cooperative business.

It was soon updated with the Rochdale cooperative principles, and in 1922 was adapted to the federal Capper - Volstead Act -- the “Magna Carta” of cooperative marketing.

Initially, the government ignored or was hostile to cooperatives.

But in 1887 Wisconsin became one of the first states to legalize cooperative business.

It was soon updated with the Rochdale cooperative principles, and in 1922 was adapted to the federal Capper - Volstead Act -- the “Magna Carta” of cooperative marketing.

Cooperatives flourished under the federal support of the Roosevelt Administration in the 30s and 40s

They helped establish the electric and telecom infrastructure that connected rural and urban communities, and, today, continues to provide services.

While agricultural cooperatives lost territory to corporate farms in the 20th century, new market emphasis on organic food has helped fuel interest in cooperatives in dairy and other agricultural industries.

Cooperatives flourished under the federal support of the Roosevelt Administration in the 30s and 40s

They helped establish the electric and telecom infrastructure that connected rural and urban communities, and, today, continues to provide services.

While agricultural cooperatives lost territory to corporate farms in the 20th century, new market emphasis on organic food has helped fuel interest in cooperatives in dairy and other agricultural industries.

Cooperatives TodayCooperatives Today

According to the most recent study by the USDA Rural Development Service, Wisconsin cooperatives represent: 2.7 million cooperative

memberships More than $5.6 billion in

gross sales 30,000 local employees $200 million in state and

local taxes

According to the most recent study by the USDA Rural Development Service, Wisconsin cooperatives represent: 2.7 million cooperative

memberships More than $5.6 billion in

gross sales 30,000 local employees $200 million in state and

local taxes

Cooperatives TodayCooperatives Today

Wisconsin has the second most cooperatives in the nation, behind MN

There are over 1,000 co-ops registered in the state

Many parents of students may serve on the boards of local co-ops, or may be the employees of local co-ops

Wisconsin has the second most cooperatives in the nation, behind MN

There are over 1,000 co-ops registered in the state

Many parents of students may serve on the boards of local co-ops, or may be the employees of local co-ops

Local, state, regional, nationalLocal, state, regional, national

The cooperative structure can be used for co-ops that have business units at the local, state, regional or national level

Some larger regional co-ops have a federated structure which means that their membership includes both individual producers (i.e. farmers) and local co-ops

The cooperative structure can be used for co-ops that have business units at the local, state, regional or national level

Some larger regional co-ops have a federated structure which means that their membership includes both individual producers (i.e. farmers) and local co-ops

Case Study: CHS Inc.Case Study: CHS Inc. CHS Inc., the nation’s largest co-op, based in the Twin Cities, is a regional,

federated co-op with both farmer members as well as local co-ops that are members

CHS Inc. is a diversified energy, grains and foods company The company is owned by farmers, ranchers, other cooperatives, and thousands

of stockholders In 2008, CHS owners from 48 states shared a $343 million patronage

disbursement

CHS Inc., the nation’s largest co-op, based in the Twin Cities, is a regional, federated co-op with both farmer members as well as local co-ops that are members

CHS Inc. is a diversified energy, grains and foods company The company is owned by farmers, ranchers, other cooperatives, and thousands

of stockholders In 2008, CHS owners from 48 states shared a $343 million patronage

disbursement

II - Types of Co-opsII - Types of Co-ops

ElectricElectric

Most rural areas and farms in Wisconsin, and across America, did not have electricity until President Roosevelt created the Rural Electrification Administration (REA) in 1935

Up to that point, people in the countryside generally lived without power.

Most rural areas and farms in Wisconsin, and across America, did not have electricity until President Roosevelt created the Rural Electrification Administration (REA) in 1935

Up to that point, people in the countryside generally lived without power.

ElectricElectric

The REA loaned money to community energy cooperatives, which flourished and spread across the state.

Today, electric cooperatives provide energy to rural and metropolitan citizens alike

The REA loaned money to community energy cooperatives, which flourished and spread across the state.

Today, electric cooperatives provide energy to rural and metropolitan citizens alike

ElectricElectric

2 types of electric co-ops (1) Generation and

transmission (G & T) co-ops that create and send power via the transmission grid to local distribution co-ops

(2) Local distribution co-ops that send the power to businesses and households

2 types of electric co-ops (1) Generation and

transmission (G & T) co-ops that create and send power via the transmission grid to local distribution co-ops

(2) Local distribution co-ops that send the power to businesses and households

Case Study: Adams-Columbia Electric Cooperative

Case Study: Adams-Columbia Electric Cooperative

Adams-Columbia Electric Cooperative is the largest rural electric distribution cooperative in the state.

ACEC serves 36,000 members/owners in 12 central-Wisconsin counties. It purchases & sells approx. 500,000,000 kWh a year.

ACEC employs 109 full-time, 13 season/part-time, and 78 meter readers.

Adams-Columbia Electric Cooperative is the largest rural electric distribution cooperative in the state.

ACEC serves 36,000 members/owners in 12 central-Wisconsin counties. It purchases & sells approx. 500,000,000 kWh a year.

ACEC employs 109 full-time, 13 season/part-time, and 78 meter readers.

Grain, Farm Supply, and Fuel

Grain, Farm Supply, and Fuel

Over 150 retail agricultural grain and farm supply cooperatives provide crop inputs, animal feed, grain marketing and petroleum products

Over 150 retail agricultural grain and farm supply cooperatives provide crop inputs, animal feed, grain marketing and petroleum products

DairyDairy

Dairy co-ops among the first American agricultural cooperatives.

More dairy farmers have relied on cooperatives to market their product than any other industry.

Co-ops provide a market outlet, help bargain for better prices, and represent farmers’ interests in public policy

Dairy co-ops among the first American agricultural cooperatives.

More dairy farmers have relied on cooperatives to market their product than any other industry.

Co-ops provide a market outlet, help bargain for better prices, and represent farmers’ interests in public policy

DairyDairy

Today, there are approximately 220 dairy cooperatives in Wisconsin

83% of milk sold by Wisconsin farmers is marketed through dairy cooperatives

Today, there are approximately 220 dairy cooperatives in Wisconsin

83% of milk sold by Wisconsin farmers is marketed through dairy cooperatives

Case Study: Organic ValleyCase Study: Organic Valley

Organic Valley works exclusively with family farms.

Their mission is to allow families to retain independence via the cooperative model. 600,000 family farms have been taken over by corporations since 1960.

Of its 1,652 farms across the US and Canada, Wisconsin has the most (523) of any state

Organic Valley works exclusively with family farms.

Their mission is to allow families to retain independence via the cooperative model. 600,000 family farms have been taken over by corporations since 1960.

Of its 1,652 farms across the US and Canada, Wisconsin has the most (523) of any state

Farm Credit & Credit UnionsFarm Credit & Credit Unions

Wisconsin’ federally chartered farm credit cooperatives serve farm families.

Credit Unions are a popular means of keeping credit within a community, paying out $289 million in dividends annually to members.

Together, cooperative credit employs 5,349 people and generates $157 million in total income.

Wisconsin’ federally chartered farm credit cooperatives serve farm families.

Credit Unions are a popular means of keeping credit within a community, paying out $289 million in dividends annually to members.

Together, cooperative credit employs 5,349 people and generates $157 million in total income.

Insurance: Town Mutual Insurance Companies

Insurance: Town Mutual Insurance Companies

Town Mutual Insurance Companies are a type of cooperative insurance company owned by the policy holders

These “mutuals” primarily offer property and casualty insurance

Some of the oldest cooperatives in America are mutual insurance companies. The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire was organized by Benjamin Franklin and his colleagues in March 1752

Today, there are 105 Town Mutuals in WI, most of which were founded before 1900.

Town Mutual Insurance Companies are a type of cooperative insurance company owned by the policy holders

These “mutuals” primarily offer property and casualty insurance

Some of the oldest cooperatives in America are mutual insurance companies. The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire was organized by Benjamin Franklin and his colleagues in March 1752

Today, there are 105 Town Mutuals in WI, most of which were founded before 1900.

Case Study: Sugar Creek Mutual Insurance Company

Case Study: Sugar Creek Mutual Insurance Company

136 year old cooperative in Southeast Wisconsin

Three full-time employees run the co-op, along with nine agents.

Covers 1,904 policies, with a total of $580,860,696 of risk-in-force.

136 year old cooperative in Southeast Wisconsin

Three full-time employees run the co-op, along with nine agents.

Covers 1,904 policies, with a total of $580,860,696 of risk-in-force.

Food cooperatives employ fewer people (659 jobs) than other industries

However, they still generate a total income close to $20 million

Historically, co-op grocers raised the profile of cooperative principles in metropolitan areas

Food cooperatives employ fewer people (659 jobs) than other industries

However, they still generate a total income close to $20 million

Historically, co-op grocers raised the profile of cooperative principles in metropolitan areas

FoodFood

Case Study: Willy Street Co-opCase Study: Willy Street Co-op

Willy Street Co-op is a full-service grocery cooperative specializing in locally made, natural, and organic foods.

Over 16,000 cooperative members produce $17 million of sales annually.

Willy Street Co-op is a full-service grocery cooperative specializing in locally made, natural, and organic foods.

Over 16,000 cooperative members produce $17 million of sales annually.

ConsumerConsumer

Includes grocery and worker-owned cooperatives

Includes grocery and worker-owned cooperatives

Telephone/TelecommunicationsTelephone/Telecommunications

Local telephone co-ops offer advanced telecommunications services to help rural Wisconsin compete in a world economy

Telecomm co-ops serve many communities in Wisconsin

Local telephone co-ops offer advanced telecommunications services to help rural Wisconsin compete in a world economy

Telecomm co-ops serve many communities in Wisconsin

New Generation Co-ops (NGC’s)

New Generation Co-ops (NGC’s)

Farmers started first NGCs when Minnesota and North Dakota sugar plants were closing (American Crystal Sugar Co, Minn-Dak Farmers Co-op, and others)

The new approach to cooperatives developed as a defensive strategy against unstable markets NGC’s created, replaced, or stabilized markets

when the markets failed, such as in plant closings

Farmers started first NGCs when Minnesota and North Dakota sugar plants were closing (American Crystal Sugar Co, Minn-Dak Farmers Co-op, and others)

The new approach to cooperatives developed as a defensive strategy against unstable markets NGC’s created, replaced, or stabilized markets

when the markets failed, such as in plant closings

Evolution of NGCs: “Offensive” market responses

Evolution of NGCs: “Offensive” market responses

The NGCs shifted into offensive strategies of capturing greater market value

Increasing value of local goods and services Ex: Ethanol co-ops raise value of area corn crop; raise

investor-member income from value-added processing

Both protecting and increasing value of member investments Ex: Protect and increase value of investment in senior

housing co-ops by making markets for resale, provide higher quality member services

The NGCs shifted into offensive strategies of capturing greater market value

Increasing value of local goods and services Ex: Ethanol co-ops raise value of area corn crop; raise

investor-member income from value-added processing

Both protecting and increasing value of member investments Ex: Protect and increase value of investment in senior

housing co-ops by making markets for resale, provide higher quality member services

The NGC Model Continues to EvolveThe NGC Model Continues to Evolve

Traditional Cooperatives are adapting NGC strategies, while NGC partner with other investors

Capital needs often require outside investors and “hybrid” business models Ex: Co-op members may partner with other investors in

Limited Liability Companies (LLCs) Newer business models define profit expectations,

which helps eliminate investor conflicts Ex.: Minnesota 308(b) Model; Low-Profit, Limited Liability

Company (L3C) Model. Both define expectations and returns for cooperators and outside Investors

Traditional Cooperatives are adapting NGC strategies, while NGC partner with other investors

Capital needs often require outside investors and “hybrid” business models Ex: Co-op members may partner with other investors in

Limited Liability Companies (LLCs) Newer business models define profit expectations,

which helps eliminate investor conflicts Ex.: Minnesota 308(b) Model; Low-Profit, Limited Liability

Company (L3C) Model. Both define expectations and returns for cooperators and outside Investors

For more informationFor more information

To find out more about cooperatives in Wisconsin, particularly those located in your community, please visit the Cooperative Network

This material is made possible by the CHS Foundation

To find out more about cooperatives in Wisconsin, particularly those located in your community, please visit the Cooperative Network

This material is made possible by the CHS Foundation