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InvestingIn Your Co-op’s Future0

January / February 2014

2 January/February 2014 / Rural Cooperatives

By Alan Guebert

Editor’s note: This guest commentary is reprinted courtesy TheFarm and Food File, Guebert’s column that is published weekly inmore than 70 newspapers in North America. Guebert can becontacted at: [email protected].

The weekly hometown newspaper recentlybrought news of a family friend’s death. Thefriend, a dairy farmer, had lived a long, goodlife and was a respected member of hischurch, community and profession.

My family’s connection, outside of cows and kids, wasbusiness: he, my father and a few dozen farmers inneighboring southern Illinois counties were members of asmall farm cooperative through which they purchased inputslike feed and fertilizer.

Back then, 50 and more years ago, these very busy hog,cattle, dairy and grain farmer-members did all thecooperative lifting, light, heavy and in-between. Theygathered orders, kept accounts and, often as not, used theirown trucks, tractors and wagons to deliver their co-opbrothers’ purchases.

In fact, I saw our dairying family friend only three or fourtimes a year. Once was always at the annual co-op picnic(think summer Sunday afternoon, grilled pork steaks, creamsoda); the other times were when he left his never-done farmwork to pick up and deliver soybean meal in his wheezing,single-axle truck to our farm.

How did he have the time to leave his hay-to-bale, silage-to-chop dairy to bring us our goods in his truck?

He didn’t. He made time because that’s what cooperativemembers did back then to aid the success of their sharedenterprise and fellow farmers. It was — and is — the veryessence of small “c” cooperation.

Others recall similar selflessness in other, biggercooperatives. The Berry brothers, attorney John, Jr. andwriter and poet Wendell, of Henry County, Kentucky, areeloquent, passionate explainers of the Burley TobaccoGrowers Cooperative Association, based in their home state.

Neither defends tobacco because, as Wendell noted in adiscussion of the Burley Association with his brother at apublic forum last spring, “It’s indefensible.”

Both, however, vigorously defend the principles their

father, John, Sr., an attorney and farmer, and other burleygrowers employed to start, then manage, the cooperative. Itwas an essential tool, they explain, used by hundreds ofthousands of farmers and generations of farm families in fivestates to maintain competitive markets, successful farms andvibrant rural communities.

The principles harnessed by Berry, Sr., my father, hisIllinois’ neighbors and many others continue to inspirecooperation today. According to the U.S. Department ofAgriculture, 2,238 agriculture, ranching and fisherycooperatives and their 2.1 million members employed129,000 full-time and 56,000 part-time employees whilegenerating $235 billion in sales last year.

Moreover, notes USDA in a recent issue of its “RuralCooperatives” magazine, (http://www.rurdev.usda.gov/SupportDocuments/rdRuralCoop_Sept_Oct13Vr_Web.pdf),today’s farm cooperatives — like today’s farms — run thegamut in size.

“While 31 cooperatives recorded more than $1 billion insales” in 2012, reports the magazine, “almost 34 percent of agcooperatives (749) had less than $5 million in sales.”

But the four biggest ag co-ops, CHS Inc., Land O’LakesInc., Dairy Farmers of America and Growmark, are reallybig; their combined 2012 sales, $76.7 billion, equaled one-third of all ag cooperative business last year.

Coincidentally, the number of cooperative membersnationwide, 2.1 million, nearly matches the number of farmsnationwide, 2.2 million, even after membership and co-opnumbers dropped in 2012. Overall membership sank by200,000, or 7 percent, and co-op numbers fell (mostlythrough of mergers) by 60.

But even as the number of traditional ag co-ops begins totrend lower, the number of non-traditional ag co-ops isbeginning to bloom. In September, USDA’s “RuralCooperatives” magazine carried short, informative storiesabout a new peony-selling co-op in Alaska, the founding oftwo community “food hub” co-ops in Wisconsin and therecent start-up of a “wellness and yoga” co-op in ruralMontana.

These newcomers are learning what the old-timers wellknew: working together works. Or, as some of the folks inHamilton, Montana, now say, “Namaste, partner.” (Editor’snote: “Namaste” is a greeting used in India). ■

Commentary Ag co-ops remain strong

Features

Rural Cooperatives / January/February 2014 3

Volume 81, Number 1January/February 2014

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

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

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

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

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

Tom Vilsack, Secretary of Agriculture

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

Dan Campbell, Editor

Stephen A. Thompson, Assitant Editor

Stephen Hall / KOTA, Design

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

p. 4

04 Food hubs: an evolution of the co-op business model By James Matson, Jessica Shaw and Jeremiah Thayer

10 Investing in your co-op’s future Key finance, marketing issues examined during Farmer Co-ops ConferenceBy Lynn Pitman

18 Co-ops = Community Development Cooperative developers share ideas in MinneapolisBy Bruce J. Reynolds

20 What leads to satisfied co-op members?Surveys of dairy farmers show management and pricing are keyBy Carolyn B. Liebrand

24 Welcome to the Club!Food buying club co-ops have potential to help increase food security for manyBy Alfonso Morales and Ali Loker

29 Co-ops urged to observe Grain Bin Safety Week

Departments02 COMMENTARY

08 UTILITY CONNECTION

15 IN THE SPOTLIGHT

16 CO-OPS & COMMUNITY

30 NEWSLINE

p. 20

ON THE COVER: How cooperatives raise capital tofund their operations was one of the major topics atthe Farmer Cooperatives Conference, sponsored bythe University of Wisconsin. See page 10.

p. 40


Food hubs: an evolution of the co-op business model

Cooperatives, long amainstay of the agriculturalindustry, have evolved andadapted along with the ever-changing farm industry andoverall economy. As theinfluence of co-ops has grown,the underlying principles ofcooperative enterprises haveproven vital to the success ofthe nation’s food andagricultural industry.

In recent years, consumerdemand for local foods hasgrown markedly, leading to arise in local food systems.These include food hubs,which typically operate usingcooperative principles

By James Matson, Jessica Shaw and Jeremiah Thayer


and which often have an urban andsocial/environmental mission focus.

By unifying agricultural producers,farmer co-ops can provide the scale,coordination and improved marketingsystem needed to help their memberssucceed. There is no universallyaccepted definition of a cooperative,and the laws for cooperativeorganization vary from state to state. Soperhaps a cooperative is most easilyrecognized when it follows the threecore co-op principles developed byUSDA during a series of nationwidepanels in 1986 (see sidebar, page 7).

Food hubs can be viewed as a naturalprogression in the application of thesecooperative principles and ideals. Theydo more than simply address the needsof producers; food hubs incorporate a“triple bottom line” focus to betteraddress the needs and demandsof consumers seeking localfoods.

Food hubs, driven by thecooperative spirit, expand thetraditional concept ofagricultural cooperatives toinclude other stakeholdergroups in addition toproducers. Food hubsrepresent a continuedevolution of the cooperativeideal of producers workingtogether to provide outlets fortheir products, while alsoaddressing the concerns ofworkers, consumers and thecommunity.

Increased profit for localproducers and increasedproduction can directly impacta community through the localretention of more food dollars.

However, community revitalizationextends beyond simple economics; it isa result of an economic and socialrevitalization that fosters the long-termsustainability of a community-basedfood system.

Emergence of food hubsUSDA’s Agricultural Marketing

Service says a food hub offers “acombination of production,aggregation, distribution and marketingservices [to] make it possible forproducers to gain entry into new andadditional markets that would bedifficult or impossible to access on theirown” (“Farmers Markets,” 2013).Although this definition focuses on thephysical movement of goods, a foodhub can also be defined by market-efficiency functions, in addition to more

abstract goals of building a diversifiedfood culture.

Food hubs have blossomed in largepart due to the “surge in buying locallyproduced foods and support for localagriculture” (Matson et al., 2013).Small-scale producers alone wereincreasingly unable to meet the growingsurge of consumer demand for localfood.

The growth in direct marketingchannels — and the increasing numberof farmers choosing to use them — isevidence of the rapid growth of localfoods production and consumption.Producers are banding together anddeveloping businesses to meet newopportunities to supply food to mid-sized wholesale operations — includinginstitutions, restaurants and grocerystores — as well as individual

customers. Even in their short history,

food hubs have proven highlyadaptable — in size, scope andtype of products offered — tomeet the vagaries of consumerdemand. Indeed, the term“food hub” exists more as adescription of a number offunctions than as a definedbusiness structure. Thus, theterm “food hub” is oftenapplied to a continuouslychanging business model,transforming to satisfy theever-changing demands oflocal consumers. Thiscontinuous adaptation hasresulted in an increased focuson the social-mission aspectsof many food hubs and theircommunity interactions, aswell as a movement to address

Editor’s note: The authors are all with Aiken, S.C.-based Matson Consulting, which for more than a decade hasassisted in the organization and infrastructure design of local food hubs. It is currently working in cooperation withUSDA and the Virginia Foundation for Agriculture, Innovation and Rural Sustainability to develop a U.S. Food

Hub Operations Guide. Matson is the lead consultant for the business with 25 years’ experience in agriculturalbusiness development; Thayer is an associate who focuses on feasibility studies, business plans and marketing

documents; Shaw is an editor and consultant.

The coordination services a food hub provides can extend theseason of products. Larger crop volume and coordination ofproduction can ensure a steady flow of product that helps tostabilize prices.

multiple stakeholder classes in acommunity.

Multi-farm CSA’s (communitysupported agriculture), cooperatives andfarm-to-table initiatives arejust a few of the types of foodaggregation ventures takingon the roles included in theUSDA definition of a foodhub. This flexibility allowsmany food hub ventures tomeet their mission byproviding more than freshproduce — such as locallyslaughtered meats, value-added goods and locallyfinished food products.

How food hubs embody co-opprinciples

Food hubs represent acontinuation of the three maincooperative principles (as outlined insidebar, page 7). They not only addressthe needs of producer-members, similarto the way agricultural cooperatives do,but they also address the needs andconcerns of consumers through theirinclusion as primary stakeholders.Multi-stakeholder co-ops are able toprovide for user-ownership of thebusiness by all stakeholder classes.Ownership leads to user-control, aseach member-owner stakeholder class isintegral to the overall direction of theentity. User-benefits are ensured aseach stakeholder class has its needs metthrough the services of the business.

Sandhills Farm to Table Cooperativein Southern Pines, N.C., is an exampleof a multi-stakeholder co-op that allowsproducers, workers and customers tobecome owners in the organization.This diverse ownership allows allstakeholders to provide input into howthe organization operates and helpsensure that it ultimately addresses theneeds of each owner-class. Producers,workers and customers can worktogether toward the success of the co-op.

Based on their status as owners, thestakeholder classes can control the

various functions of the organizationand receive benefits. Individual farmersand other producers are generally in theposition of being price-takers. Food

hubs can negotiate better prices fortheir producers, keeping more farmersin business and helping them expandproduction into new crops.

As with other types of cooperative,the user-ownership and user-controlprinciples adhered to by food hubsmeans that they will also pass alongother benefits to members. Forexample, food hubs allow producer-members to benefit by aggregatingproduct and accessing larger volumemarkets. This aggregation often leadsto greater control over pricing thanthey could achieve individually.

The coordination services a food hubcan provide often result in an ability toextend the season of products, whilelarger crop volume and coordination ofproduction can ensure a steady flow ofproduct that helps to stabilize prices.Additional revenue can then be used toinvest in infrastructure, such asgreenhouses, which, in turn, can createa longer growing season. As anexample, Fifth Season Cooperative inWisconsin has capitalized on seasonextension opportunities by sourcingdairy, meat, and meat products fromdairy-cooperative and meat-processingmembers, as well as more stable items

from local producers that can be storedfor longer periods at the warehouse.

In addition to negotiating prices,food hubs often connect farmers with

other non-farm businesses tomeet a wide variety of mutualneeds. Local Food Hub,located in Charlottesville,Virginia, offers an example ofhow food hubs can facilitatethis connection betweenfarmers and non-farmbusinesses. Since this foodhub requires a clean watertest from its producers, thefood hub has partnered withwater testing companies toprovide reduced rates forproducers in need of watertesting. This is just one waysome food hubs are helpingreduce overhead costs for

producers and also lowering prices paidby consumers.

The aggregation function of foodhubs benefits consumers and businessesby providing access to local foods thatwould normally be hard, or impossible,to acquire. The ability to provide accessto additional outlets helps to connectlocal and regional growers with mid-scale buyers, including local grocerychains, restaurants and institutions, suchas colleges, schools and governmentinstitutions.

Food hubs often provide educationfor producers on topics such as safegrowing and crop handling practices;similarly, they help consumers learnmore about food safety in the home,cooking and food preparation, as well asthe benefits of a sustainable food supplyand keeping more farmland inproduction.

How food hubs expand on co-op ideals

The emergence and evolution offood hubs stems from an educationaland social mission to unite consumersand producers in the marketplace.Although the main function of the foodhub is to sell local foods to consumers,


Increased profit for local producers and increased production candirectly impact a community through the local retention of more fooddollars.

food hubs provide a wealth of benefitsfor producers, consumers and the localcommunity that extend beyond simplybuilding a supply chain — benefits thatbecome a part of the milieu ofinformation extending beyond simpleself-interest (Zaichkowsky, 1985) that

affects an individual’s purchasingdecisions.

Food hubs are often highlycommitted to the co-op principle ofservice to community. For example,many studies have highlighted thepositive impact that a shorter food

supply chain has for local communitiesand economies. Other studies haveshown that local food supply chainscreate a web of interconnectedeconomic, community andenvironmental benefits.

The ability to earn a profit is notalways the primary underlyingmotivation for establishing a food hub.Food hubs that operate cooperativelyaim to provide benefits beyond (and insome cases, instead of) simple economicreturns. In these cases, the focus shiftsfrom the producer to other social andenvironmental benefits. Research hasshown that “an approach that allowspreferences to influence decision-making makes people better off andproud to contribute to sustainability”(Polemini et al.).

Consumer demand for foodtraceability is a growing issue for thefood industry. Food hubs — byshortening the food supply chain — canincrease the ability to trace food to itsorigin. This is just one way food hubsenhance communication betweenproducers and consumers.

Food hubs as a tool forcommunity revitalization

While the primary focus of farmersis on attaining financial stability byfinding markets for their products, foodhubs address the concerns of mid-scaleproducers while establishing values-based food value chains. These values-based food chains “encapsulate the dualgoals of creating economic valuethrough product differentiation andadvancing a particular set of social,economic or environmental valuesthrough collaborative supply chains thatexemplify the broader trend of socialentrepreneurship….” (Diamond andBarham, 2011). These “collaborativesupply chains” imply a philosophy ofshared responsibility between producersand consumers (Janssen 2010).

One area where food hubs have thepotential to significantly impactcommunities is by addressing the needs

These three “bedrock” cooperative principles were identified in 1986 byUSDA, working with co-op leaders and educators nationwide:

The User-Owner Principle — The people who use a cooperative own it. Asowners, the members of a cooperative are responsible for directing activitiesand driving the overall focus and mission of the cooperative towards its goal.Because they own the business assets, the members have the obligation toprovide financing, in accordance with use, to keep the cooperative in businessand permit it to grow.

The User-Control Principle — As owners, a cooperative’s members controlits activities. This control is exercised through voting at annual and othermembership meetings, and indirectly through those members elected to theboard of directors. Members, in most instances, have one vote regardless ofthe amount of equity they own or how much they patronize the organization.

The User-Benefits Principle — Since the cooperative is owned by itsmembers, they have the opportunity to receive services otherwise notavailable, get quality supplies at the right time, have access to markets, or forother mutually beneficial reasons. ■

Food hubs can negotiate better prices for their producers, keeping more farmers inbusiness and helping them expand production into new crops.


Cooperative Principles

continued on page 37

By Anne Mayberry, Public AffairsUSDA Rural Utilities Service

America’s rural utilitieswill soon have access to$250 million in fundingfrom the U.S.Department of

Agriculture’s Rural Utilities Service(RUS) that can provide a financial boostto their energy efficiency and renewableenergy programs. Agriculture SecretaryTom Vilsack announced finalregulations for the new EnergyEfficiency and Conservation LoanProgram Dec. 4. “This program willhelp build a cleaner and moresustainable domestic energy sector forfuture generations by reducing barriersto investment in energy efficiency andpotentially cutting energy bills forAmerican families and businesses in theprocess,” said Vilsack.

The program (scheduled to becomefinal Feb. 3, 2014) will make loansavailable to RUS borrowers toimplement various energy efficiencyand conservation measures, which canreduce energy costs for consumers.Typical funding uses include demand-side management to more efficientlycontrol the use and cost of power,energy efficiency/conservationprograms, and on- and off-gridrenewable energy systems.

40 percent savings possibleRural electric cooperatives have a

successful history of promoting energyefficiency; many have collected data tomeasure the success of a variety ofactivities. “Energy efficiency retrofittingcan shrink home energy use by 40percent, save money for consumers,

reduce emissions and strengthen ruraleconomies,” Vilsack said.

Goals of the new Energy Efficiencyand Loan Conservation Programinclude funding projects to increaseenergy efficiency for consumers (savingthem money) and modifying electricload to reduce system demand. Othergoals include the more efficient use ofexisting distribution, generation andtransmission facilities; encouraging theuse of renewable fuel sources; attractingnew businesses and creating jobs. Inannouncing the program, Vilsack said“Ultimately, reducing energy use helpspump capital back into ruralcommunities. This program is designedto meet the unique needs of consumersand businesses to encourage energyefficiency retrofitting projects acrossrural America.”

USDA Rural Development DeputyUnder Secretary Doug O’Brien saidthat the new program will make morecapital available to expand energyefficiency programs. “While energy

efficiency measures can reduce homeenergy use considerably, manyconsumers and businesses do not investin them because they lack the capital orfinancing to do so,” O’Brien said.“Consistent with President Obama’sClimate Action Plan, this program willreduce barriers to these investments bymaking financing more available.”

National Rural Electric CooperativeAssociation (NRECA) CEO Jo AnnEmerson said the new rule will providefinancial assistance for co-op energyefficiency programs. “Electriccooperatives welcome this newfinancing tool that will allow co-ops tohelp their members overcome thebiggest hurdle to energy efficiencyupgrades: cost,” said Emerson. Sheadded that 96 percent of member-owned, not-for-profit cooperatives offerenergy efficiency programs to help theirmembers save money. “Co-ops maylend RUS funds to consumers toundertake their own efficiencyupgrades. Consumers may have the


Electric co-ops play a major role in educating consumers about ways to lower their energy bills,through means such as adding insulation and sealing air leaks. USDA’s Rural Utilities Service isproviding additional funding that will help co-ops make loans to members for energy efficiencyimprovements to their homes and businesses. Photo courtesy National Rural Electric CooperativeAssociation

Uti l i ty Co-op Connect ionUSDA works with co-ops on $250 million energy-efficiency effort


ability to repay the loan through on-billfinancing.”

Investments eligible for fundinginclude: • Building weatherization;• Heating and cooling system upgrades;• Ground-source heat pumps;• Lighting;• Small-scale renewable generation, and • Energy audits.

Leveraging with other USDA programs

Utilities may relend funds toconsumers or finance their ownactivities. These loans may be serviceddirectly by RUS borrowers or financialinstitutions. Under the program,consumer loans are capped at 1.5percent above the interest rate fromRUS to the borrower. RuralDevelopment’s Rural Business-Cooperative Service (RBS) and RuralHousing Service (RHS) have programsthat can be leveraged with energyefficiency funds.

South Carolina Electric Coopera-tives’ work on energy efficiency hasalready leveraged another RuralDevelopment program, and achievedsignificant results. In this case, the“Help My House” pilot was launchedby Central Electric Power Cooperative,

a wholesale power provider in SouthCarolina, in response to its board’sadoption of a 10-percent targetreduction in residential energy usewithin 10 years. This is coupled withthe goal of reducing average wholesalepower costs for residential customers,while maintaining or improvingmember satisfaction.

Because many of the co-ops’consumers across the state lacked fundsto invest in energy efficiencyimprovements, Central Electric Power

Cooperative worked with several groupsand government agencies — includingUSDA Rural Development — todesign, fund and administer theprogram. USDA’s Rural EconomicDevelopment Loan and Grant Program(REDLG) provided loans to fund the“Help My House” projects.

The results of the South Carolinaprogram were impressive, withreductions in electric use averaging 34percent. U.S. Rep. James Clyburn, whohas been instrumental in promotingenergy efficiency, says energy efficiencyprograms have delivered benefits torural areas in South Carolina. “Thisannouncement will mean jobs in ruralcommunities, significant utility savingsfor rural homeowners, and environ-mental benefits for all Americans atlittle cost to taxpayers. This is a loan,not a grant, and enables workingfamilies to finance energy-efficiencyinvestments in some of the nation’smost persistent poverty areas.”

Expanding energy efficiency andrenewable energy programs in ruralareas not only helps residential andcommercial consumers reduce their useof electricity, but can also help ruralelectric cooperatives avoid the purchaseor construction of additional electricgeneration. Steve Smith, president and

CEO of Hoosier Energy, a generationand transmission cooperative thatsupplies power to 18 rural electriccooperatives that serve nearly 300,000consumers in Indiana and southeasternIllinois, said his co-op is among theutilities that have developed metrics tomeasure success.

“Using energy efficiently empowersrural consumers to better manage theirenergy bills as costs rise,” Smith said.“At the same time, co-op members likebeing part of a larger effort that

provides environmental benefits whilecontributing to U.S. energy independence.”

Hoosier’s program includesdistributing more than 1,400 compactfluorescent lighting fixtures to replaceincandescent bulbs and increasingefficiencies of heating, ventilation andair conditioning (HVAC) systems, all byusing strategies to offset incrementalcost differences. Last year, thecooperative increased incentives forcommercial and industrial customers toreduce demand during Hoosier’s peakload cycles, according to Tom VanParis, vice president of HoosierMember Services and Communicationsand a speaker at USDA’s 2013 AgOutlook Forum. “We offer ourconsumers tools to better manage theirelectric bills in an era of rising rates,and we work to help defer the need fornew capacity, which can be costly,” VanParis told the audience.

Study: $1 trillion savings over 10 years

Several studies have pointed to theeconomic benefits of energy efficiencyprograms — not just in the savings forconsumers, but also in the long-termeffects on energy use. A March 2012Rockefeller Foundation report onfinancing energy efficiency projectsfound that a $279 billion investmentcould return more than $1 trillion inenergy savings over 10 years.

“Energy efficiency programs savemoney, curb emissions and help boostrural economies, based on theexperience of rural electric cooperativesnationwide,” O’Brien noted indiscussing the new program. “Ruralcommunities may see an increase inthese programs to help fund affordable,energy-efficient improvements for ruralbusiness and residential consumers nowthat this rule is final.”

Additional information on theEnergy Efficiency and ConservationLoan program is available from theRUS website: http://www.rurdev.usda.gov/ UEP_HomePage.html. ■

“Electric cooperatives welcome this new financing toolthat will allow co-ops to help their members overcomethe biggest hurdle to energy efficiency upgrades: cost.”


By Lynn Pitman, Outreach SpecialistUniversity of Wisconsin Center for Cooperatives

Editor’s note: Many of the presentationsmade during the Farmer Co-op Conferenceare posted online at: www.uwcc.wisc.edu.That website will also carry periodic updatesabout the next conference, which will beheld Nov. 6-7, 2014, in Minneapolis.

How does an agri-business cooperativeprovide value to itsmember-owners? Themore than 160 people

who attended the 16th annual FarmerCooperatives Conference inMinneapolis in November were able toexplore that perennial question from avariety of viewpoints.

Investing for the long termCapitalization presents unique

challenges for agribusiness cooperatives,

and a discussion of alternativeopportunities for finding capitallaunched the conference this year.Ronald McFall, a partner with the StoelRives law firm, provided a review ofdebt and equity instruments throughthe lens of securities laws. Changes tothe safe harbor exemption for securitiesregistration may present an opportunityfor cooperatives to expand theirsecurities offerings, he noted. Theexemption’s ban on public solicitationswill not apply if sales are made only toaccredited investors and if reasonable

InvestingIn Your Co-op’s Future

Key f i n a n ce , ma rk e t in g i ssues examined during Fa rmer Co -ops Con fe rence

steps have been taken to verifyaccredited investor status.

Carl Casale, president and CEO ofCHS Inc., provided insights into thecapitalization strategies for this Fortune100 cooperative. Strong earningsgrowth has supported the expansion ofCHS’ global reach. The co-op now isseen as a “tier-one” supplier by itscustomers. By becoming a stronginternational player, CHS has made itsowners relevant to the global market.

The challenge for CHS, he said, is tocontinue to build the permanent capital

needed to invest in assets that arebeyond the reach of an individualfarmer. Casale, a veteran of the 90-daycycle that drives a publicly tradedcompany, contrasted those investor-driven demands to the “long view” thatcooperatives can take by virtue of their“patient capital” equity structure. Butsourcing cooperative permanent capitalcan be challenging.

Many cooperatives use earnings fromnon-members as a source of permanentequity to support growth. Casale notedthat cooperative businesses can run intotrouble if they stray from their corebusiness. Because CHS members areresponsible for 70 percent (andtrending upward) of the co-op’searnings, non-member business is notseen as a source for equity growth.

Debt, especially in these times of lowinterest rates, presents another sourceof capital for growth. However, marketvolatility makes liquidity veryimportant. Allocated member equity isan important part of a healthy balancesheet, but it can’t be consideredpermanent equity. While the co-op isnot obligated to return the equity, theexpectation among members is there.CHS has chosen to use “no-call”preferred stock offerings to build thepermanent equity portion of its balancesheet.

Jeff Stroburg, president and CEO ofWest Central Cooperative in Iowa,described his co-op’s approach togrowth equity. West Central beganoffering a dividend-bearing stock in2005. It is one of four different types ofallocated stock that the co-op issues toprovide flexibility in both revolvingpatron equity and maintaining equityfor growth.

Qualified allocated equity is retainedby issuing a class of revolving patronagestock. It is redeemable into thedividend-bearing stock after 7-10 years.The dividend on that stock is currently8 percent and is available forredemption any time, subject to boardapproval. It is only issued to revolvepatron equity and cannot be purchased.

To provide an incentive to membersto keep their equity invested in the co-op, West Central sets the rates based onmaturity date. Dividends are taxed atthe capital gains rates and are notsubject to self-employment taxes. Thedividends are sourced from non-member business, which provide a wayin which members can also directlybenefit from this revenue source.

The program must be managed tobalance liquidity needs to meetpotential redemption activities againstthe needs for working capital. Stroburgmentioned the potential feasibility of apublic market for cooperative stock,which would provide holders of thestock liquidity independent of thecooperative.

Changing ownership structure

Ireland’s Glanbia CooperativeSociety illustrates another approach tobalancing outside investment, growthand the optimum deployment of ownerequity. Michael Boland, professor at theUniversity of Minnesota, providedbackground on the co-op, which wascreated through the merger in the1990s of two dairy cooperatives.

Each cooperative had owned a value-added firm, and when the cooperativesmerged, so did these firms, creatingGlanbia plc (a public limited company,which is equivalent to a publicly tradedcompany in the United States). GlanbiaCooperative Society was the largestshareholder in Glanbia plc, which is aninternational marketer andmanufacturer of cheese and otherconsumer dairy products, sportsnutrition products, protein andmicronutrient products, as well as farmsupplies.

In 2008, when the European Unionannounced that milk quotas would berepealed in 2015, a large number ofdairy co-op members began to push forexpanded processing facilities toaccommodate an expected increase infarm production. However, thisconflicted with Glanbia plc’s focus on



value-added, high-margin production,which did not require large amounts ofmilk for its markets and which wereincreasingly located outside of Ireland.

The pressure to return earnings toshareholders and for debt servicingfrom earlier expansions, as well as thedemand for equity retirement payments(for both retiring and current farmers)also created competition for a share ofthe earnings.

In 2010, members narrowly rejecteda proposal to acquire the Dairy Irelanddivision of Glanbia plc, dilute itsmembership stake in the plc to 10percent and use the cash raised to builddairy processing and agricultural assets.Those opposed to the proposal did not

want to give up their control of the plcand to lose the potential returns oninvestments they had made in it.

The plc’s stock price continued torise, and in 2012 the co-op and plcannounced a new proposal. Glanbia plcwould form an LLC with the co-op fora joint venture to build a dairyprocessing plant in Ireland, controlledby the Glanbia Cooperative Society. Tohelp finance the plant, the co-op wouldsell a portion of its plc holdings, endingits majority position. Proceeds wouldalso be used to pay off long-term debtand retire equity. The plan was finallyratified at the end of 2012.

Boland interviewed Glanbia Co-opboard chair, Liam Herlihy, about therestructuring. Herlihy noted that thechallenge was the trade-off involvingcontrol of the plc vs. value that couldbenefit members. A major goal of the

restructuring was to increase processingcapacity in Ireland, benefitting Irishfarmers. While co-op member control

of the plc has been diluted from 55percent to 41 percent, the vote wasultimately successful because it gavesomething to everyone.

In situations this complex, the trustbetween the CEO and the board chairis critically important because itencourages frank discussion and makessure there are no surprises. Herlihy alsonoted that outside directors were animportant addition to a board, bringingin skill sets that are needed for growth.

Policy landscapeChuck Conner, president and CEO

of the National Council of FarmerCooperatives, said efforts to simplifythe tax code will continue to becontentious. A preliminary plan floatedby the Senate finance committee calledfor a repeal of Section 199 deductions,but not Subchapter T (which describes

the tax treatment of cooperatives). The impacts of domestic policy on

agribusiness continued to be explored

with a panel discussion on ethanol,moderated by Michael Weaver, apartner at the law firm of Linquist &Vennum. The panel included JimMiller, vice president at GrowthEnergy, which represents ethanolproducers and supporters; GregKrissek, manager at Kennedy and Coe,a consulting firm; and Rick Schwarck,president of Absolute Energy, whichowns an ethanol plant in Iowa. Thepanel members presented their viewsabout the positive effects of the ethanolmandates on the agricultural economy.

What’s ahead for economy?A look at the increasing impact of

China on U.S. agriculture andagribusiness cooperatives was providedby Dermot Hayes, professor at IowaState University. Historically, theChinese have compensated for their

“ In situations this complex, the trust between the CEO and theboard chair is critically important because it encourages frankdiscussion and makes sure there are no surprises.”

Co-op capitalization strategies were discussed by a panel of (from left): Ronald McFall, of theStoel Rives law firm; Jeff Stroberg, president and CEO of West Central Cooperative; and CarlCasale, president and CEO of CHS Inc. Photo Courtesy University of Wisconsin. Ireland’s GlanbiaCooperative Society (GCS) was discussed to provide an example of another approach tobalancing outside investment, growth and the optimum deployment of owner equity. The co-op’scheese innovation center is seen on facing page. Photo courtesy GCS

geographical constraints — such therelative scarcity of good farmland in theeastern part of the country — throughintensive labor on marginal lands and adiet that wastes very little. As thecountry grows and becomes moreprosperous, this strategy has becomeincreasingly challenging.

China’s current leadership has beenopen to a more free-market approach toagriculture. Continued increases ofimported of soybeans, corn andlivestock — the production of which isconsidered an inefficient use on muchof its agriculture land — would allowrural populations to move to urbancenters and bolster the workforce there.China’s growth has already had a

substantial impact on Midwest U.S.agriculture. Hayes said that due to thisdemand, and for other reasons, theeconomic outlook for Midwestagriculture remains very strong.

Joseph Mahon, economic analystwith the Federal Reserve Bank ofMinneapolis, said that the domesticeconomic situation for agriculturecontinues to be positive. FederalReserve District 9, which encompasses

By John Shutske, Associate DeanCollege of Ag and Life Sciences, University of Wisconsin

Last month, I had the opportunity to be in Minneapolis for a couple daysat the Farmer Cooperatives Conference hosted by the University ofWisconsin Center for Cooperatives. I was particularly interested in an after-dinner presentation on the first night, which touched on the majorchallenges that the world faces in feeding a growing global population.

Steve Radelet, who recently joined the faculty of the School of ForeignService at Georgetown University following his service as chief economistfor USAID, discussed “The Great Era of Global Development.” Radelet talkedabout the worldwide economic and human progress during the past 50years, which has been unprecedented in human history. In just 20 years,billions of people have been lifted out of poverty and hunger.

But most inspiring was Radelet’s discussion of the role that democraticideas, leadership accountability and economic freedom have played in theprogress made by developing countries.

Not all countries have equally participated in these past few decades ofprogress. And this progress could face significant setbacks, or even bederailed, by a major global conflict or environmental catastrophe. But idealsof freedom, democracy, accountability and transparency do clearly work.This discussion reminded me that we see many of these principles andideals embodied in the work of cooperatives.

Radelet’s discussion has also inspired me to think about the role of land-grant universities, such as ours. President Abraham Lincoln signed theMorrill Act of 1862, leading to the formation of our colleges that housedagriculture programs and other educational, research, and eventuallyextension programs. He and leaders before him clearly understood thateducation was, and remains, an important pillar to freedom and democracy.

As our world continues to progress, we will need to adapt in entirely newways because of issues such as climate change, emerging human (andanimal) health concerns, and the continued forces and implicationsconnected to a more globalized economy.

I am confident, however, that our science and educational programs willkeep pushing forward. It is also clear that the role of cooperatives and theideals that Radelet described as being so successful in improving the humancondition have only upside growth potential. ■

In just 20 years, billions of peoplehave been lifted out of poverty

and hunger.


The long view of a changing world


most of the Midwest, weathered therecession better than other regions, inpart because of the strength of theagricultural sector.

Overall, the 2014 forecast for the 9thDistrict is similar to 2013, with theeconomy likely to enjoy a moderaterecovery. Farm income has remainedsteady, and while crop prices overall aredown, land values and rents are stillclimbing, Mahon said.

Global and consumer-driven impacts

Molly Jahn, a professor at theUniversity of Wisconsin-Madison,looked at future demand trends and thelikely impacts on productionagriculture. Farm output in 2008 was158 percent above production in 1948,and now food systems can meet theneeds for global per capita caloricsufficiency. But evolving pests anddiseases constantly challenge thesegains, and continual research is neededto keep up. Furthermore, the currentfood system is causing critical resourcedegradation in many areas.

Noting the historical correlationbetween civil instability and food pricesduring this time of increased

agricultural productivity, Jahn said thatmaximizing productivity does notalways equate to food security. Jahn saidher work with the InternationalCommission on Sustainable Agricultureand Climate Change has focused ondeveloping recommendations to helpbalance agriculture-induced climatechange, food needs for a growing globalpopulation and climate constraints onfood production.

There are a variety of strategies todeal with these challenges, includingagricultural innovations that increasecrop resiliency, productivity andefficiency, as well as reduce greenhousegas emissions. Carefully matching cropsto environments, for instance, canoptimize nutrient and water use.

Cooperatives are uniquely positionedto play a role in this shift. There is adeveloping need for tools that allowproducers to manage more complexsustainability trade-offs, Jahn said. Byaggregating and sharing producer data,cooperatives can create knowledge-based assets that will supportsustainable outcomes for all.

Consumers putting more demands on industry

Christine Walsh, vice president withPoint Zero Retail, a research andmarketing agency, talked aboutsustainability from a consumer-demandperspective. Producer cooperatives havefocused on operational efficienciesrather than the influence thatconsumers play in the market place.Consumers are more engaged than ever,and the transparency that they expectfrom producers of their food is no

different than the transparency thatthey expect from other businesses orgovernment, Walsh said.

She reminded the audience thatagricultural producers are not being“picked on.” Consumer demand forinformation about issues they careabout spans many sectors and will likelyonly grow.

Walsh highlighted several new toolsnow available to consumers that provide

comparative product information formaking purchasing decisions. Theseinclude more information aboutnutrition, production methods andsourcing. Producers need a variety ofstrategies to meet consumer demandsfor information at the retail level.

“Pretty big data”Data, whether used to inform

consumers or to assess the trade-offs incomplex decision-making, represent acritical asset for co-ops. Knowing wheredata comes from, and how it iscaptured, is important. George Olney,chief operating officer of iRely, aprovider of enterprise software forcommodity management, described theprocess of implementing new datacollection software systems. These newsystems are also the basis of potentialdata-sharing arrangements that couldsupport metrics, risk management andtrend analysis.

Larry Romuald, treasurer ofCooperative Resources International(CRI), a livestock breeding co-op,described the implementation of onesuch system. The co-op has been usinga patchwork of old software programsthat was not keeping pace with the co-

op’s growth or the increasingcomplexity of its domestic andinternational operations.

CRI identified important strategiccapabilities that could only be met bynew enterprise software systems, andthat would justify the substantial timeand budget commitments required forimplementation. The three-year projectwill be launched in the spring of 2014. ■

“By aggregating and sharing producer data, co-ops can createknowledge-based assets that support sustainable outcomes for all.”

By Jerry Kozak

Editor’s note: Jerry Kozak stepped down Dec. 31 after 16years a president and CEO of the National Milk ProducersFederation (NMPF). He shares his insight in this final column hewrote for NMPF’s member newsletter.

NMPF consists of 31 cooperatives that produce the majority ofthe U.S. milk supply, making NMPF the voice of 40,000 dairyproducers on legislative issues. Since 1991, Kozak has also served asexecutive director of the American Butter Institute and was thefirst American to serve as president of the International DairyFederation, based in Brussels, Belgium, from 1996-2000. Kozakwas senior vice president of the International Dairy FoodsAssociation in Washington, D.C., from 1989 to 1997. Prior workincluded service with the U.S. Food and Drug Administration,where he was chief of the Milk Safety Branch from 1984 to 1988,and then director of its Division of Cooperative Programs from1988 to 1989.

Of all the decisions any of us makeprofessionally, the two most important arewhether to take a job, and then when to leaveit. Sixteen years after deciding to becomepresident and CEO of the National Milk

Producers Federation, I’ve chosen to retire at the end of theyear — which means this is my last column for NMPF’s CEOCorner. So, all my big decisions have been made.

Rather than offer a recitation of memorable moments(there have been many cherished ones with people in thisbusiness) or a list of regrets (as that other singer from NewJersey famously said, “I’ve had a few, but too few tomention”), allow me to offer a few parting observations aboutthe lessons I learned at NMPF and how they shaped the past16 years working for the organization’s members and thedairy industry.

How you define consensus can give you everything, ornothing. The tendency among most organizations,particularly trade associations led by a board of directors, is

to define consensus as getting everyone to be in accord on aparticular position. But if it’s a tough issue, waiting for 100percent alignment can paralyze the organization andneutralize its effectiveness.

That was the situation I found when I came to NMPF in1997. One of the first things I said was that striving forconsensus is incredibly necessary, but defining it as a situationwhere everyone has to be completely happy is a mistake.Hard choices never lead to complete harmony, but as long aspeople have input into the process and contribute their twocents, an organization then needs to move forward in orderto be effective.

This belief roiled the membership in my first few years atNMPF, but made my job easier in the long run.

Credibility is your credit. NMPF doesn’t sell products;rather, it offers ideas to our industry and to policymakers.Nevertheless, any marketing effort involves getting people tobuy into the ideas you’re selling. In order to gain traction inthe world of ideas, they have to be credible. They must bebased on sound science, and the economics have to be clearlyunderstood. To the extent that we’ve had success in the past16 years, it’s because we have not advocated positions thatweren’t defensible and credible. The legislators andregulators we’ve worked with have appreciated that we havegrounded our ideas in the facts, not in ideology ormythology.

And we have gained greater traction over time, and gottenmore credit, because we could back up our ideas with thefacts. Making a convincing case — making the sale — thesecond, third, or 100th time is only possible if you have areserve of credibility from delivering on your word the firsttime.

Proactivity uses less energy than reactivity. Whilethere’s some value to the notion that if it ain’t broke, don’t fixit, it’s also true that it’s far easier to change things beforethey’re completely broken. One thing I did at NMPF is toidentify areas where we needed to make changes, to learn and


In the Spot l ightLife Lessons

Jerry Kozak


A normally quiet, country road in BooneCounty was bustling with activity recently asvolunteers, electric cooperative crews,arborists and others worked to give a central-Missouri landmark some much-needed care

and attention.The overall condition of the more than 350-year-old

McBaine Bur Oak, simply known as “The Big Tree” to locals,has been in decline lately, and sixth-generation propertyowner John Sam Williamson, Jr. says the work was needed.

“The drought last year was hard on it,” says the BooneElectric Cooperative member. “It’s genetically superior, or it


Co-ops & CommunityRestoring a Living Landmark

By Paul [email protected]

Editor’s note: This article is reprinted courtesy RuralMissouri (www.rural missouri.coop), the memberpublication of the Missouri Association of ElectricCooperatives. Newton is the magazine’s field editor. The“Co-ops & Community” page spotlights co-op efforts thatfulfill the mission of commitment to community. If youknow of a co-op, a co-op member or co-op employee whoseefforts deserve to be recognized on this page, please contact:[email protected].

wouldn’t have lived this long. Butit’s also been really lucky. It’s hadfloods, droughts, lightning strikesand a lot of things that could havekilled that tree, but didn’t.”

Arborist Bill Spradley ofKirkwood served as the generalcontractor for the care of the tree,which sits between the Katy Trailand the Missouri River southwest ofColumbia. On Oct. 22, crews fromSpradley’s company, Trees, Forestsand Landscapes Inc., Cuivre RiverElectric Cooperative, BooneElectric, the Missouri CooperativesRight of Way ManagementAssociation and the city of RichmondHeights spent the day pruning deadwood, installing lightningprotection and applying treatment to and around the tree toenhance growth and inhibit future deterioration.

“What we have found from the first time we were herewas there are more people connected to this tree than weever had imagined,” says Spradley, who first worked on thetree five years ago. “Whether it’s high school kids gatheringhere, wedding proposals, motorcycle riders that come backyear after year, we just thought it was important to keep thisgoing because of the connection people have with it.”

At first glance, the tree seems out of place. The branchesof the sprawling bur oak, which was already more than 150years old when the Show-Me State was admitted to theunion, stretch well above anything else on the surroundingfarmland. The tree dwarfed the 70-foot-tall elevator liftsbrought in to work on it. Crews had to rely on secured ropesand their best tree-climbing skills to get to the top.

In addition to Cuivre River and Boone Electric donatingtheir time and equipment for the day, the MissouriCooperatives Right of Way Management Associationpurchased nearly $1,700 worth of hardware used forlightning protection on the tree.

“The lightning protection is really important because wecan do all this work to prolong the life of the tree, but onestrike and it would be a quick kill,” Spradley says. “Lightningcould hit at any time.”

Scott Skopec, Cuivre River Electric’s supervisor of right-of-way maintenance, says the right-of-way association, which

donated money to plant trees inJoplin last year, heard about theneeds of the tree and felt it was aworthy cause.

“We have to cut and clear a lotof trees,” he says. “This is anopportunity that we can give backto the community for a tree that somany people love and come toadmire and see.”

The Missouri state championand national co-champion bur oakhas been a destination for visitorsfor some time, according toWilliamson, whose family hasowned and farmed the land the treeoccupies since 1835.

“There are a lot of stories about things that havehappened under the tree, some of them good, some of thembad,” Williamson says. “Everybody tries to take care of thetree. A lot more people take care of the tree than don’t.That’s a good thing.”

This was only the second time the bur oak receivedprofessional care. Spradley worked on the tree in 2008 with amuch smaller delegation of workers. His work to help thetree wasn’t warmly — albeit mistakenly — accepted at first.

“We were setting up to cut some of the big deadwood, anda few locals came out. They thought we were cutting the treedown, and they were totally upset. I had to calm some ofthem down,” says Spradley with a laugh. “So that shows youhow much it means to the community.”

As the Williamson family continues to farm the land thatstraddles Burr Oak Road, the hope is that all the work doneto what John Sam calls the “oldest living thing in BooneCounty” will help prolong its life for future generations.

“I think it will outlive me,” he says. “It’s definitely on adecline. Big trees like this could take 50 years to die. It’ll bereally sad when it does, but it’s lived a long full life.” ■

The McBaine Bur Oak is located on Burr Oak Road 10.4 milesfrom the intersection of Nifong Boulevard and South ProvidenceRoad in Columbia. The road begins as South Providence andchanges to Route K, Perche Avenue and finally Burr Oak Road.The tree will be on the right.


A 350-year-old bur oak tree that rises up majestically in Boone County, Mo., has survivedcenturies of floods, droughts and lightning strikes. Below and opposite page, arboristsand co-op staff take steps to help ensure that the tree continues to be enjoyed by futuregenerations of the “Show Me” state. Photos by Paul Newton, courtesy Rural Missouri

By Bruce J. Reynolds, EconomistCooperative ProgramsUSDA Rural Development

The significant rolecooperatives are playingin community revivaland development wasthe focus of a

conference in Minneapolis inNovember, appropriately titled“Cooperatives = CommunityDevelopment.” The meeting wassponsored by CoMinnesota, a“networking group” formed in 2011 toshare ideas among Minnesota’scooperatives and communitydevelopers.

It was one of three co-opconferences held the same week inMinneapolis. The others were theannual Farmer CooperativesConference (see page 10), sponsored bythe University of Wisconsin, andNCERA-210, sponsored annually bythe Land Grant University Extensionsystem to present the findings of thelatest research on cooperatives(http://ncera. aae.wisc.edu/).

The CoMinnesota conference, thefocus of this article, was held at theheadquarters of Thrivent Financial, afraternal group that originallydeveloped to meet insurance needs ofLutherans. Participants came from across-sector of cooperatives, USDARural Development and staff from fourstatewide or regional cooperativedevelopment centers that participate in

USDA’s Rural CooperativeDevelopment Grant (RCDG) program.

Understanding co-op heritage Chris Kopka, a law professor and

vice president of Thrivent Financial,opened the conference by remindingthe audience of the importance ofunderstanding our nation’s cooperativeheritage, including the reasons whynumerous farmer cooperatives wereformed during the late 19th century, atime when farmers were struggling togain the marketing power andaffordable supplies necessary to survive.These early co-ops established thetraditions of education and self-help,which would also be embraced byfuture generations of cooperatives.

In his keynote address, Mark Ritchie,Minnesota secretary of state, providedan overview of the importance ofcooperatives to the state’s economy, aswell as the benefits of additionalsecurity (such as reliable markets, or theavailability of vital supplies) and uniqueservices that co-op members receive.He also discussed the potential forsustaining many of the family businessesof retiring baby boomers throughtransitioning businesses to workerownership.

Cooperative “basics” were discussedby Kevin Edberg of CooperativeDevelopment Services, and MargaretBau, co-op development specialist withUSDA-Rural Development’s Wisconsinstate office. Bau discussed the essentialsof cooperative ownership, including the

importance of local ownership bymembers based on their use of co-opservices. This means that patronagedividends and member equity aredistributed to local residents; hence,this source of income stays in thecommunity.

Roundtables discuss key co-op topics

The conference luncheon featuredroundtable discussions led by experts invarious co-op sectors. At the USDARural Development table, thediscussion focused on USDA’s RuralEconomic Development Loan andGrant (REDLG) program. MikeMurtaugh from Freeborn-Mower Co-op Services, a rural electric cooperativeheadquartered in Albert Lea, Minn.,explained its re-lending activity underthe program to promote localbusinesses. The workings of theREDLG program were furtherelaborated on by Cheryl Seanoa andNaomi Lenz from the Minnesota officeof USDA Rural Development.

The afternoon sessions featuredseven workshops on various cooperativetopics. Warren Kramer of theNorthcountry Cooperative Foundation(NCF), a participant in USDA’s RCDGprogram, discussed the development ofmanufactured home park cooperatives.By helping home owners to establishcooperative ownership and control oftheir land, NCF is contributing to theresidents’ financial security andcommunity well-being. Some of these

Co-ops = Community Development


Cooperative developers share ideas in Minneapolis


co-ops have been formed in response topark owners announcing plans to selltheir land to developers, which wouldhave forced the eviction of residents.

Janssen Hang, an organizer with theHmong American Farmers Association,and John Flory, director with theLatino Economic Development Center

(LEDC), discussed the challenges forimmigrant farmers in obtaining accessto land. Many of these farmers operatewith “insecure” or unfavorable land-leasing arrangements, or findthemselves unable to transition fromfarm workers to owners.

The speakers cited progress in farm

ownership and access to farmer marketsin urban areas. During the past twoyears, LEDC has participated in theRCDG program to increase its level ofassistance to both Hmong and Latinofarmers.

A workshop on how to financedevelopment projects looked at theissues facing housing, business andconsumer cooperatives. ChristinaJennings, executive director of theNorthcountry CooperativeDevelopment Fund, described the nutsand bolts of evaluating andunderwriting co-op projects. Thediscussion also covered sources offinancing, including opportunities forpartnering with various lendinginstitutions, including USDA RuralDevelopment.

The conversion of businesses fromsole proprietorships to ownership byemployees is gaining increasedattention nationwide. Margaret Lund, aMinnesota-based cooperative developer,gave a presentation on Terra FirmaBuilding & Remodeling. Marty Ruddy,who started the business, and anotherco-op employee also participated in thepresentation. While most conversionsto co-ops are pursued to maintain thebusiness and distribute a share of itsvalue to retiring owners who hadpreviously operated as sole proprietors,this case was unique.

Ruddy built the business andinitiated the conversion to a worker co-op, for which he plans to continueworking for many more years as aworker-member. His motivation fortransitioning the business to a worker-owned co-op, Ruddy explained, wasbased on his experience of collaboratingwith his employees in planning andmaking decisions. While he prosperedas sole owner, he believes the best yearsare ahead for Terra Firma Building &Remodeling in operating as a workercooperative.

The CoMinnesota web page includesa video of the conference, at: http://cominnesota.coop/home. ■

Efforts are being made to help immigrant farmworkers, including Hmong farmers from SoutheastAsia (seen here), become farm owners through the use of cooperatives. Janssen Hang, anorganizer with the Hmong American Farmers Association, and John Flory, director with theLatino Economic Development Center (LEDC), discussed the challenges facing immigrant farmersduring a recent conference sponsored by CoMinnesota. USDA Photo by Bob Nichols


By Carolyn B. Liebrand, Ag EconomistCooperative Programs, USDA Rural Development

Editor’s note: This article is based on Research Report 229,“Member Satisfaction with Their Cooperatives: Insights fromDairy Farmers.” For more information, please contact the authorvia: [email protected].

Do you know how your farmer-members feelabout their co-op? Some proactivecooperative leaders wondered just that… andthen took action to find out.The key to running a successful cooperative

is no great secret: the co-op must perform functions andprovide services needed and desired by its members to theirsatisfaction. A number of factors influence levels of overallsatisfaction with a co-op.

One way for a cooperative to find out what members thinkand feel about their cooperative is to ask them for directinput. Several major dairy cooperatives have done that inrecent years by surveying their members by mail.

USDA Cooperative Programs played a role in thesesurveys, resulting in the collection of 1,736 cooperativemember opinions on 43 questions that were common to eachsurvey. The surveys were conducted independently fromJanuary through March in various years between 1993 and2012. About 40 percent of the members in these cooperatives

provided input on all of the questions that the surveys had incommon.

The surveys included questions about the cooperatives’internal management and operational issues, which fell intosix general topic areas:

• Milk pricing;• Cooperative services; • Cooperative operations; • Cooperative principles; • Cooperative governance, and• Member connections with their cooperatives.The producer-members were asked to indicate their

opinion on various statements by selecting a number, rangingfrom 1 to 5, to represent their intensity of feeling about agiven item. For example, on some questions, those surveyedwere asked if “strongly disagree,” “disagree,” “unsure,”

Surveys show that overall satisfaction with adairy cooperative is strongly linked tomembers’ satisfaction with their co-op board ofdirectors. Members hold management and theboard responsible for the functions that affecttheir farms’ financial bottom line. Photocourtesy Dairylea

What leadsto satisfiedco-op members?Surveys of dairy farmersshow managementand pricing are key

“agree” or “strongly agree” would best describe theirresponse to a question. Other questions asked the dairyfarmer members if they were “very dissatisfied,” “somewhatdissatisfied,” “unsure,” “somewhat satisfied,” or “verysatisfied” with cooperative services and operations.

To find out factors most closely linked with members’overall satisfaction with their cooperative, correlationsbetween each of the survey items were calculated, assigning avalue to each pair of survey items. This value indicates thestrength of the relationship between the topics of the twoquestions.

For example, higher levels of satisfaction in one area maybe related to higher levels of satisfaction in another area.Conversely, the value may indicate a relationship wherehigher levels of satisfaction may be related to lower levels ofagreement with a particular principle or practice.

The bottom lineDairy farmers’ livelihood depends on their milk being

efficiently marketed and receiving the highest possible pricefor it. Many studies show that dairy farmers greatly value anassured market and high milk price. So, it is natural that theirsatisfaction with their cooperative is tied closely to whetherthe cooperative does a good job of marketing their milk at areasonable cost, then returns a competitive milk price tomembers.

Corporate-level issues that concern how well thecooperative is run (board and management efficiency and/orcompetency) and items that affect members’ pocketbooks(pay prices and cooperative operational costs) are moststrongly associated with overall member satisfaction withtheir cooperative (see figure 1). Members’ overall satisfactionwith their cooperative is very strongly correlated with


member satisfaction with management and pricing policies. Similarly, member satisfaction is strongly related to their

perception of how well the co-op is managing operating andmarketing costs.

Overall satisfaction with the cooperative is strongly linkedto feelings toward the board of directors. Members holdmanagement and the board of directors responsible forcooperative activities and functions that affect their farms’financial bottom line.

Communication key to satisfactionThree communication (member relations) issues are

strongly correlated with members’ satisfaction with their co-ops (figure 2). Agreement that their cooperative keeps themwell informed about its operations was strongly linked tooverall feelings about the cooperative.

Similarly, members’ feelings that they can influence thecooperative and have an impact on how it is run are stronglyrelated to overall satisfaction. It may be that feeling wellinformed about their co-op contributes to members’ beingsatisfied with the corporate level issues mentioned above. Itthen seems possible that less satisfied members would showgreater satisfaction with the co-op if they were more aware ofhow the cooperative operates and/or felt like they had moreof a role in how it is run.

Contributing factorsMany additional topics are moderately associated with

members’ overall satisfaction with the cooperative (figure 3).Some are similar to those identified above that affectmembers’ pocketbooks (agreement that cooperative pays allmembers fairly for their milk) and communication(agreement that members receive as much information asthey need about operations and programs).

Member connection to co-opFeelings of “being connected” to the co-op influence

member satisfaction. Member satisfaction was linked to aview that “the cooperative is not more concerned about itsoperations than about members.” Likewise, agreement thatthe cooperative “is not just another place to do business” isrelated to overall satisfaction with the cooperative.

In addition, agreement that belonging to the cooperative isan important part of the member’s identity as a farmer andthat the member feels that he or she is a part owner of thecooperative also have a moderate impact on overall feelingstoward the cooperative. Together, the link between theseitems and member satisfaction indicates that members’ viewof their cooperative as a unique organization may play a rolein their overall level of satisfaction.

Cooperative servicesThe surveys asked about five different co-op services.

(Individual surveys asked other additional questions aboutspecific services provided by the cooperative, but these fivewere comparable across all surveys.) The level of satisfactionwith the cooperative’s provision of market information, withits milk hauling policies, with the cooperative’s fieldrepresentative, and with the cooperative’s laboratory serviceswere each moderately correlated with member overallsatisfaction. However, satisfaction with milk hauling services(operating or arranging routes) was only weakly linked tosatisfaction with the cooperative.


Figure 1 — Members’ overall satisfaction with theircooperative is strongly correlated with corporate level issues

Item Strength of relationship

Satisfaction with…Cooperative’s management Very strong

Cooperative’s pricing policies Very strong

Level of agreement that…Cooperative does a good job of marketing members’ milk and returns a competitive price for their milk Strong

Satisfaction with…Cooperative’s management of operating and marketing costs Strong

Cooperative’s board of directors Strong

Level of agreement that…Member would not drop out if an alternative was available Strong

Figure 2 — Members’ satisfaction with their cooperativeoverall is strongly correlated with communication issues

Item Strength of relationship

Level of agreement that…Co-op keeps me well informed about

its operations Strong

Members have a great amount of influence on how co-op is run Strong

Member is satisfied with amount of influence on how co-op is run Strong

The relatively weaker correlations between membersatisfaction with their cooperative and satisfaction with thevarious services provided by, or through, the cooperative maybe because of the individualistic nature of the relationshipsbetween service provider and member. Members may holdservice providers — such as field representatives and milkhaulers whom they have direct contact with — accountablefor the quality of the services provided, rather than thecooperative itself.

Members’ satisfaction with their cooperative may be moreheavily influenced by how the cooperative guides theprovision of these services. For example, members’ rating ofthe cooperatives’ milk hauling policy is more stronglycorrelated with satisfaction with the cooperative overall thanis members’ rating of the milk hauling service itself.

While member satisfaction with the cooperative wasmoderately related to satisfaction with, or rating of, theseservices, the fact that they were not more strongly correlateddoes not necessarily mean that the provision of, or quality of,

services the cooperative supplies are not important tomember satisfaction. It may just mean that memberunhappiness with certain aspects of the services provided mayor may not translate into dissatisfaction with the cooperativeoverall, depending upon the nature of the specific issue.

Cooperative practicesFinally, agreement that the cooperative does not try to

cover too big a geographic area is moderately linked to thelevel of overall satisfaction with the cooperative. In otherwords, members who were satisfied with their cooperativeusually did not agree that it tried to cover too big an area.

The level of agreement with the statements that thecooperative’s earnings were a return on the member’sinvestment and that the cooperative paid patronage inproportion to the member’s patronage are both moderatelyassociated with overall satisfaction. Likewise, agreement thattheir cooperative works appropriately with other agriculturalcooperatives and that it supports cooperative education formembers and the public are also moderately correlated withthe level of overall satisfaction.

That these are not more strongly linked may indicate thatfor some members, satisfaction with the cooperative does notdepend on whether or not their cooperative practices theseprinciples, or perhaps whether or not the members are awareof their cooperative’s practices.

Cultivating member satisfactionIn summary, it is clear that the factors most strongly

linked to member satisfaction are a cooperative’s:• Management, in general;• Milk pricing policies;• Management of operating and marketing costs;• Board of directors, in general, and• Communication with members.Thus, the first priority for cultivating improved member

satisfaction appears to be having a competent board ofdirectors and a capable management team in place. Toachieve this, members should elect a board that is competentin setting policies and in recruiting and supervising a capablemanagement team. Members look to management to do thebest possible job of marketing member milk, minimizingoperating costs and setting satisfactory milk pricing policies.

A second key area for member satisfaction is soundcommunication that keeps members well informed aboutcooperative operations and provides feedback from membersregarding their wishes and concerns. Third, the cooperativeshould have an education program to augment members’understanding of the milk market and the nature of thecooperative business model.

Last, but not the least, the cooperative should ensure thatservice providers who are in direct personal contact with



Figure 3 — A range of topics are moderately associatedwith member satisfaction with their cooperative overall

Level of agreement with items concerning member connectionto the cooperative:• Co-op is not more concerned about operations than its

members• Belonging to the cooperative is an important part of the

member’s identity as a farmer• Members feel they are part owner of the cooperative• The cooperative is not just another place to do business

Satisfaction with cooperative services:• Cooperative’s provision of market information• Cooperative’s milk hauling policy• Field representation (farm visits, interface between producers

and cooperative)• Laboratory services (component and quality tests, and reports)

Level of agreement with cooperative practices:• Cooperative pays all members fairly for their milk• Cooperative members receive as much information as they

need about operations and programs• The cooperative does not try to cover too big an area as an

organization• The cooperative’s year-end earnings are considered a return on

member’s investment• The cooperative works appropriately with other agricultural

cooperatives• The cooperative pays patronage refunds in proportion to

patronage• The cooperative supports cooperative education for members

and the public

By Alfonso Morales and Ali Loker

Editor’s note: Morales is an associateprofessor of urban and regional planningat the University of Wisconsin-Madison.Loker earned a bachelor’s degree inCommunity & Environmental Sociologyin 2012 from the University ofWisconsin-Madison and is currently avolunteer with Americorps. Support forthis research was provided by USDA’sNational Institute of Food andAgriculture.

The World FoodSummit of 1996defined food securityas existing “when allpeople at all times

have access to sufficient, safe,nutritious food to maintain a healthyand active life.” While foodinsecurity is a global issue, this articlewill primarily focus on the situationin the United States and the role offood buying clubs in helping toaddress it.

In 2010, about 85.5 percent ofhouseholds were food secure, 9.1percent had low food security and 5.4percent had very low food security,according to the U.S. Department ofAgriculture (USDA). This equates to48.8 million households that werefood insecure in 2010.

Of these low food securityhouseholds, 40.2 percent wereclassified as being below the povertyline, 35.1 percent were single-parenthouseholds headed by a female and


Welcome to the Club!

Many buying clubs initially focus on acquiring food staples and dry goods, since storage for such items is limited only by space,without the need for refrigeration. Canned goods offer similar advantages, but margins on them tend to be much lower.

Food buying club co-ops have potentialto help increase food security for many


25.4 percent were single-parenthouseholds headed by a male.Households with children were abouttwice as likely to be food insecure aswere households without children.These statistics are only a smallsnapshot of the issue of food insecurityin the United States.

There are a wide variety of solutionsthat have been used to fight foodinsecurity. USDA has developed theCommunity Food Security Initiative to“forge partnerships between USDA andlocal communities to build local foodsystems, decrease need and improvenutrition” (Kanto).

This initiative includes a FoodSecurity Toolkit that helps communitiesidentify needs and that providespossible solutions. These solutionsinclude farmers markets, community-supported agriculture, farm-to-schoolprograms, community gardens andcommunity kitchens. All of these“tools” are currently under-utilized bylow-income individuals. Through thistoolkit, USDA hopes to increase the useof these programs by food insecureindividuals.

Food clubs are an additional solutionto food insecurity.

Linking consumers with wholesalers

Buying clubs are a form ofcooperative that involves a group ofpeople who collectively purchase fooddirectly from a wholesaler. This processeliminates many steps of traditionalfood distribution, allowing the membersto save money.

The 1960s and ‘70s were a time ofgrowth in co-op popularity. Manyconsumer co-ops were establishedduring this time, but there wasresistance in some communities to theseco-ops, which some people regarded as“a hippie fad” that catered to peoplewith odd food preferences. However,this image has changed considerablywith the increasing diversity of peopleinvolved in co-ops and the rapidlygrowing demand for local, organic

and/or natural foods. Many of the food co-ops that exist

today got their start as buying clubs.Some of these smaller, less formal co-ops have developed into larger co-opswith less member involvement.

In Food Co-ops: An Alternative toShopping in Supermarkets, WilliamRonco argues that “the relationshipbetween buying clubs and more visiblestorefronts is not one of evolution, butinterplay...many storefronts help startand support buying clubs” (pages 125-126). This interaction between buyingclubs and cooperatives is very importantto keep in mind when examining theirhistories.

Why food buying clubs?A dominant theme in articles on

food clubs is the ability of consumers toalter the market through participatingin buying clubs. In a 1999 report onfood security in Canada, JacindaFairholm frames the issue well: “Bychanging our purchasing patterns asconsumers, we can help alter the marketso that it better reflects the needs andwishes of all consumers, particularlyfamilies and individuals with lowincome.”

Buying clubs empower consumers byencouraging them to pool theirpurchasing power and participate in analternative distribution system. Buyingclubs also allow consumers to havegreater control over the quality of thefood, the price and the source(Fairholm, page 32). A buying club“influences prices and quality in its areabecause members are better informedand have a larger choice.” Learning thestrength of consumer power is a benefitmentioned by Fairholm, Sekerak andDanforth, as well as in Moving Aheadwith Group Action.

This consumer power can beespecially effective for low-incomepopulations, where people are ofteninitially interested in a buying clubbecause of their ability to save money.However, after participating in a buyingclub for some time, the members begin

to witness firsthand the power ofcooperation and what can beaccomplished through group action.

Many leaders of co-ops (not simplyfood co-ops) got their start in buyingclubs (Sekerak, Danforth). The smallerscale of buying clubs is an approachableentry point for individuals who may nototherwise be likely to join acooperative. The small scale alsoprovides a more manageable level ofresponsibility than does being anemployee of a co-op store.

A job at an established cooperativemay entail part- or full-time work. Ajob at a buying club, however, mightsimply be two or three hours per week,or even per month. A buying club canprovide invaluable experience with taskssuch as working with wholesalers,keeping records and running a smallbusiness.

These experiences and more areprovided by the buying club with thesupport of other members andvolunteers. Participating in a leadershipposition in a buying club can give anindividual the confidence to use theseskills in a more formal job setting, eventhose that are not associated with co-ops.

Sekerak and Danforth say anotherbenefit is the relative ease of forming abuying club, compared to other foodsecurity solutions, such as formingconsumer cooperatives. There is noneed to secure a permanent space for afood club; many are run out ofmembers’ homes or churches,community centers or other publiclocations where space is free oravailable at a low cost. All jobs areperformed by volunteers, eliminatingthe hassle associated with hiringemployees.

The ability to reduce costs results inlower priced food. By reducing orcompletely eliminating the costsassociated with modern fooddistribution, buying clubs are able tomake fresh, healthy foods moreaccessible to low-income populations.

The social benefits of a buying club


are also worth noting. Buying clubs area wonderful opportunity to buildcommunity. Community members worktogether towards a common, tangiblegoal of providing better food to theresidents at a lower cost. Therelationships that are built through the

buying club extend beyond theboundaries of the club and can be animportant jumping-off point for thecommunity to pursue social justice inother forms (Moving Ahead).

Starting and running a food buying club

A common first step in forming abuying club is to familiarize oneselfwith the community and any existinginfrastructure that might make the areaa good or bad fit.

Organization and Management ofConsumers’ Cooperatives and Buying Clubsprovides a helpful outline to survey acommunity. It includes questions underthese categories: communitycharacteristics, local competition(existing agencies), trading andmembership prospects, tradingfacilities, financing, other cooperatives,operation of the association and asummary and recommendation portion(page 54). This survey encouragesindividuals to take into considerationmany factors that could affect theestablishment of a buying club.

Although buying clubs are relativelysimple to establish, even a well-run clubin the wrong community could easilyfail. Careful selection of location,combined with a well-run club, willlikely lead to success.

An optional, but recommended, nextstep is to contact local service groups.These groups can include committeesthat provide technical assistance to

buying clubs and other cooperatives,centers that provide resources tocooperative groups, professionalorganizers and existing cooperatives orbuying clubs in the area (Evans, page6). Reaching out to these groups duringthe planning stages can help a club

establish supportive relationships at acrucial point in development. Thesegroups will be able to provide usefulinsight and advice to newcomers.

The next step in the process is tohold a preliminary meeting with agroup of core volunteers who arecommitted to establishing the buyingclub. This meeting should begin withdiscussing what a buying club is andhow it will address the needs of thegroup. If it is decided that a buying clubwill not address the group’s needs, thecommunity is not a good fit and othersolutions should be considered. At thismeeting, it is important to emphasizecommunication and to receive inputabout how to remain in contactbetween meetings.

Tasks will be distributed among thevolunteers, so it is imperative thateveryone remain connected and

updated about the progress being made.Members of the group should considerwhat they want to accomplish with thebuying club. What are the long- andshort-term goals? Put these in writingso that the group can periodically assesswhether they are being met.

The preliminary meeting (or thesecond meeting) is also a goodopportunity to discuss and assign roles.There are many tasks in setting up abuying club: general coordinating,creating and tallying order forms,purchasing and dividing up the food,cashiering, set-up and clean-up work ondistribution day, coordinatingvolunteers and bookkeeping (Evans,pages 9-10). It is crucial to divide thework as evenly as possible to prevent“burn out” of volunteers.

Food offering choices The group must also determine what

types of food to offer through thebuying club. How to Form a Food Co-opoffers recommendations. Many buyingclubs decide to order staples and drygoods. Storage for dry goods is limitedonly by space, as they do not requirerefrigeration. Canned goods may seemappealing for similar reasons to drygoods, however, the margin of savingson canned goods is low — almostnegligible in some instances.

Produce can be difficult forbeginning buying clubs to offer, due tostorage constraints. However, manyclubs carry produce because it providesthe largest savings for its members.Meat and dairy come with storageconsiderations that are similar to thosefor produce, along with the additionalcomplication of grades. It is importantfor the club to solicit input from itsmembers as to their preferences in

“Buying clubs al low consumers to have greater control overthe quality of the food, the price and the source.”

Food orders are distributed at the CumberlandFood Buying Club in Crossville, Tenn. Photocourtesy Cumberland Food Buying Club


grades for these products beforedeciding to offer them.

Determining the types of food tooffer is a balancing act between savings,storage consideration and memberpreferences. This is an extremelyimportant decision and should be madeonly with the input of as manymembers as possible. Ann Evansrecommends that clubs begin byoffering staples and moving up to meat,dairy and produce only after they’vebeen successful at the former.

Once the buying club hasdetermined what types of food it wouldlike to include in its offerings, it mustlocate a wholesaler. Moving Aheadsuggests first searching for a wholesalerthat is owned by consumer co-ops inthe area (page 11). If this is notpossible, work with other wholesalersserving the area. Co-op Stores and Buyingprovides a list of important questions toask a potential wholesaler, includingquestions about mark-ups, membershiprequirements, prices, frequency oforders and deliveries, policies ondamaged goods and minimum orderrequirements.

It is crucial to have a thoroughconversation with the wholesaler tohelp the group avoid unexpectedcomplications. Try to interview severalwholesalers, taking notes andperforming calculations forcomparisons. Throughout this process,the members should keep informationon other wholesalers confidential andshould not use this information indiscussion with competing wholesalers(Lefever, page 2).

Financing optionsFinally, the buying club should

decide how it would like to handle itsfinances. The primary decision thatmust be made is when to collectpayment from members. There are twooptions, both with advantages anddisadvantages.

Prepayment requires more book-keeping. However, it is a guarantee thatall food that is ordered will be paid for.Prepayment also allows the club to have

enough money to pay the wholesalerwithout needing to have an outsidesource of capital.

Payment at pickup eliminates muchof the bookkeeping, including trackingprepayments and issuing credits orrefunds if there are damaged or lostgoods. However, payment at pick upnecessitates an outside source offunding to pay the wholesaler upfront.A buying club can do this through aloan or initial deposits from itsmembers. A bank account should be setup to handle the cash flow (Evans).

The only way a buying club willsurvive is if it has members recruitedfrom the community. The first objectiveis to raise awareness of the buying club

and to recruit. Once the club is moreestablished, the focus shifts fromrecruitment to education.

Structure and processesAfter the appropriate planning steps

have occurred, the buying club is readyto begin its operation. A semi-formalized structure is encouraged byseveral sources, including Organizationand Management of Consumers’Cooperatives and Buying Clubs, Form aBuying Club in California and MovingAhead. These sources recommendcreating written bylaws and aconstitution or a policy sheet.

These documents state the purposeof the buying club, detail membership

There is not much literature on food buying clubs outside of the UnitedStates. However, buying club initiatives in Canada were the focus of JacindaFairholm’s article: Urban Agriculture and Food Security Initiatives in Canada: ASurvey of Canadian Non-Governmental Organizations.

The Ontario Natural Food Co-op (ONFC) is an organization that supportsmore than 330 buying clubs. The clubs invest in ONFC, which provides theinventory, equipment and space necessary for distribution. The ONFC plays acritical role in sustaining these buying clubs. It provides education aboutcooperatives and produces a quarterly newsletter that includes information on“food security issues, recipes, cooperative model education, event/conferenceinformation, permaculture, sustainable agriculture techniques and more.”

The Field-to-Table program developed the Good Food Box project, whichhas been an inspiration for many similar programs in Canada. The Good FoodBox is a large buying club that “combines the economies of scale involved inbulk purchasing with extensive community involvement” (page 33).

The Good Food Box differs from other buying clubs in that it offers a flat-feebox of fruits and vegetables that changes each month. This is a similar idea tocommunity supported agriculture (CSA). In a CSA, individuals pay in advancefor a season’s worth of produce boxes that they pick up weekly. The GoodFood Box is much more accessible to low-income individuals because there isno large upfront cost and members are not required to purchase the boxes foran entire season, unless they choose to.

Indeed, 56 percent of these boxes are sold to individuals below the povertyline. The program tries to source from local farmers when possible. The GoodFood Box also provides its customers an information sheet about produce andcooperatives. The Field-to-Table program has published a guide forestablishing Good Food Boxes in other locations. ■

Food buying clubs in Canada

requirements, explain the use of anycommittees (if applicable), and describehow finances and amendments arehandled (Moving Ahead, pages 26-27).These documents can be referenced ifany issues or questions arise, and canhelp when orienting new members tothe club.

Keeping these cooperative principlesin mind may be helpful when creatingthese documents: • Open membership;• Neutrality in religion and politics;• Democratic control;• Limited return (if any) on share

capital;• Net earnings belong to the user-owners;• Education;• Cooperation among co-ops.These principles are a good foundationfor a cooperative of any kind, includingbuying clubs.

Most buying clubs operate on acommittee system. Moving Aheadrecommends the following committees:ordering, finance, packaging andmembership-education. These

committees are then responsible to theofficers, who also work with the overallorganization of the club, call and runmeetings and handle finances (beyondthe finance committee). Again, it isimportant to share the labor and avoidover-working the volunteers.

For larger buying clubs Evanssuggests three different work systems:

(1) The block system is effective forclubs of up to 200 households. Thelarger buying club is broken down intosmaller, pre-order co-ops of 5-10households. Members of each of thesesmaller co-ops place their orders as theynormally would in a buying club. Thena coordinator from each of these

smaller co-ops compiles the orders intoa “block order.” The larger club thencompiles the block orders and places asingle order with the wholesaler. Eachsmaller co-op takes a turn as the“master block” to provide volunteersfor that week’s distribution.

(2) In the team system, membersvolunteer to be a part of a team(bagging, transportation, secretarial,

treasurer, etc.). These teams performthe same task each month.

(3) The rotating job system is similarto the team system; however, volunteersrotate jobs at regular intervals.

Financial management is key to theeconomic viability of the club, whichmeans sound bookkeeping is needed totrack cash flow. This is a time-consuming job and should be shared,when possible (Evans, 30). The pricescharged for goods should be abovewholesale price, but less than retailstore price. This way, the club willmake a small profit and provide savingsfor members.

The buying club must also decide

how much of a service fee to chargemembers. This fee will cover operatingcosts, such as for bags, delivery, etc. Insetting the fee, consider all operatingcosts. Typically, this will be 2-3 percentof each order. However, most clubscharge 5-10 percent to allow a“cushion” (Evans, page 28). Thedifference between the fee charged andthe operating costs will eventually addup to a significant amount.

It is up to the club to decide what todo with this surplus. The club can givethis money (or a portion) back to itsmembers as a reward for theirpatronage. Another option is to save themoney for future goals.

The use of credit is stronglydiscouraged (Organization andManagement, Dodge). Credit createsmany problems and its use is notjustified by the convenience forconsumers.

It is very important to remainconnected to the members. They arethe driving force, and without them theclub would not exist.

A good way of keeping membersupdated about the club is through anewsletter. This can be a monthlypublication that members pick up withtheir food, or a quarterly newsletterwith more indepth organizationalupdates. Regular meetings can also beheld to update members and to solicittheir input. Informed members willusually have a greater sense ofownership and be more committed tothe club.

Transitioning to a co-op storeSome successful buying clubs opt to

expand and form a co-op store, but if


“Determining the types of food to of fer is a balancing act between savings,storage consideration and member preferences.”

The Oklahoma Food Cooperative, seen here,started out as a food buying club. Manybuying clubs have followed a similar growthpath, but such a step should be taken onlyafter a careful market study and planning.


During the past 50 years, morethan 900 cases of grainengulfment of workers havebeen reported in the UnitedStates, with a 62-percent

fatality rate. In 2010, at least 26 U.S. workerswere killed in grain engulfments — the highestnumber for one year on record.

The most tragic fact of all: grainengulfments are preventablewith proper safety training andprocedures.

Nationwide AgribusinessInsurance Co. is partneringwith the Farm Safety For JustKids, Heartland Co-op, IowaFFA Foundation, NationalEducation Center forAgricultural Safety (NECAS)and others to increaseawareness of the dangers offlowing grain and bringvisibility to safety proceduresthat can save lives through an annual GrainBin Safety Week, Feb. 23-March 1.

The week is timed to bring safety awarenessof the dangers of grain bins prior to theplanting season in much of the country. Theweek-long event will highlight a differentcomponent on each of the seven days: • Sun. Feb. 23: Grain management; • Mon., Feb. 24: Bin hazard identification;• Tues., Feb. 25: Bin and equipment design,

including safety equipment; • Wed., Feb. 26: Bin entry; • Thurs., Feb. 27: Working safely in a bin;• Fri., Feb. 28: Extraction/rescue; • Sat., Mar. 1: Confined spaces beyond the bin.A website, www.GrainBinSafety Week.com,provides more information, tools for the mediaand information to help people get the wordout as well as participate.

On Feb. 26, Nationwide Agribusiness willhost a free, live webinar on grain bin safetythat’s open to everyone. Farmers andcommercial grain handlers will gain valuableinsight into the risks and hazards of grain bins,

safe-work procedures, Occupational Safety andHealth Administration (OSHA) standards andmore. Space is limited, so making an earlyreservation is advised at: http://nwagcompanyevents.fugent.com/home/events.asp.

Nationwide Agribusiness, Farm Safety ForJust Kids and NECAS will host #AgChat onTwitter from 7-9 p.m. (Central time) on Feb25. This moderated, online conversation will

look at grain bin safety froma number of angles. Anyonewith a Twitter account canparticipate by going toTwubs.com/agchat to tweetduring the chat. The siteautomatically enters the#agchat hashtag in everytweet and allows users toparticipate in real time.

An example of anambitious Safety Weekprogram is “Staying Safe onthe Farm,” Feb. 24, an all-

day event at the FFA Enrichment Center(adjoining Des Moines Area CommunityCollege) in Ankeny, Iowa. On-site activitiesinclude: Featured speaker Bill Chizek, safetydirector at Heartland Co-op in West DesMoines, and demonstrations with a grain binentrapment simulator and a manure pitsimulator. There will be farm implement anddriver safety tips, as well as demonstrations ofsafe handling of Anhydrous Ammonia (NH3)fertilizer. There will also be a grain dustexplosion demonstration and an auger safetydemonstration.

Nationwide Agribusiness and NECAS havepartnered to provide grain entrapment rescuetraining and a bin rescue tube (valued at$2,600) to one fire department or emergencyrescue squad. Nominations are due by April 30and should be e-mailed to: [email protected] mailed to: NECAS, Grain Bin SafetyContest, 8342 NICC Dr., Peosta, IA 52068.Official rules will be available online at:www.GrainBin SafetyWeek.com. ■

Co-ops urged to observeGrain Bin Safety Week


Training exercises such asthis can help co-op staff beprepared for an emergency— and to avoid the chancesof one occurring.


Ocean Spray sales top $1.6 billion

Ocean Spray Cranberries Inc. hadnet sales of $1.66 billion for fiscal 2013,on par with the cooperative’s recordsales year in 2012. Proceeds to commonshareholders totaled $380 million, up15.5 percent over the prior year.

Ocean Spray’s IngredientTechnology Group’s dried cranberrybusiness experienced particularly stronggrowth in both domestic andinternational markets, surpassing the100-million-pound mark for the firsttime.

“This was a strong year for OceanSpray in terms of continuing to delivera premium to our grower-owners andadvancing a number of strategicinitiatives that will grow our business athome and abroad,” says RandyPapadellis, Ocean Spray’s president andCEO.

The co-op reported that itcompleted a series of transactions withCoBank, resulting in the increasedavailability of $215 million in financingthat will allow Ocean Spray torebalance its capital position to create amore conservative structure and supportplans for cooperative growth.

Other highlights for 2013 included:the launch of Cran-Lemonade, nowdistributed in 80 percent of groceryaccounts nationwide; the launch ofCraisins Dried Cranberries in two newpackage forms, and the launch of theeighth domestic dried cranberry line inMiddleboro, Mass. Significant progresswas also made in the construction of astate-of-the-art beverage plant inPennsylvania’s Lehigh Valley.

USDA Ag Outlook Forum Feb. 20-21

“The Changing Face of Agriculture”is the theme of USDA’s 2014Agricultural Outlook Forum, Feb. 20-21, at the Crystal Gateway Marriott inthe Washington, D.C., suburb ofArlington, Va. The Outlook Forumbrings together the agriculturalcommunity to discuss policy, trade,science, rural development and theeconomic outlook for the coming year.

The Forum also focuses on forestry,health and nutrition issues and thechanging dynamics and face of ruralAmerica, among other topics. Farmerco-ops will be involved in discussionsabout the burgeoning local foodmarket.

Agriculture Secretary Tom Vilsack

and USDA Chief Economist JosephGlauber will kick off the conferencewith their views of the state of thenation’s farm economy heading into2014, including USDA’s latest crop andmarket forecasts. They will be followedby two plenary panel sessionsaddressing: “The Future of Agriculture:Building Markets Here and Abroad,”and “The Future of Agriculture: YoungFarmers - Unlimited Opportunities.”

There are dozens of breakoutsessions on key farm and rural issues,including: the latest agricultural census;how agriculture can support veterans;food price and farm income outlooks;international trade issues; news ofefforts to control invasive pests;agroforestry trends; the Know YourFarmer, Know Your Food effort; citrus

Ocean Spray’s net sales of $1.66 billion in 2013 nearly equaled the record set the previous year.Photo courtesy Ocean Spray.

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

Co-op developments, coast to coast


The Cooperative DevelopmentFoundation (CDF) has named fouroutstanding cooperative leaders as2014 inductees to the Cooperative Hallof Fame. The Hall of Fame isadministered by CDF, a nonprofitaffiliate of the National CooperativeBusiness Association CLUSAInternational (NCBA CLUSA). Visit theHall of Fame at: www.heroes.coop.

The latest inductees are: ■ Martin Lowery, executive vice

president of external affairs at theNational Rural Electric CooperativeAssociation (NRECA). For more thanthree decades, Lowery has been astrong advocate for the cooperativebusiness model. He began working atNRECA in 1982, where he has played aleadership role on many projects,including forming and promoting newcooperatives, such as the Kauai IslandUtility Cooperative — Hawaii’s firstelectric co-op. Lowery played a keyrole in drawing together disparategroups to create the TouchstoneEnergy Cooperatives brand in 1998. Hecurrently oversees NRECA’sCooperative Research Network (CRN),which brings co-ops together tosupport large research projects, suchas a $33.9 million U.S. Department ofEnergy grant for smart gridtechnologies.

■ Papa Sene, senior technical

advisor to NCBA CLUSA, where he hasserved for three decades. Sene, whogrew up in Naikhar, Senegal, hasshared, taught, enhanced and helpedto spread co-op values globally. Hebegan spreading the co-op message inthe Boy Scouts, then led atransformative co-op housingmovement in Dakar, Senegal, in the1960s. He served as the head ofaccounting for a regional cooperativeand studied cooperative businesses atthe National School for AppliedEconomics. He led the development ofthe “CLUSA Approach,” which hasbeen used across economic sectorsaround the world, where it has beenapplied for natural resourcemanagement, community health andco-op governance issues. He haswritten several books and receivednumerous awards.

■ Barry Silver, executive vicepresident of National Cooperative Bank(NCB), where he has served for morethan 33 years in various leadershippositions. Silver has helped thousandsof cooperatives obtain financing andwas a major force behind the creationof NCBA CLUSA’s Annual PurchasingCooperatives Conference. It wasSilver’s passion for co-op educationthat led to the creation of the annualNCB Co-op 100 — a list of the nation’s100 largest co-ops across all economic

sectors. This list sparked theInternational Cooperative Alliance’sGlobal 300 report. From 2005-2009,Silver worked on a multi-billion dollarproject for the World Bank in China,helping to create new ag co-ops byeducating leaders about cooperatives.

■ Harriet May, former presidentand CEO of the Government EmployeesCredit Union (GECU), began her creditunion career as a teller nearly 40 yearsago, rising to become the leader of thelargest credit union (and financialinstitution) in her hometown of El Paso,Texas. May led the charge to makehome ownership available to lowerincome, minority members of her westTexas community by helping toestablish an Affordable Housing CreditUnion Service Organization. Thedramatic results include: sponsorshipof 732 credit workshops with 10,700participants; more than 16,200 first-timesavings accounts opened; providingcredit counseling to 8,600 families, andpreparing (for free) 73,372 tax returnsunder the Volunteer Income TaxAssistance (VITA) program. She hasbeen an innovator in financial literacy(even participating in a paneldiscussion with the President of theUnited States) and has worked acrossthe border with Mexican officials tocreate a system of affordableremittance services. ■

Four named to Co-op Hall of Fame

disease challenges; the 100thanniversary of the CooperativeExtension program, among manyothers. To view the full schedule andregister, visit: www.usda.gov/oce/forum/.

NCB financing autism, elder care organizations

National Cooperative Bank (NCB),

which provides banking products tocooperatives and other sociallyresponsible organizations, recentlycompleted $6.5 million in financing fortwo California healthcare organizations.

NCB provided a $4 million loan toNovata Behavioral Health, a subsidiaryof Mental Health Systems (MHS), toacquire the Center for AutismResearch, Evaluation and Service

(CARES) in San Diego. CARES workswith children and adults diagnosed withautism, providing evaluation, training,education and a wide-range of otherservices to participants.

The bank also provided a $2.5million loan to help the Center forElders’ Independence (CEI) refinanceexisting debt from the purchase of itsfour-story corporate headquarters in the


Oakland/Berkeley area. CEI wasfounded 25 years ago to offer acommunity-based system ofcomprehensive health and relatedservices to low-income, frail elderlyresidents of the East Bay region. CEIserves more than 580 members throughfour different sites.

“NCB is proud to be a financialresource for senior living and healthcareproviders throughout the United Statesfor over 30 years,” says Ann Fedorchak,NCB senior vice president. “To date,we have arranged over $530 million inloans to serve the needs of this industry.Our role in the healthcare sector,whether as a sole lender or a partnerwith other financial institutions, iscritical to NCB’s mission, and we lookforward to expanding our commitmentin 2014.”

$70 million to promoteeconomic growth in Africa

The National Cooperative BusinessAssociation CLUSA International(NCBA CLUSA) has signed a five-year,$70 million cooperative agreement withthe United States Agency forInternational Development (USAID) tohelp accelerate economic growth forindividuals and families in the Sahelregions of Niger and Burkina Faso.About 86 percent of Niger’s ruralpopulation lives under the poverty level.

The project — known as Resilienceand Economic Growth in Sahel — willbenefit more than 2 million vulnerablepeople by addressing the structuralcauses of chronic food insecurity andnutritional vulnerability in the Sahelregion of West Africa.

NCBA CLUSA started working inNiger in 1985 and Burkina Faso in1993, establishing community-basedhealth services, developing effectiverural organizations, linking farmers toinput suppliers and buyers, promotingstrong and dynamic markets, andimproving household incomes. “Thisfully integrated project will addressresilience at its core and build thefoundation for sustainable and scalableeconomic growth for the people of the

Sahel,” says Mike Beall, president andCEO of NCBA CLUSA.

This new effort is based on thepremise that bolstering food securityrequires a holistic approach, which mustsimultaneously improve agriculturalproduction, manage and sustain thenatural resource base, increase farmers’revenues and increase access to waterand basic public health services.

Texas Tractor Drive helps feed hungry

A diverse group of cooperatives inWest and Central Texas recently

banded together to help feed thehungry. Avant Marketing Group of St.Louis, Mo., got the ball rolling byreaching out to U.S. Farm CreditAssociations. In Texas, Lubbock-basedAgTexas Farm Credit took up thechallenge, and a plan was drafted for“Tractor Drive 2013: Driving HungerOut of Rural Texas.”

The goal was three-fold: (1) to raiseawareness of hunger in rural Texas; (2)to raise money to support food banks,and (3) to achieve these two goals bysupporting FFA chapters and theirefforts to support local food pantries asa part of FFA’s “Feeding the World —

Starting at Home” program.The Texas Food Bank Network

provides support for all the food banksin Texas. By joining forces with them,all proceeds were ear-marked for thecounty in which they were received.Texas Food Bank Network turns everydollar in donations into five dollars infood.

The food drive tractor traveled morethan 1,000 miles as it visited ruralcommunities in 23 counties in West andCentral Texas. The John Deere 5045tractor was donated by B.E. Implementin Brownfield and Bramlett Implement

in Stephenville as a prize for the FFAchapter that raised the most money perag student (32 chapters competed).

More than $105,000 was raised,which became the equivalent of$525,000 of food for those in need. TheBreckenridge FFA Chapter won thetractor by raising $19,493, or $209 permember. Breckenridge is in ComancheElectric Cooperative’s (CECA) serviceterritory — a co-op that was a majorsponsor of the drive.

Co-op leaders honored by Co-op Network

The Cooperative Network recently

Breckenridge (Texas) FFA officers with the tractor their chapter won by raising the most moneyto fight hunger in Texas. FFA chapters were supported by farm credit, electric and famer co-ops.


presented its Cooperative BuilderAward — its highest statewide honor —to three cooperative leaders: StevenKrikava, retired director of governmentrelations for Land O’Lakes; Kenneth

Machtan, board president of GroupHealth Cooperative of South CentralWisconsin (GHC-SCW); and LarrySwalheim, retired CEO of LandmarkServices Cooperative. The honor is

given to individuals who demonstratethe utmost loyalty and service to thecooperative movement at the local,state, regional or national level.

“Recipients of the Cooperative

Foremost Farms USA, Baraboo,Wis., has been recognized as a GreenProfessional business in the GreenMasters Program of the WisconsinSustainable Business Council. Thedesignation recognizes the co-op’scontinued commitment tosustainability.

“Foremost Farms has demonstratedcontinued commitment to the triplebottom line: people, planet andprofitability, and we look forward toseeing more of their innovativesustainability initiatives in the future,”says Tom Eggert, executive director ofthe Wisconsin Sustainable BusinessCouncil.

“We believe that acting in anenvironmentally, socially and

financially responsible manner makesgood business sense,” says MichaelMcDonald, Foremost’s vice presidentfor environment, health, safety andsustainability. “To be recognized forour efforts is the cheddar cheese onour apple pie!”

Examples of Foremost Farms’ effortsin sustainability include:• Developing goals and strategies to

reduce greenhouse gas emissions;• Finding efficient ways to transfer the

energy from dairy products that havebeen cooled or preheated to reduceenergy consumption;

• Reducing overall energy use at itsdairy plants by 4 percent, eventhough product processing volumeincreased 4.8 percent;

• Replacing light bulbs, appliances andmanufacturing equipment withmodern, energy efficient models;

• Installing motion sensors, timers orother lighting controls at plants andoffices;

• Constructing an industrialwastewater treatment facility (withanother dairy processor) thatcaptures the methane produced inanaerobic processes and fuels aninternal combustion engine-drivenelectrical generator that createselectricity, which is sold to a localutility company;

• Working with customers to minimizepackaging materials and placingfinished dairy products in reusablecontainers. ■

Foremost earns Green Professional designation

This industrial wastewater treatment facility at Richland Center, Wis., captures methane produced in anaerobic processes. The methanegas fuels an engine-driven electrical generator that creates electricity, which is sold to a local utility. Photo courtesy Foremost Farms


Builder Award give above and beyondto improve the lives of everyday people;their achievements represent thelifeblood of the cooperativemovement,” says Bill Oemichen,president and CEO of CooperativeNetwork, which provides governmentrelations, education, marketing andtechnical services to a wide variety ofmember-cooperatives in Minnesota andWisconsin. “Each year at our annualmeeting, we are proud to recognize theadmirable work of our fellow‘cooperators,’ who consistentlychallenge us to aspire even more for ourmembers.”

Krikava, from Edina, Minn., retiredthis past year after a 39-year career withLand O’Lakes. Machtan, fromMcFarland, Wis., has served on GHC-SCW’s board of directors since 1988and as board president since 2001.Swalheim, from Stoughton, Wis.,retired from Landmark ServicesCooperative in 2011 after 20 years asCEO.

ACE conference slated for Austin in July

The Association of CooperativeEducators (ACE) will hold its annualinstitute this July 13-16 at theUniversity of Texas in Austin. Austin is

a hotbed of co-op development andeducation efforts, according to ACEspokesperson Sarah Pike, making it afitting location for the conference. TheACE institute is attended by co-opeducators and development specialistsfrom throughout the United States(including Puerto Rico) and Canada.

Among the organizations helping toboost the city’s co-op sector isCooperation Texas, formed in Austin in2009 as a nonprofit organization that iscommitted to the creation of

sustainable jobs through thedevelopment, education and support ofworker-owned cooperatives, Pike notes.The Austin Cooperative BusinessAssociation is another major forcehelping to expand and strengthen theco-op sector in Austin and thesurrounding region. Texas also hasstrong statewide co-op associations,notably the Texas AgriculturalCooperative Council and Texas RuralCooperative Center, which are strongproponents for co-ops and co-opeducation.

New and/or expanding co-ops inAustin include: Wheatsville Food Co-op, Black Star Co-op (a brewpub), YoMamas Catering Co-op, Red RabbitCooperative Bakery and CollegeHouses, among many others. Austin’sthriving co-op sector has attractedmedia coverage, including a recent PBStelevision program, Fixing the Future,and articles in the Austin Post.

Accommodations will be available atthe Hampton Inn and at local studenthousing co-ops. For more information,contact Pike at: [email protected].

Four co-ops win dotCoop Awards

Co-ops in Columbia, Puerto Rico,Canada and Oregon have beenrecognized with the 2013 dotCoopGlobal Awards for Excellence,recognizing their application ofcooperative values and principles asdriving forces in their success. Theawards were presented by MichaelBeall, president and CEO of theNational Cooperative BusinessAssociation CLUSA International,during the International CooperativeAlliance (ICA) Global Conference andGeneral Assembly in Cape Town, SouthAfrica.

“The recognition of theseexceptional cooperative businesses is atestament to the power of themovement and how the model’sdifferences can be harnessed andutilized to positively impactcommunities globally,” Beall said.

Award winners (by category) are:

• Large Cooperative: Coop ZenoGandí, a credit union headquartered inArecibo, Puerto Rico, with more than35,000 members. It was cited forproviding cutting-edge technology thatallows members to use Internet andmobile services for many functions andconnects the cooperative to the youthof the community.• Medium Cooperative: FirstAlternative Cooperative, a retail foodcooperative in Corvallis, Ore., providesnatural and organic food in community-oriented stores to more than 7,000members. It was saluted for being abusiness that focuses on member andcommunity needs, includingmaintaining a website that is rich withinformation about buying local, classes,recipes and wellness. • Small Cooperative: CooperativaOrientación y Securidad C.T.A., is aworker cooperative that providesmonitoring, private security andinvestigations for hospitals. The co-op,based in Bogota, Colombia, was cited inpart for an outstanding website thatexplains the cooperative business modeland how the co-op and its members areconnected to their communities andother co-ops across Colombia.• Cooperative Organization: TheCanadian Cooperative Association(CCA), based in Ottawa, Ontario,represents more than 9 millioncooperatives and credit union membersfrom more than 2,000 organizationsthroughout Canada. CCA is itself afederally incorporated cooperative,owned by its member organizations,and provides leadership to promote,develop and unite cooperatives andcredit unions to benefit people inCanada and around the world.

Florida’s Natural makes co-op’s third-highest payout

Even though citrus sales volumedipped 3 percent last year, Lake Wales,Fla.-based Florida’s Natural Growerswas still able to provide grower-members the third-highest profit sharein the co-op’s history, according to TheLedger newspaper. More than 1,000


Florida’s Natural farmers received $1.75per pound solids for their oranges and$1.60 for their grapefruit during its2012-13 fiscal year, William Hendry,the co-op’s chief financial officer,reported at the cooperative’s 80thannual meeting

The meeting was attended by about300 members and guests. The 2012-13orange market was softer because ofhigh inventories.

NOVEC distributes more green energy

More Northern Virginia ElectricCooperative (NOVEC) members arelighting up their homes with “greenpower” thanks to the co-op’sparticipation in two renewable energyprojects. In November, NOVECdedicated a 49.9-megawatt biomassplant in Halifax County, Va. The plantburns wood waste left over from

logging and lumber operations in thesouth/central region of the state.NOVEC estimates that the plant willsupply enough electricity to power16,000 homes.

In December, NOVEC participated

in the dedication of three newgenerators at the Prince WilliamCounty Landfill, about 45 minutes westof Washington, D.C. The newgenerators, along with two generatorsthat have been in service since 1998,have more than doubled the electricoutput at the landfill. The fivegenerators are now providing about 48million kilowatt-hours annually for theNOVEC system.

These new green power projects,combined with hydroelectric powerNOVEC buys from the SoutheasternPower Administration, is helping all co-op customers illuminate their homesand businesses and run their applianceswith more renewable energy. “Werealize our customers want sensiblealternative energy choices, and we’relooking for opportunities to add morecompetitively priced renewable energyto NOVEC’s power supply,” says Stan

Feuerberg, NOVEC president andCEO.

The Prince William County SolidWaste Division (SWD), Fortistar (aNew York-based company that ownsand operates the landfill gas-to-energy

facility) and NOVEC worked togetherto develop the landfill gas-to-energyproject. “This is a great example of apublic/private partnership,” says SWDChief Tom Smith. Fortistar sells 100percent of the facility’s electrical energyoutput to NOVEC under a long-termsales arrangement. A portion of theproceeds received from the energy salesis returned to Prince William County asroyalties.

NOVEC, headquartered inManassas, Va., distributes electricity andenergy-related services to more than150,000 customers in NorthernVirginia.

Co-op merger creates Prairieland FS

Two Illinois farmer cooperatives —Lincoln Land FS Inc. in Jacksonvilleand Two Rivers FS Inc. in Rushville —have merged to create Prairieland FS

Inc., with headquarters inJacksonville. The new co-opwill serve 13 counties inwest-central Illinois andnortheast Missouri.Shareholders of both co-opsapproved the merger, whichbecame effective Dec. 1,according to a report in theHerald-Whig newspaper. “Customers should see littleor no change at the locallevel,” Keith Hufendick,Prairieland CEO, told thenewspaper. “What this doesis create efficiencies at thecorporate level. This willhelp us sustain long-termprofitability.”

Prairieland FS is a full-service cooperative that

provides agronomy, energy, facilityplanning and logistics products andservices, as well as grain marketing, forfarmers and other customers.

Co-op educatorIan MacPherson dies

Ian MacPherson, a leading co-ophistorian, educator, author and frequentspeaker at co-op meetings, died Nov. 16

This biomass plant in Halifax County, Va., burns wood waste leftover from logging, generatingenough power to light up 16,000 homes. Photos courtesy Northern Virginia Electric Cooperative(NOVEC).


at age 74. Dr. MacPherson was knowninternationally for his role in the 1995revision of cooperative principles. Asboth a scholar and a cooperativeactivist, MacPherson “personified therelationship between Canadiancooperative academics and co-oppractitioners,” according to a postingon the Canadian CooperativeAssociation website.

MacPherson served as president ofboth the Canadian CooperativeAssociation (CCA) and Credit UnionCentral of British Columbia (now partof Central 1 Credit Union), as well ason the boards of various consumer,financial and health-care cooperatives.

MacPherson was the author ofdozens of books and articles aboutcooperatives, including A Century ofCooperation, a 2009 commemorativebook marking the 100th anniversary ofCanada’s organized cooperativemovement. In 1976, he joined thefaculty of the University of Victoria andlater served as chair of the historydepartment there. From 1992 to 1999,he was the university’s dean ofhumanities, stepping down from thatposition to found and head the B.C.Institute for Cooperative Studies (sincerenamed the Centre for Cooperativeand Community-Based Economy).

He was also a founder of theCanadian Association for Studies inCooperation (CASC), a multi-disciplinary research organization whichbrings together co-operative academicsand practitioners.

“There is no researcher incooperative studies in Canada who hasnot benefited from Ian’s large presenceand path-breaking work,” says SonjaNovkovic, professor of economics atSaint Mary’s University and chair of theICA Committee on CooperativeResearch. “He was the founder ofCASC and a mentor to many studentsand researchers whose lives havechanged because they were influencedby Ian’s passion and deep understandingof the cooperative movement. We willmiss him as a friend, a humanitarianand an inspiration.”

To read more about McPherson,visit: www.ianmacphersonmemorial.blogspot.ca/.

Land O’Lakes Inc. acquires Geosys

Land O’Lakes Inc. has acquiredGeosys, a global technology firm thatprovides satellite imaging and insightsfor agribusiness. The acquisition caps amulti-year relationship between Geosysand Land O’Lakes through the co-op’sWinField division, which uses selectGeosys technologies in the UnitedStates.

“These industry-leading technologiesgive farmers the tools to make criticaldecisions to improve yields whilereducing their environmentalfootprint,” says Land O’Lakes Presidentand CEO Chris Policinski. “Thesetechnologies further help our membercooperatives to leverage proven toolsthat turn data into decision enablersthat drive productivity and sustainableagricultural practices.”

Geosys, which has more than 50employees in multiple countries, hadbeen seeking a strategic partner toaccelerate growth, says DamienLepoutre, president of Geosys.

C-FARE launches nationalco-op education project

The Council on Food, Agriculturaland Resource Economics (C-FARE —www.cfare.org) in 2013 began a two-year project, “The Role of Cooperatives inthe Nation’s Economy: Educating FutureCooperative Owners and Leaders” todevelop high school teaching modulesabout the economics of cooperatives.

The effort involves a panel of expertsexperienced in working withcooperatives, state councils of economiceducation, agricultural educationexperts and high school teachers. Thebroad backgrounds represented on thepanel will help ensure that the modulesmeet economic education standardswhile also allowing for widespreaddissemination of the information oncethe instructional module is completeand field tested.

C-FARE received technical supportfor the project from the Council forEconomic Education (CEE), whichaided in the coordination of peer andteacher review of the modules. CEEfocuses on economic and financialeducation for K-12 students. In 2012,CEE trained more than 55,000 teacherswho, in turn, reached 5 millionstudents. The CHS Foundationprovided key initial support to helplaunch the effort.

Project leaders are Barbara O’Neill,distinguished professor and Extensionspecialist in financial resourcemanagement at Rutgers CooperativeExtension ([email protected]),and Sanjib Bhuyan, associate professorand graduate program director of theDepartment of Agricultural, Food andResource Economics at RutgersUniversity ([email protected]).

“C-FARE is pleased to be a part ofeducating the next generation ofowners, leaders and patrons about thecooperative business model andstructure,” says Roger Coupal, associateprofessor in the Department ofAgricultural and Applied Economics atthe University of Wyoming and currentC-FARE board chairman. “Theleadership and support of the projectfrom the cooperative community willallow students in key states across thenation to learn about the economics ofcooperatives as early as 2014, with thegoal for continued expansion in futureyears.”

Cooperative leaders interested inlearning more about this programshould contact C-FARE at: (202) 408-8522 or [email protected].

C-FARE is a Washington, D.C.-based nonprofit that promotes the workof applied economists and serves as acatalyst for incorporating economicthinking into the analysis of food,agricultural and resource decisions. Itserves as a conduit between theacademic research/Extensioncommunity and governmentpolicymakers and agencies, helping tomatch expertise to public needs. ■


evolve, before we had our collectivebacks up against the wall.

The National Dairy FarmersAssuring Responsible Management(FARM) program is an example of thisdynamic. As consumer expectationschange, we need to be out in front indeveloping a national industry standardfor dairy cow care. We couldn’t wait

until the consuming public thinksthere’s a problem, and only then try tofix it.

Yes, it’s been hard work, and thatwork continues. But one look at thechallenges of other sectors ofagriculture tells us that building aprogram like FARM will make our jobsas dairy marketers easier in the future.

Doing the right thing is harder inthe short term but makes life easierin the long run. As I’ve said so manytimes in discussions with our members,doing the right thing is often very hard.

It’s relatively easy to define the rightthing, but much more difficult to pushtoward it. Again, with trade associa-tions, it can be a chore in pulling themembers together to work oncontroversial positions.

But as I noted in my last column, theone discussing our position opposingthe greater availability of raw milk,easier paths are usually not the rightones. And all of us, regardless of wherewe are in our careers, end up regrettingthe times when we chose the easy pathover the right one. ■

of “food deserts.” Food deserts aredefined as “communities, particularlylow-income areas, in which residents donot live in close proximity to retailers

offering affordable and healthy food.Healthy food options in thesecommunities are hard to find or areunaffordable” (U.S. Department ofHealth and Human Services 2011).

Food hubs provide value to a

community through a different type ofsustainability that is achieved throughmore than just economic profits forproducers and the food hub. Many foodhubs, due largely to their focus onsocial mission, are formed as nonprofitswith the intent of promoting social andenvironmental benefits as much, ormore, than economic profit. This

secondary approach to sustainability hasalso proven to be successful, asevidenced by the longevity of a numberof nonprofit food hubs. Local FoodHub is a nonprofit organization, and amajority of the finances of the hub are

supported by grants and donations fromthe community. Supporters of the foodhub see their donations as a way toinvest in the community, since LocalFood Hub donates generously tocharities and local food banks. As anexample, around 25 percent of theproduce grown at Local Food Hub’sfarm is donated to such charitableorganizations.

All food production systems havetheir place and address a specific set ofstakeholder needs. The authors believethat taking a collaborative view willproduce the best solution for bothconsumers and producers for long-termsustainability. Further, we believe thatadditional research is necessary to fullyexplore the exciting possibilities thatexist for local foods producers in today’sfood industry. ■

Selected References• Diamond, Adam and James Barham. Money and

Mission: Moving Food with Value and Values.Journal of Agriculture, Food Systems, andCommunity Development no.4 (2011):101–117. http://dx.doi.org/10.5304/jafscd.2011.014.013

• Matson, James, Martha Sullins and Chris Cook.The Role of Food Hubs in Local Food Marketing.Washington D.C.: U.S. Department ofAgriculture, Rural Development. 2013.

• Polimeni, John M., Raluca Iorgulescu Polimeni,L. Shirey, Christina L. Trees, W. Scott Trees,The Supply Of Community Supported Agriculture.Journal of Business & Economics Research.March 2006, Volume 4, Number 3.

• U.S. Department of Health and HumanServices. Healthy Food Financing Initiative. Officeof Community Services. 18 January 2011.ww.acf.hhs.gov/programs/ocs/resource/ healthy-food-financing-initiative-0. (Accessed May 16,2013.)

In the Spotlightcontinued from page 15

Food hubscontinued from page 7

Even in their short history, food hubs have proven highly adaptable — in size, scope and type ofproducts offered — to meet the vagaries of consumer demand.


there is any doubt about such a move,the expansion should be delayed untilthe concerns are addressed.

Member input is critical to such adecision. One important considerationis whether there should be a limit onmembership to prevent uncontrolledgrowth. A successful transition to a co-op store will also require having areliable wholesaler and source ofcapital. Pooling resources with otherbuying clubs or co-ops when forming anew co-op store may reduce the burdenon any one food buying club and resultin a better end product.

There are conflicting opinions aboutthe advisability of creating a co-op storefrom a buying club. The opinions ofwhether to start a co-op store seem toshift depending on the time period. Forexample, Organization and Managementof Consumers’ Cooperatives and BuyingClubs written in 1940, says that a buyingclub’s ultimate objective is to develop astore, with the buying club being atemporary stage.

In Consumer Cooperation: the Heritageand the Dream, written in 1974, Sekerakand Danforth are against the idea,saying: “The requirements for survivaland growth are much greater [with aco-op store] — in terms of managementskills and capital and sales volume[required].” They say buying clubs are agreat tool for small groups of people toget fresher food at a reduced price, but

recommend against developing theminto a co-op store. Moving Ahead agreeswith this sentiment.

However, the growing demand forlocal and organic foods is creating amarket that is often conducive tosupport for co-op food stores.Ultimately, the decision to expand afood club into to a co-op store shouldbe made carefully, on a case-by-casebasis.

Opportunities for future research

Buying clubs represent only one wayto increase food access, choices andaffordability. As such, they emphasizessome aspects of food access over others,with varying implications. For instance,minimizing costs by using volunteersmeans there are fewer full- or part-timejobs involved. Additionally, using“scratched and dented” food items,which may have similar nutritionalvalue, may also have implications forhow consumers feel about themselvesthat may outweigh the lower costs.

Buying clubs also representimportant food access opportunitieswith important economic and socialconsequences. These many reasonsshould stimulate more research onbuying clubs. It would be useful to trackbasic data on the number of buyingclubs, their business volume and howmany have become co-op stores,although such data is difficult tocompile due to the informal nature ofthe clubs. This data would help answerthe question of whether buying clubswork best as an end product, or as ameans to the formation of a co-op.

The issue of food buying clubsoutside of the United States also needsto be researched. What are the effectsof different distribution systems on therole of buying clubs in foreigncountries? How many of these buyingclubs evolve into new forms (besides co-op stores)?

The role of food buying clubs in theUnited States has fluctuated over time.Food buying clubs will likely continueto be part of the solution to foodinsecurity. However, much research isstill needed on their long-term effects. ■

References• Black, Herbert. People and Plows Against Hunger:

Self-Help Experiment in a Rural Community.Boston, Massachusetts: Noodles for America,Inc., 1975.

• Dodge, Philip. How to Form a Food Co-op., 1980.• Evans, Ann M. Form a Buying Club in California.

Division of Consumer Services, 1980.• Fairholm, Jacinda. Urban Agriculture and Food

Security Initiatives in Canada: A Survey ofCanadian Non-Governmental Organizations.LifeCycles: 32, 33, 34. 1999.

• Food Security in the United States: Key Statisticsand Graphics. Sept, 7, 2011. http://www.ers.usda.gov/briefing/foodsecurity/stats_graphs.htm

• Kanto, Linda Scott. Community Food SecurityPrograms Improve Food Access. Food Review 24.1(2011).

• Lefever, Don. Co-op Stores and Buying Clubs,1972.

• Lewis, Bob, et al. Food Co-ops in New York City:An Organizing Handbook and Resource Guide.Community Food Resource Center, 1983.

• Moving Ahead with Group Action: A Buying ClubManual. Ed. Cooperative League of the USA,1975.

• Organization and Management of Consumers’Cooperatives and Buying Clubs. Ed. FrancesPerkins, 1940.

• Ronco, William. Food Co-ops: An Alternative toShopping in Supermarkets. Beacon Press, 1974.

• Sekerak, Emil, and Art Danforth. ConsumerCooperation: The Heritage and the Dream. Con-sumers Cooperative Publishing Association,1974.

Welcome to the clubcontinued from page 28

members are well trained, with thetechnical expertise members expect andwho are committed to delivering a high

level of customer service.The information presented here is

gleaned from surveys designed forspecific needs of the cooperativesinvolved; surveys were conducted in anumber of years and during varyingmarket conditions. Therefore, it ispossible there may be other importantfactors that play a role in members’

satisfaction with their cooperatives thatare not identified by the analysis ofthese member opinions. However, thiscollection of member opinions revealsimportant factors that can influencemember satisfaction and highlightssome of the areas that cooperatives maywant to focus attention on. ■

What leads to satisfied co-op members?continued from page 23

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