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March/April 2017

Rura

lCOOPERATIVESCOOPERATIVES

Fighting to SaveFlorida’s CitrusIndustryPage 8

AG CO-OPS’ $212 BILLION FOOTPRINT 2015 Co-op Statistics Report Now Available From USDA

n For a free hard copy, send e-mail to: [email protected],or call (202) 720-7395, or write to: USDA Co-op Info., Stop3254, 1400 Independence Ave. SW, Washington, DC 20250.Please indicate title of report and number of copies needed.

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This report presents an in-depth look at the enormous impact ag co-ops have on thenation’s economy. The sector-by-sector analysis and trends tracked can be used by co-op

managers and directors to gauge the performance of their operations.

Rural Cooperatives / March/April 2017 3

Volume 84, Number 2March/April 2017

Rural Cooperatives (1088-8845) is published bimonthlyby USDA Rural Development, 1400 Independence Ave.SW, Stop 3254, Washington, DC. 20250-0705.

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04 Co-ops Help Members Adapt Advanced agronomy programs can help farmers gain efficiency through cutting-edgetechnology

By Julie A. Hogeland

08 ‘Failure Is Not an Option’ Florida’s Natural, citrus industry taking bold steps to help growers fight devastatingdisease

By Dan Campbell

23 Expertise Is Essential Deciding who will conduct a co-op feasibility study is a crucial decision

By James Wadsworth

Departments

14 LEGAL CORNER

17 MANAGEMENT TIP

20 IN THE SPOTLIGHT

26 NEWSLINE

p. 4

ON THE COVER: Citrus greening diseasehas severely reduced Florida’s orangeharvest during the past decade. The state’slargest growers’ cooperative is helping itsmembers fight back by offering to subsidizethe cost of replanting orange groves. Seepage 8. Photo courtesy Florida’s NaturalCooperative

p. 8 p. 26

Features

By Julie A. Hogeland, Ag EconomistUSDA Rural DevelopmentEmail: [email protected]

Co-ops exist to servemembers, often byanticipating andaddressing farmerproblems before they

become overwhelming. In recent years,farmers have been forced to deal withunusually severe weather patterns suchas droughts. While a severe, extendeddrought in California has been much inthe news in recent years — until heavyprecipitation fell this winter — drought

has also impacted growers in otherregions. Nearly half of Ohio suffered somelevel of drought last summer, whileabout 17 percent of Michigan had todeal with “peak drought” conditions lastyear — and this even after the twostates received above-averageprecipitation for all but one monthfrom December 2015 to March 2016.Other areas have had to deal with theopposite problem: too much moisture,including severe flooding. Increased weather variability andseverity has generally fallen short ofwhat many farmers would consider full-

blown climate change. Nevertheless,prolonged heavy rainfall suggests to 60-70 percent of Midwestern farmers that“something is going on,” says DennisTodey, director of USDA’s MidwestClimate Hub. Are these extreme shifts in weatherpatterns the “new norm,” or atemporary phase? Regardless, farmersmust deal with the weather conditionsMother Nature tosses at them. Using advanced agri-science andtechnology to adapt farming practicesmay be a farmer’s best weapons in thisbattle. This article examines how one ofthe nation’s leading farmer co-ops

4 March/April 2017 / Rural Cooperatives

Co-ops HelpMembers AdaptAdvanced agronomy programscan help farmers gain efficiencythrough cutting-edge technology


works in tandem with locally ownedcooperatives to help members do justthat.

Land O’Lakes SUSTAIN program goal: better choices Land O’ Lakes — the nation’s thirdlargest agricultural co-op, best knownfor its dairy foods and farmsupply/agronomy services — launchedthe Land O’Lakes SUSTAIN programin 2012 to help producers make bettercrop and nutrient choices. This nationalprogram was developed in partnershipwith the Environmental Defense Fund(EDF). EDF is a nongovernmental

conservation organization withexpertise in collaborative solutions tomany of today’s sustainability issues. The Land O’Lakes SUSTAINplatform uses advanced technology,including WinField United R7, asoftware platform that helps producers

identify hybrid crop varieties thattolerate certain growing constraints,such as dampness or drought, andwhich will grow well in their local area.Winfield United is the crop inputsdivision of Land O’ Lakes Inc. “What really matters to farmers ishow a specific crop does locally,” saysTodey. Even crop varieties that maythrive 40 to 50 miles away may not besuited for a member’s local growingconditions, he notes. The Land O’Lakes SUSTAINplatform demonstrates co-op readinessto “make things happen.” The platformwas designed on the heels of predictionsthat, to manage weather transitions,farmers will increasingly rely onsupplier and manufacturerrecommendations for crops, pestmanagement and other managementpractices. As agriculture shifts toemploying more “client-based”research, recommendations need to bemore precise and tailored to individualdecisionmakers, according to many ageconomists (Reilly, 2011). Based on these criteria, LandO’Lakes SUSTAIN hits all the bases: itis a locally oriented, decentralized and

customized approach to help farmersoffset the risk of crop selection andproduction through the use of state-of-the-art, precision agriculture. Manyecologists now regard “bottom-up,decentralized” approaches to dealingwith changing climate patterns as amore promising route to helpingfarmers and communities adapt, asopposed to globally coordinated actionsthat increasingly appear to beunattainable. Moreover, by rectifying the naturalimbalances of key soil nutrients, Land

O’Lakes SUSTAIN also contributestoward land stewardship and soil health,something valued throughout the food-supply chain and by growing numbersof consumers.

How Land O’ Lakes SUSTAIN works The process can start with using theR7 tool; farmer-owners of a localcooperative begin the agronomicprocess by dividing their fields into 2.5-acre grids, then taking soil sampleswithin each grid. Using geo-spatialsoftware processes, the cooperativeanalyzes the soil samples to determinethe variability of soil nutrient levels. The cooperative then makes nutrientrecommendations for lime (needed tocorrect soil pH levels), phosphorus andpotassium. These recommendations areoften less than what a farmerhistorically will put on a field in a “flat-rate application” management strategy.Using spreaders equipped with site-specific technology, the cooperative canthen apply the right amount ofnutrients in the right spots. Thisenables farmers to maintain adequatenutrient levels and to achieve optimum

Using advanced agri-science and technology toadapt farming practices may be a farmer’s bestmeans of adapting to extreme weather variability.

Growers who enroll in the Land O’ LakesSUSTAIN program benefit fromtechnologically advanced analytic tools tohelp bolster crop yields, even in challengingconditions, while also reducing the impact offarming operations on the environment.Photos courtesy Land O’ Lakes


production from each field. The R7 tool of WinField Unitedcombines satellite imagery data thatindicate high- and low-yield areas,along with physical measures of biomassvariability. Ecologists define biomass asthe amount of living matter in a givenhabitat, expressed as the weight oforganisms per unit area. R7 can also accommodate historicalyield data and other managerialvariables, such as multi-year field zones.R7 is used to make recommendationsfor seed populations and nutrients

based on potential productivity of eachzone within a field. Applying seed andnutrients in the right amount and at theright rate for each area enables eachzone to work at its own potential,instead of putting too much or too littleseed and fertilizer in the field. This process gives nature what itneeds — the basis of the continuousupkeep required for good stewardship— and farmers optimize theirproductivity and efficiency throughadvanced agronomic technology. Knowing soil potential andrequirements is half the equation. Theother half is choosing the right seed andusing the placement rate derived fromgrid sampling. This knowledgeimproves farmer return on investment.After all, why should farmers riskpaying for resources that are vulnerableto run-off? Hybrid performance data used in theR7 tool come from cross-country testplots (called “Answer Plots®”)established by WinField United.Answer Plots represent both widelyvarying and finely nuanced fieldconditions for the corn and soybeansintegral to Corn Belt agriculture. Fundamentally, the Land O’Lakes

SUSTAIN platform is a farm-management program that givesproducers information that will helpthem make better crop and inputdecisions. Weather trends are a factorin these decisions, but not the primaryfocus. Rather, incorporating technologylike the R7 tool allows producers topractice stewardship in the form of thecareful use of limited or costlyresources, including money, soil, seedand nutrients. Moreover, by adding nutrients orchemicals based on scientific diagnosis

of soil content, the soil is brought to anoptimum state, helping to ensure it willbe a resource for future generations.

Engaging producers as problem solvers In an era of severe and unpredictableweather, ecologists recommend threeways communities and producers can

adaptively manage or respond to newweather events: (1) learn by trial anderror; (2) build on incremental changesand (3) learn from each other. Gettingfarmers thinking and talking about thechallenges of weather variability canengage them in a creative, problem-solving capacity that can strengthentheir skill in decisionmaking (ArbuckleJr. et al., 2014). Such skills will becritically important insofar as continuedproblematic weather fosters furtheruncertainty, causing farmers to re-evaluate past management decisions and

seek new information and strategies. In this context, the term “climatechange” may be less helpful in workingwith farmers than would terminologyand narratives that focus on adaptationto severe weather events. Terms such as“weather variability” and “extremeweather” will likely resonate with agreater proportion of farmers (Arbuckleet al., 2014).

Importance of stewardship Likewise, the term “stewardship” willprobably resonate more with producersthan “sustainability.” Put simply,“sustainability” does not have the trackrecord of rich, evocative meaningassociated with the term “stewardship.”From the time of Thomas Jefferson, theconcept of stewardship has beenassociated with the honorable tasks ofproducing food and fiber. In that sense, stewardship representsa long-held, culturally endorsedagrarian value with positive associationsfor farmers. That positive associationpresumably makes “stewardship” amore potent, effective term than“sustainability” in helping farmersconstruct an identity (or the way theysee themselves) appropriate to

The term “stewardship” resonates with farmers more strongly than does“sustainability.” Stewardship represents a long-held, culturally endorsed

agrarian value with positive associations for farmers.

The R-7 tool of Winfield United (the cropinputs division of Land O’ Lakes) uses satelliteimagery data that identify high- and low-yieldproduction areas while also measuringbiomass variability.


contemporary challenges. Craig Houin of Sunrise Cooperative,a leading ag and energy cooperative inOhio, leads the co-op’s Sunrise DataInnovation and R7 program. Heobserves that retailers need tounderstand how to handle the conceptof stewardship more appropriately (i.e.,sensitively) because it impactslivelihoods and community.Stewardship is the core focus and

initiative of the Land O’LakesSUSTAIN program, says Houin. What does “sustainability” mean?Indications are that, as it is presentlyused, the term “sustainability” has notyet attained a well-defined, stablemeaning. At the 2011 annual meeting of theHarvard Business School, professorswho were looking at everyday languagefor newly influential terms noted that“sustainability” would probably have adifferent meaning in the next five years.More recently, Houin notes thatfarmers attending a meeting of youngproducers questioned what“sustainability” meant. The way people in agriculture talkabout weather variability — what somecall “the discourse of climate change”— has been criticized for over-

emphasizing the uncertainty andcomplexity associated with severeweather events (Fleming et al, 2014).Too much uncertainty raises thequestion of whether people are doingwhat they should be doing. Thealternative to uncertainty might be acheck-list or agenda of what should bedone. This approach risks putting farmersinto the role of passive recipients rather

than being actively engaged,entrepreneurial problem-solvers. Onthe other hand, too much complexityimplies that more science is probablyrequired before individuals can beexpected to act. The term “sustainability” is arelatively new agricultural term whichhas, to some degree, been associatedwith climate change implications andmeanings, and so may encompass someof the same uncertainty. The terms“sustainability” and “climate change”(or variability) may be problematicinsofar as they raise more questionsthan they answer. Asking farmers howthey define sustainability and weathervariability — what does it mean tothem? — may be useful to ensure thatco-op and farmer-member are on thesame page.

What is clear is that goodstewardship involves making acommitment to soil health. Thisinvolves improving managerial practicesvia improving decisionmaking andefficiency, etc. Utilizing innovations —such as variable-rate application, limeapplication, cover crops and reducedtillage — are an important part of thiscommitment.

Why a cooperative? Sunrise Cooperative, Land O’Lakes-SUSTAIN and Winfield Unitedrepresent a new, fluid and evolvingbusiness relationship to identify whatfarmers need and how it should bepackaged and delivered. Houin says co-op affiliation mattersbecause agriculture encompasses manydeep-rooted relationships. Businessrelationships can often become personalrelationships, with bonds of trust forgedbetween a co-op representative and thefarmer-member. A co-op identitysignals that the organization is ownedby farmers and therefore is motivated toimprove performance on their behalf.This has reciprocal benefits: knowingfarmer preferences conceivably reducesthe cooperative’s cost to serve. The Land O’Lakes SUSTAINplatform demonstrates howcooperatives are uniquely positioned tohelp their members adapt and succeed,regardless of whether challenges areenvironmental or market based.

Selected References• Arbuckle Jr., J.G., Hobbs, A. Loy, Morton,L.W., Prokopy, L.S. and J. Tyndall (2014).“Understanding Corn Belt farmer perspectives onclimate change to inform engagement strategiesfor adaptation and mitigation.” Journal of Soil andWater Conservation, Nov/Dec, 505-515.• Fleming, A., Vanclay, F., Hiller, C. et al. (2014).“Challenging dominant discourses of climatechange.” Climatic Change 127: 407-418.• Reilly, J.M. (2011). “Overview: Climate ChangeAdaptation in the Agricultural Sector” in ClimateChange Adaptation in Developed Nations.Stuttgart: Springer.• Reilly, J. and D. Schimmelpfenning (2000).“Irreversibility, Uncertainty, and Learning:Portraits of Adaptation to Long-Term ClimateChange.” Climatic Change 45: 253-278. n

Growers attend field-day trials to keep abreast of advances in new plant varieties and treatment strategies.


Florida’s Natural,citrus industry taking

bold steps to helpgrowers fightdevastating

disease

By Dan Campbell, [email protected]

Florida citrus growerswho survived 2004 —when the state waspummeled by threeconsecutive hurricanes

— could be excused for believing theyhad taken the worst hit Mother Naturecould deliver and still bounce back.Hurricane Charley that year alonecaused 24 deaths and inflicted $2.2billion in damage to the state’sagriculture industry, of which citrus isking. “Charley came in on the Gulf side;went right up the Peace River Valley,through the heart of citrus country,”recalls William McMullen, a memberof Florida’s Citrus World Cooperative(more commonly known as Florida’sNatural, the co-op’s popular juicebrand). “Trees were twisted and tossedabout like matchsticks.” What had beenshaping up as a banner year became adisaster. But even that calamitous year, aswell as periodic “freeze years,” musttake a back seat to the devastationunleashed on the orange crop byhuanglongbing (HLB) disease, morecommonly called citrus greeningdisease. Citrus greening, first detectedin Florida in 2005, is spread by a tinyinsect — the Asian citrus psyllid. Although the psyllid was present inFlorida in the late 1990s, citrusgreening most likely came into the statevia the Port of Miami. Since then,citrus greening disease, a bacterialdisease spread by the psyllid when itfeeds on citrus leaves, has severelyreduced the orange crop. “At least we knew that 2004 was aonce-in-100-years occurrence,” saysMcMullen, who grows several hundredacres of oranges in Polk County,southwest of Orlando. “You repairdamage, you replant, you come back.There is no cure yet for this disease,”which causes fruit to be misshapen andto drop well before maturing

‘FAILURE IS

NotAN OPTION’


(when still green). “Citrus greening is a doublewhammy,” McMullen continues. “It hascut my crop by about 50 percent whilemy production cost has nearly doubled”(due to extra horticultural actionsnecessary to mitigate some of theimpacts of the disease). Frank Hunt III, president of HuntBros. Cooperative, has been fightingthe disease with more frequent, small

nutritional feedings and irrigations tohelp strengthen the trees’ roots. Still,he has seen production plunge by about70 percent in his groves on “TheRidge,” a higher elevation growing areathat runs down the center of the stateand is known for its very sandy soil. While these steps help slow theprogression of the disease, they won’tstop it. “We’ve had to push [clear treesfrom] about 600 acres,” Hunt says.Fortunately, he also has orange groves

in the southwest part of the state thathave been far less impacted. Hundreds of millions of dollars havebeen spent on research since 2005, butthe unrelenting march of citrusgreening has continued. In 2004,Florida produced 240 million boxes oforanges, about 95 percent of which goto juice. This year, the current cropestimate is 70 million boxes, but islikely to be reduced further before

season’s end. Citrus canker and someother diseases are causing some of theloss, but citrus greening isoverwhelmingly the biggest culprit. One recent headline blared: “Howlong can Florida’s citrus industrysurvive?” Other media coverage hasfocused on the possible need foralternative crops if commercial citrus isin a death spiral. Citrus greening is also now present,to a far less extent, in California andTexas, the nation’s other primary citrus-

producing states. But the hot, humidclimate and geographic concentrationof the state’s citrus industry havecombined to make Florida ground zeroin the battle with the psyllid.

Horticultural steps help Researchers are working feverishly tobreed disease-resistant or -tolerant treevarieties and rootstocks, as well as todevelop other crop protectant “tools”

(see sidebar, page 11). Meanwhile, the good news is thatsome industry leaders — including BobBehr, CEO of Florida’s Natural —think the crop “may have hit bottomthis year and begun to rebound.” “It used to be that once a tree wasinfected, a grower would have to pushthe tree and replant,” Behr says. “Nowwe are learning to live with the disease,which means focusing on better roothealth to allow the tree to thrive withina citrus greening environment. It won’t

Frank Hunt III has cleared 600 acres of diseased trees and is replanting with high-density groves of 200 to 270 trees per acre to help offset theimpact of citrus greening disease. Opposite page: Citrus greening disease prevents fruit from maturing; it stays green and drops prematurely. Photoscourtesy Florida’s Natural, except where noted.


produce as much fruit as a healthy tree,but if a grower is willing to spend someextra money on care, the tree will stillproduce good fruit.” Advanced irrigation systems can helpget more nutrients and water directly toa tree’s root zone. Hence, the state ofFlorida will pay up to 75 percent of thecost for installing micro-jet or dripirrigation systems. These systems alsoconserve water by reducing runoff andevaporation, and can play a big role infreeze protection.

The ultimate weapon, however, willbe disease-resistant trees. Behr says heis “cautiously optimistic that there willbe one in the next 5 to 7 years,” giventhe current rate of research progress. Michael Sparks, CEO of FloridaCitrus Mutual, a statewide tradeassociation which does legislative andeducation work for the industry, sharesthat outlook. “We have 30 differentfield trials underway right now;progress is being made. So yes, I wouldsay Bob Behr’s estimate is right on themoney. The crop will be smaller againthis year than the year before, but notdown by nearly as much as we havebeen experiencing,” Sparks says. Florida Citrus Mutual hassuccessfully lobbied the stategovernment for $225 million forresearch and has teamed with similarcitrus associations in California andTexas to get $400 million in federalfunding committed to the battle.Indeed, Sparks says if one adds up allthe research dollars committed so far bygrowers, USDA and the states ofFlorida and California, among othersources, close to $1 billion may havebeen devoted to fighting the disease.

Citrus also recently became eligiblefor USDA’s Tree Assistance Program(TAP), a disaster-relief programadministered by USDA’s Farm andForeign Agricultural Services missionarea (FFAS). It’s not just farmers whose future isat stake — much of rural Florida’s fatehangs in the balance. Citrus creates62,000 direct jobs and many moreindirect jobs in Florida, and it is the lifeblood of many rural towns in the state’sinterior.

“That is why failure is not anoption,” says Sparks. Since his organization is funded by aper-box fee, Citrus Mutual has had tocut staff and facilities as the crop hasdiminished. It even had to sell it

headquarters building to fund itsoperations during the crisis. “There’s no way we could raise thefee on growers who are fighting fortheir lives,” says Sparks. So theassociation has tightened its belt andcontinues to help lead the fight.

Co-op support for replanting When production drops below acertain point, trees and entire grovesmust be pushed and replanted. The costof replanting when production is down

so sharply is a hardship for growers. Indeed, there are an estimated130,000 acres of “ghost orange groves”in Florida, meaning the owners havesimply abandoned them. This is anindustry problem, because these groves

“At least we knew that [three hurricanes in 2004]was a once-in-100-years occurrence. You repair damage, you replant,

you come back. There is no cure yet for this disease.”

William McMullen says he doesn’t view the co-op’s tree replanting program so much as amember-recruitment program as it is a way to help members boost productivity during a time of trouble.


uring his career as a research scientist, Harold Browning sayshe has never before felt the kind of pressure he isexperiencing now. “When you see growers going out ofbusiness due to citrus greening disease, as they are in Florida,with no end point yet in sight, you certainly do feel theurgency of the task,” Browningsays.As chief operating officer of the

Citrus Research DevelopmentFoundation (CRDF), Browning isresponsible for helping to directfunding and coordinate research fora wide range of ongoing projectsfocused on everything fromdeveloping pheromone baits that candivert and trap the Asian citruspsyllid (ACP), to identifying insectpredators to prey on it, to breedingdisease-resistant trees. A threat assessment done around15 years ago looked at all thepotential threats to the state’s citrusindustry, Browning recalls. The No. 1 threat was citrus greeningdisease. “Not only are we facing an unprecedented disease, but onethat comes with very few readily available solutions,” Browningsays. “This is probably the worst case one could imagine for anentire industry, as well for those of us who support it throughresearch.” Considering how little was known about citrus greeningwhen it hit here, Browning says he is pleased with the amountof research progress made in a short time. “Prior to 2005, worldwide, very little had been published onthe disease. Today, literally hundreds, perhaps thousands, ofpapers have been produced that lay down a foundation ofknowledge about the interaction between the tree, the bacterialpathogen and the vector insect that carries it. We started witha black box; we have steadily been able to shine light into thatbox. But there are still things we don’t know.”

Seeking long- and short-term solutions Research projects range from short- to long-term. “Manyshort-term projects could be considered as a band aid, ortherapy that prolongs the life of tree, but are not a cure,”Browning says. “The other end of spectrum would be a fullyresistant tree. Even if one is available in a few years, it couldtake 15 to 20 years before the majority of Florida citrus wouldbe replanted and producing it.” So, short-term strategies are vital to the industry’simmediate survival. “We are well along the path on a wide range of solutions,”

Browning continues. “But how to do we turn newfoundknowledge into solutions? We’re maybe at the third lap of amile run, with the endpoint not yet in sight.” CRDF was established in 2009 as a liaison between thecitrus industry and the research community. Funding for

research comes from the citrusindustry and state and federalsources, including USDA. “We solicit proposals and report on

the results of research. We workwith private companies andregulatory agencies, integratingteams to take research results andturn it into something that can betested in the field, then be adoptedby growers,” Browning explains. The original plan had been for

CRDF to be an independent,corporate entity that would receivesome support from the University ofFlorida (UF). It has since evolved intoa Florida nonprofit that is affiliated

with UF. In addition to research work being done at UF, CRDFhas also directed research funds to the University of California,Texas A&M, Penn State University and Cornell University,among others. “Whoever has the best ideas, we can fund theirwork,” Browning says.

Important role for co-op Browning views Florida Natural’s tree replanting program as“a very important companion to the research work being done”because it reduces the degree of risk growers face by reducingtheir cost of replanting. “It is a tribute to the co-op that it isjumping in and doing all it can to help growers.” Originally, it was felt that the industry could provide most ofthe needed research funds via an assessment on every box ofcitrus fruit grown in the state. “But as growers fail and the cropdiminished, our resources faded,” Browning explains. “So, inrecent years we have had to reach out to the state legislatureand USDA.” Several USDA agencies are providing funding and othertypes of assistance, including the Agricultural ResearchService (ARS), the Animal and Plant Health Inspection Service(APHIS) and the National Institute of Food and Agriculture(NIFA), as well as research being done at USDA’s horticulturallab in Fort Pierce, Fla., among other locations. “There will probably never be one silver bullet [that curesthe disease],” Browning says. “It’s going to be an integratedmanagement system that allows growers to stay in business, orreturn to business.”

— By Dan Campbell

DResearchers contend with ‘worst-case’ scenario

Researchers, such as this one, are makingprogress on many fronts against citrus greeningdisease. Photo courtesy University of Florida CitrusResearch and Education Center


can become hot spots for hosting pests.Beyond that, these acres, as well asorchard land that has been cleared butis being left fallow, represent lost

production the industry sorelyneeds to survive. Florida’s Natural has notonly been playing an active rolein educating members aboutways to deal with the disease,but it has also taken bold actionto get non-productive farmlandproducing oranges again. “We were looking for waysto incentivize growers to getmore land back intoproduction,” says Hunt, who isvice president of the Florida’sNatural board. Hunt Bros.Cooperative is a local co-opprimarily composed of membersof the extended family. HuntBros., in turn, is a member ofFlorida’s Natural, a 14-member,federated processing andmarketing co-op comprised oflocal co-ops and a few largeindividual growers. Co-op leaders studied thepossibility of buying or plantingits own groves to help supplythe volume of oranges needed to keepits juice processing plant in Lake Wales,Fla., operating efficiently, Hunt notes.But because there was so muchnonproductive acreage within themembership, the board andmanagement decided the best course ofaction would be to provide incentives tomembers to replant. To do so, itestablished a $10-million plantingincentive program (PIP) to helpsubsidize the cost of replanting. “We opted to pay growers $10 pertree to replant — enough to cover the

cost of the tree plus some of their otherreplanting costs,” says Hunt. Themoney conveys as a loan from the co-opwhich, if the member agrees to extend

the normal 2-year supply contract to 10years, is forgiven. “Using non-member earnings tohelp underwrite the cost is providing anincentive for replanting that is critical

to the long-term survival of growersand the co-op,” adds Behr. Theprogram has proven to be very popular;already, more than 1 million orange

trees have been replanted underit. The initial PIP offering hasbeen so successful that a second$10-million offering is nowunder serious consideration.McMullen says he doesn’t seethe replanting program somuch as a member-recruitmenteffort — “because most growerstend to either be co-op peopleor not” — as it is a way to helpmembers boost productivity in atime of trouble.

‘Waiting it out’ may prove fatal

Growers waiting on thesidelines for a disease-resistantorange variety before replantingare “gradually puttingthemselves out of business,”Hunt says. “There will alwaysbe a better rootstock comingdown the line. Meanwhile, youhave to keep producing. Thelonger you wait on thesidelines, the harder it will be to

get back into business. Each year youwait, you are pushing it that muchfurther into the future before you havea producing grove.”

Traditionally, orange groves herehave been planted in the range of 100to 150 trees per acre. To boostproduction in the face of the disease,many growers are now planting high-density orchards of about 250 to 300trees per acre, sometimes even up to400 trees per acre. These plantings thenbecome “hedge row” groves that“represent a more efficient use of our

In an orange grove heavily infected with citrusgreening disease, entomologists Matt Hentz(left) and David Hall, both of the USDAAgriculture Research Service’s HorticulturalResearch Laboratory in Ft. Pierce, Fla., inspecttrees for Asian citrus psyllids that have beenkilled by a beneficial fungus. USDA photo byStephen Ausmus

“You have to keep producing. The longer you wait on the sidelines,the harder it will be to get back into business.”


land and water resources. They help tomake our farms more sustainable,” saysBehr. As he replants, Hunt is mostly goingwith 200 to 270 trees per acre. In such a planting, when one tree ispushed, that hole is typically notreplanted, he explains. “The other treesthen grow into and fill that space.” By going with a higher densityplanting, plus using improved irrigationsystems and adaptive horticulturalpractices, new groves can beeconomically viable, Hunt says. “Even

after replanting, it can take 3 to 5 yearsbefore a tree is producing, and 5 to 10years before you are getting a goodreturn on that grove.”

Many small growers may not bounce back The 1 million new trees plantedunder the co-op’s program isencouraging, but many more trees areneeded, says Sparks. “I just did aCongressional briefing during which Isaid we will need 30 million new treesover the next 10 years just to get back

to where we were before HLB hit us in2007.” When the disease was first identifiedin Florida, “we knew we were in for thefight of our lives, because it had alreadydecimated China’s industry,” saysSparks, a 40-year veteran of the citrusindustry. “They just gave up and movedtheir industry 250 miles away,something we can’t do in Florida. “Small- and medium-sized growershave long been the backbone of theFlorida citrus industry, and it tears yourheart out to see so many of them whoaren’t going to make it,” Sparks says.One likely result of this disease will begreater consolidation on the productionside, he notes. Talk of alternative crops gets a verbalshrug from Sparks. Granted, he’s acitrus guy, but he says realistically noother crop will ever be able to fill evena fraction of the gap that would becreated by a collapse of citrus. “Our sandy soil, hot days with coolnighttime temperatures and lots of rainmake Florida ideally suited to growingcitrus,” he says. “It’s nice to also haveniche market crops [blueberries andpeaches are among the crops beingplanted on more acres], but can theybecome an alternative to Florida’s $10-billion citrus industry? Not likely.” To stimulate further replanting, alegislative priority this year for CitrusMutual is aimed at getting federal taxrules changed so that rather thandeprecating the cost of a new groveover 14 years, it can instead be listed asa business expense in the year it isplanted. “If we can do that, it will attractmore investment in replanting,” Sparkssays. “That could play a big part ingetting those 30 million trees back inthe ground.” Despite all the suffering in citruscountry, Sparks and Behr say they areheartened by a gradual rise of cautiousoptimism around the state as moregrowers adopt new farming strategies.“But,” adds Sparks, “we still have a longway to go — period.”n

eyond having to contend with a devastating citrus disease, Florida’s Naturalmust do business in a highly competitive orange juice market. Its majorcompetitors are juice brands owned by giant soft drink companies with far moreresources at their disposal than the co-op has. One important way Florida’s Natural engages in this competition is to market

the fact that it is a grower-owned juice brand, and that all of its oranges aregrown in Florida, not overseas, as are much of its competitors’ products. The co-op includes profiles of its grower-owners on the side panels of juicecartons and emphasizes the “co-op difference” in its various marketing efforts.Florida Natural’s Web page features profiles of a number of its grower-membersto help reinforce the grower-owned message. “We have found that being a grower-owned brand, with a home-grownproduct, really resonates with the public,” says Bob Behr, CEO of the co-op. “Themillennial generation and other young people seem to be especially receptive tothe idea of buying farmer-owned, co-op products.” In the years ahead, he thinks being a co-op will be increasingly advantageousin the marketplace. If more co-ops with branded products market the fact thatthey are grower-owned, Behr says, it will reinforce and educate the public aboutthe reasons they should consider buying co-op-produced goods. “This is something we think co-ops should be doing — co-ops should takepride in being farmer-owned and market that fact.”

— By Dan Campbell

B

Marketing the co-op difference


By Meegan MoriartyLegal and Policy AnalystUSDA Rural Business-Cooperative Servicee-mail: [email protected]

Two recent U.S.Internal RevenueService (IRS) privateletter rulings permitcooperatives to

communicate electronically withmembers regarding written consent andnotices of patronage dividendallocations. In Private Letter Ruling (PLR)201413002 (March 6, 2014), the IRSapproved a consumer cooperative’selectronic delivery methods for non-qualified written notices of allocation. And in PLR 2605806 (May 6, 2016),the IRS said co-op patrons who consentelectronically to include patronagedividends in gross income for taxpurposes had signed a “consent inwriting” for purposes of InternalRevenue Code (IRC) section1388(c)(2)(A). Under IRC section 6110(k)(3),private letter rulings may not be citedas precedent. However, rulings givesome insight into the views of IRS onthis subject.

Consumer co-op automates communications PLR 201413002 was issued to aconsumer cooperative that sells“personal, living and family items” (asdescribed in Internal Revenue Codesection 1385(b)(2)). Sales are conductedvia the internet, mail order and in theco-op’s stores throughout the UnitedStates. The co-op issues all patronagedividends in the form of nonqualifiedwritten notices of allocation that may

be used as cash equivalents to purchasemerchandise. Members can also redeem thenotices for payment in cash or in theform of a check. The consumercooperative treats the nonqualifiedwritten notice of allocation used to buymerchandise as having been redeemedfor cash or other property under IRCsection 1382(b)(2). Partly because of environmental andfinancial concerns, as well as inresponse to member demands, thecooperative decided to provide mostinformation about patronage dividends

electronically, using traditional mailonly when necessary. In the ruling, thecooperative proposed to provide thewritten notice of allocation through itswebsite, by e-mail and/or by U.S. mail. The cooperative providesinformation on its website about thebalance of each member’s unusedpatronage dividend. It can determinewhich members actually look at theirbalance. The cooperative will e-mail thenotice to members who have providedan e-mail address to the co-op. The e-mail subject line will state that themessage contains patronage dividend

Legal CornerIRS receptive to electronic communicationsbetween cooperatives and members


information, while the body of themessage will make clear that themember can also request a free papercopy of the notice. The cooperative has software thatcan identify whether the member hasopened or viewed the e-mail and/or hasclicked on links included in the messagethat provide information on how to use

the allocated dividend. The softwarecan identify and keep track ofundeliverable e-mail and can also showif subsequent attempts to reach themember by e-mail fail, in which casethe cooperative will use U.S. mail tosend the notice. Members who did not supply an e-mail address to the co-op, or who askedfor paper copies, will also receivenotices through the mail. Whenmembers come to the co-op stores ororder online, they are prompted to usetheir allocations. Employees in storescan look up member allocation balancesand apply them toward merchandisepurchases. As the end of the payment period forthe dividend nears, the cooperativeproposes to mail a notice to allmembers who were first notified by e-mail, but had not accessed theirpatronage dividend information,opened the e-mail or used (by apredetermined cut-off date) thepatronage allocation.

Grain/supply co-op facilitates electronic consent One of the “nation’s leadingintegrated agricultural companies”applied for a ruling that electronicconsent to include patronage amountsin income represents valid “consent inwriting” under IRC section1388(c)(2)(A). This agriculturalcooperative proposed to put its

“Patronage Application and EligibilityForm” on its website, where applicantscould either print the form and mail itto the co-op, or fill it out online andsubmit it by clicking on a box. Applicants who choose to fill out theform online check a box to indicateconsent to include the dividends inincome, or check a box that waives

patronage dividends. A prospectivemember must provide a Social Securitynumber or employer identificationnumber, date the application, type aname on the signature line and click abox to submit the application. The system will not permit theapplicant to submit the form unless it iscomplete. Once the application isreceived, the cooperative will check toensure that the information isconsistent with other information thecooperative has regarding the applicant.If the information does not match otherrecords, the agricultural cooperativewill not accept the form. However, ifthe application is in order, the applicantis added to the list of patrons eligible toreceive patronage dividends.

Definition of “written” In both rulings, the IRS approvedthe new means of communication. As a preliminary matter, IRS lookedat the definition of “written” in eachruling to determine whether electroniccommunications qualify. Subchapter Tdoes not provide a definition of theword “written,” so IRS turned toBlack’s Law Dictionary and severalInternal Revenue Code sources. IRS noted that Black’s LawDictionary defines “writing” as an“intentional recording of words . . .[that includes] . . . electronicdocuments on computer media . . .e-mails and any other media on which

words can be recorded.” For purposesof the Circular 230 regulations (whichaddresses written advice bypractitioners) and regulation section301.6401(d)-1(d)(2) (which addressesrequests to tax exempt organization forwritten materials), IRS said thatelectronic communications qualify as“writing.” IRS determined that

The IRS has determined that electronicnotices of allocation and electronicconsent both qualify as “written”communications with members.

IRS said that it is good practice for co-ops to require prior affirmativeconsent to electronic delivery, but in some circumstances it is not required


electronic notices of allocation andelectronic consent both qualify aswritten. Regarding the agriculturalcooperative, written consent wouldoccur when the patron types in his orher name, rather than physically signinga paper document. IRS cited section7001(a) of the Electronic Signatures inGlobal and National Commerce Act, 15U.S.C. 96 (Public Law 106-229,adopted June 30, 2000), which statesthat a signature or a contract may notbe denied legal effect solely because it isin electronic form. The Act generallydefines a signature as a symbol attachedto a contract and executed by a personwith the intent to sign the document. IRS ruled that the agriculturalcooperative’s new process for obtainingconsent in writing from patrons willresult in patrons “signing the electronicdocument as that term is understoodtoday.” Further, the patron’s electronicsignature and submission of theelectronic document results in “consentin writing” under IRC section1388(c)(2)(A).

Payment by book entry and transmission IRS addressed whether the consumercooperative’s electronic, nonqualifiedwritten notices of allocation qualified aspatronage dividend payments occurring

during the payment period for the taxyear when the patronage occurredunder IRC Section 1382(b)(2). Havingconcluded that written notices ofallocation that are transmittedelectronically are “written,” IRS lookedat when the allocation is consideredpaid. Under IRC regulation section1.1382-2(b), the written notice ofallocation is considered paid when it isissued to the patron; under regulationsection 1.1388-1(b), an entry on theorganization’s books plus transmissionto the patron is required. Subchapter T, IRS notes, does notspecify any particular means fortransmitting the notices to members.Traditionally, cooperatives have used avariety of means for transmission,including delivery by hand, in the mailand at annual meetings. Actual receipt,however, is not required. IRS agreedwith the consumer cooperative that e-mail is also an appropriate means fortransmission of notices. The consumer cooperative also askedIRS to rule that a member has receivedpatronage dividend information whenhe or she timely accesses theinformation on the website. In theruling request, the cooperativeanalogized looking at the informationon the website to a situation where amember is provided a notice at an

annual meeting. IRS views that makingthe patronage dividend informationavailable on a website is directlyanalogous to making notices available ata meeting. It is not necessary under these factsfor the consumer cooperative toadditionally mail the member thenotice, according to IRS, even when themember has not affirmatively consentedto electronic delivery. While somecooperatives are required to getaffirmative consent to electronicdelivery under the reporting rules in theJob Creation and Worker AssistanceAct of 2002 (JCWAA), Public Law 107-147 (March 9, 2002), in this case theconsumer cooperative is not because itis exempt from the Form 1099 PATRreporting requirements. The cooperative’s members are nottaxed on dividends connected withpersonal, living, and family items, anddo not have to report the dividends tothe IRS. As a result, it is unnecessary torequire consent for electronic deliveryof a dividend information statement toensure that the taxpayer is receiving theproper income statement because themember/taxpayers is not required toreport the dividend amount to the IRS. Generally, however, IRS said that itis good practice to require prioraffirmative consent to electronicdelivery. n

Live wires: proceed with cautionAt a Feb. 16 National Council of Farmer Cooperativesmeeting, George Benson, cooperative tax partner withMcDermott, Will & Emery in Chicago, warned cooperativesto proceed cautiously with reliance on electroniccommunications. For example, the consumer cooperativediscussed in this Legal Corner did not have to worry aboutaffirmative consent for electronic delivery. However, many cooperatives need to get affirmative

consent under the Job Creation and Worker AssistanceAct. Wire transfers and other electronic means of deliverycan present problems for cooperatives currently usingchecks and qualified notices, Benson noted. Additionally,there is uncertainty regarding whether cooperatives canissue domestic production activity deduction notices underIRC section 199(d)(3) via email. n

Management TipTips for reducing your new employee turnover rate

By Stephen Sheppard Senior National Account Specialist GENEX Cooperative

Editor’s note: This article is reprinted, with minor edits, courtesy Horizons, the member publication of GENEX, acattle genetics cooperative headquartered in Shawano, Wis. GENEX is a part of Cooperative ResourcesInternational. While this article specifically focuses on dairy farm employees, many of these same personnelmanagement practices can also apply to workers in almost any farming operation, or at a co-op supply store, feedplant or other co-op operations with introductory-level staff.

Over the years, many farms have grown from small dairies to large businesses. These farmsoften have to rely on employees with no previous agricultural experience. In some cases,farm workers never had a desire to be a part of the rural environment, but it was the jobavailable when they needed work.

For dairy farmers, these entry-level positions are often in the milking parlor, where thework can be hard, dirty, unglamorous and relatively low paying. For those reasons, it can be difficult tofind good help and often even harder to keep those workers you do find. But after the individual is hired, it’s your turn. It’s your responsibility to make employees believe theymade the right job choice, which helps you by reducing the turnover rate among newly hired staff. So, how do you make new employees feel theymade the right choice? A new employee requiresfive fundamental things in a new job: 1 Explanation

What is my role? Why is it important?

At the interview, give applicants a clearjob description and clear message of howimportant the harvest of milk is to theoperation of the dairy farm. Explain that itis hard work with long hours on their feet.It is important to let people know thatcows don’t go on holiday! So the schedulealso has to be filled every weekend andevery holiday.

2 EducationWhat knowledge or skills do I need?

Prospective milkers often do not arrivewith a great deal of formal education, butthat does not mean we should not takeinitiative to educate them. I don’t believeanyone wants to go through life not learninganything new. If you start a new employeewith the idea that this is a place where youlearn and expand yourself, he or she is morelikely to want to stay, rather than move toanother entry-level position elsewhere. One common fear is that educatedemployees will take their new skills andmove on to a new job. The reality is, if youdon’t teach people, they will quickly getbored and you will lose them anyway. It isimportant to encourage the new employeesin the education process to help them feelpart of the team.

3 TrainingHow do I carry out my role?

I have seen dairies take someone with nocow experience and throw them into theparlor to see what happens. That is nottraining! The situation leaves people feelinglost, intimidated and frustrated. Now, morethan ever, our dairies are under scrutiny. Youhave an obligation to the industry to makesure employees are properly trained andknow how to handle a cow. There are goodtraining resources available on cattlehandling. Be sure to use them. The Farmers Assuring ResponsibleManagement (FARM) program,administered by the National MilkProducers Federation, is an excellent, multi-faceted resource for teaching employeesabout the proper care of dairy animals. Ituses a national set of guidelines designed todemonstrate dairy farmers’ commitment tooutstanding animal care and a quality milksupply. (See related article, page 31.) FARM program participants now supplymore than 98 percent of the nation’s milk.For more information, visit: www.nmpf.organd search “FARM program.”

Now, more than ever, our dairies are underscrutiny. You have an obligation to the industryto make sure employees are properly trained andknow how to handle a cow.

USDA photos by Lance Cheung

4 EvaluatingHow will my performance be measured?

I always found the breeding team was theeasiest part of the dairy to manage, becauseeveryone understood how and when theywere to be evaluated. Every time theveterinarian conducted a pregnancy check,the breeders could look at cows they bredand see their conception rate. Everyonewants to be seen as doing a good job.Therefore, everyone needs to know howtheir performance is measured and whatperformance level is acceptable. It has to bea simple evaluation method conducted on avery regular basis. Performance milestones are also criticalto ensure employees are on track for successand should be celebrated when reached.They provide valuable check-points formanagers too.

5 ReportingWhat feedback will I receive?

Keep open lines of communication forreporting back to the employee. Employeescan feel in the dark about their jobperformance if they do not receive feedbackabout their quality of work. Or if they do, itmay not be constructive feedback. Thiscreates unease in the workplace. Feedback needs to provide informationand instruction for the employee to improve.Not all new employees will have what it takesfor the position, but it should not be asudden surprise when someone is let go dueto poor performance. If employees are notreaching their defined objectives, it needs tobe brought to their attention immediatelywith a clear direction of how they canimprove and how long that improvementshould take. Do not wait for a performance review.Employees also need to know what theramifications are if they do not start reachingtheir objectives. Company policy should be for staffmembers to introduce themselves to newemployees. Plan a welcome for the newemployee. Assign one person to greet newemployees, show them around the farm andgive them insight into how the teamfunctions. Assign someone to answer the newemployee’s questions and listen to his or herconcerns and suggestions. Entry level doesnot translate into unimportant. Take time toreally acknowledge how much you value newemployees. Work with them and mentorthem. You can quickly become an importantpart of the person’s life — giving them morethan a job, giving them a place to belong. Provide new employees with the toolsneeded to succeed. Then give them time tosucceed. Dairies frequently look at cull ratein the first 30 days after calving and adjustmanagement to keep that number as low aspossible. In the same way, measure turnoverrate in staff in the first 30 days. Consider thetraining and other resource costs to the dairy.Be willing to adjust management to keep theemployee cull rate as low as possible as well.


In the Spot l ightTammy Simmons, president Cooperative Communicators Assoc.

What is the biggest reason people who docommunications or public affairs work for a cooperativeshould join CCA?

w CCA is the only organization geared towardadvancing the skills of professional communicators whowork for cooperative businesses. Co-ops are unique,and as such they have an even greater need for skilled,ongoing communications than do other types ofbusiness. Co-ops adhere to a set of core principles: the7 Cooperative Principles, which define the democraticprinciples and “service to members” philosophy that isthe foundation of cooperatives. This can make gettingour message out somewhat of a challenge. But, bybecoming a member of CCA, our members have accessto a network of more than 200 cooperativecommunication specialists who face many, if not most,of the same challenges they do.

What are some examples of how CCA accomplishes thismission?

w CCA’s Annual Institute is three days of skills-building and networking opportunities. Sessions canrange from hands-on workshops for photo and design

software, to developing emergency communicationsand member recruitment plans;w Webinars and workshops on key communicationsissues are held throughout the year;w Co-ops 101 offers online training that teaches the co-op basics we all need to know;w The annual CCA Communications Contestsrecognize the best in communications work in fourareas: writing, publications, photography andprograms/campaigns. Members have access to onlinesamples of past winning entries and critiques in theCommunications Contest Showcase;w The Master Cooperative Communicator DesignationProgram certifies that a member has a solid grasp ofco-op fundamentals;w Shirley K. Sullivan Educational Grants can helpdefray the cost of attending the annual institute; w 10 issues annually of CCA’s excellent Communiquénewsletter, each filled with ideas that can help us doour jobs better; w Participation in a members’ online mailing list;w Members pay discounted fees to attend the CCAInstitute, regional workshops, webinars and for entriesin the CCA Communications Contest; w Networking is facilitated through our online,

As president of the Cooperative Communicators Association (CCA),Tammy Simmons is working to further the mission of an organizationwhich for 63 years has been helping the nation’s cooperatives bydeveloping the communications and public affairs skills of their staffmembers. Simmons has been a cooperative communicator for the KentuckyAssociation of Electric Cooperatives (KAEC) for the past 28 years. She iscurrently the local co-op news coordinator for KAEC, providing localelectric cooperative news to electric co-ops throughout the state. She alsocoordinates the efforts each month for 19 to 20 local section newslettersthat appear in the association’s statewide magazine, Kentucky Living. Thisinvolves writing, layout and design.

Top: Expert speakers — such asBob Cohen, CEO of BraintreeBusiness Development Center inOhio — discuss topics of vitalinterest to co-op communicatorsduring CCA’s annual institute andregional workshops.

Below: Why reinvent the wheelwhen you can prefect it instead?Breakout sessions — in whichmembers network to discuss theirexperiences in finding solutions forcommunications challenges — area highlight of most CCA Institutes.

Below: CCA’s annual communications contest offers members a chance to have their workevaluated by professionals and to earn recognition, as seen here by Savannah Chandler ofGeorgia’s Walton EMC cooperative. Photos courtesy CCA



members-only directory; w Access to job postings from CCA member organizations; w Leadership development opportunities throughinvolvement in CCA committees, event-planning andexperience on the board of directors.

How have you personally benefited from membership?

w I cannot even count the ways CCA has been beneficialto me. From the moment I joined, I became very involvedand began networking with others. I hear all the time thatpeople who are a bit shy and are not natural “networkers”find it easy to “plug in” to the CCA network. CCA has both expanded my leadership skills and givenme the opportunity to become a leader. I was a regionalambassador the year our region won Region of the Year andreceived the Outstanding Leadership award, then chairedthe annual CCA Institute. I’ve been a board member for sixyears.

There has been a revolution in communications during thepast decade or more, with the rapid growth of the internet andsocial media. Are many co-ops “missing the boat” in thisarea?

w I think perhaps many co-ops were a bit slow to getonboard, but they are catching up fast. Many co-ops haveexemplary social media strategies. CCA offers training insocial media at our annual Communications Institute and inmany of our regional and online workshops. The best inco-op social media efforts are also recognized in ourcommunications contest.

What’s on the agenda for this year’s Co-op CommunicationsInstitute?

w The great thing about a CCA Institute agenda is that itoffers opportunities to build skills for all types ofcommunicators. The agenda for this year’s institute, June 3-6 in Baton Rouge, La., is no exception. Sessions will befocusing on crisis communications, branding, writingtechniques, social media, videography and layout anddesign.

Studies have shown that most long-lived co-ops tend to bethose with strong communications programs. Yet whenbudgets get tight, this is often one of the first areas to take ahit. Your view on this?

w This does seem to be the case. Balancing a budget byreducing communications or public affairs will, more often

than not, prove counter-productive to the good of the co-op. Many times the pendulum then swings back to theimportance of communications, especially if a cooperativeexperiences a bad situation. I’ve seen it happen a few timeswithin our own particular cooperative industry; it’s usually awell-planned, positive communications plan that saves theday.

CCA members primarily come from agriculture and utility co-ops. Would staff from other co-op sectors — such as creditunions, grocery store, consumer/ retail and worker-owned co-ops — also benefit from membership? How about co-opstaffers who may have member relations or even marketing astheir primary duty?

w We do have members from those other co-op sectorsand would welcome more. After all, communicationsstrategies and techniques are pretty much the sameregardless of what co-op sector you work in. Being a communicator for 30 years, and a cooperativecommunicator for 28 years, I believe everyone in a co-opshould be a communicator, no matter what position youhold at any particular type of cooperative. Cooperativesserve members. You must know how to communicate thatunique philosophy with them. So, the short answer is yes. Member relations andmarketing folks rely on communications to get their jobdone. CCA membership is a great way to tap into the talentand knowledge base of professional cooperativecommunicators. We also have members who work for advertising andpublic affairs agencies who have co-ops for clients. CCAmembership is open to “all professional and studentcommunicators involved and/or interested in cooperatives.”If you are connected to cooperative communications in anyway, as a freelancer, contract worker, contributor, studentintern, or otherwise, then you should become a CCAmember.

Why should co-op management support staff in belonging toCCA?

w For a cooperative to thrive in these chaotic times,supporting your communications staff is vital. We mustknow how to appropriately communicate with ourmembers. And, in the long run, a cooperative’s managementstaff that supports its communications professionals’membership in CCA can affect the bottom line.Appropriate, positive communications keeps a cooperativestrong. n


By James Wadsworth, Ag EconomistUSDA Rural Business-Cooperative Service

Editor’s note: This article is excerpted from“Vital Steps: A Cooperative FeasibilityStudy Guide,” Service Report 58, whichhas been newly revised. To order the fullreport, send requests to:[email protected], or download from:http://www.rd.usda.gov/files/publications/SR58_CoopFeasibilityStudyGuide.pdf

A feasibility study is anintegral part ofcooperative businessdevelopment andshould be undertaken

by an experienced developmentpractitioner. In most cases, an outsideconsultant is used to conduct the

feasibility study. Most prospective co-op membersand financiers view an objectiveevaluation of a project concept by anoutside business developmentpractitioner as vital. The objectivitybrought to the project by an outsideexpert often provides a group withinformation that might have beenoverlooked by someone who isparticipating directly in the project. Because hiring a consultant to createa feasibility study is such an importantdecision, the steering committee orother group leading the effort must usecare when selecting that person or firm.In practice, consultants have differinglevels of ability, and usually a consultantwill be strong on some points andweaker on others. The key is to select a

feasibility practitioner who is skilled incooperative development and versed inareas relevant to the type of project. There are important criteria forselecting a qualified consultant (seesidebar, page 25) The steeringcommittee will need to determine if aconsultant is technically proficientenough to undertake a feasibility studyand whether he or she has significantexperience in doing so. The committeeshould review samples of previouslyprepared studies and speak with othersfor whom the person or firm hasworked before contracting with them. Itis important that a consultant have thetraits required to work well within thegroup. Consultants should have experiencein the industry being studied.

Expertise Is EssentialDeciding who will conduct a co-op feasibility study is a crucial decision


Otherwise, they may not correctlyidentify critical factors. Given businesscomplexity, it is almost impossible forone person to have experience in all areas. Some consulting firms resolve thisissue by having their feasibilityspecialist work with contracted industryexperts. In any case, it is important toresearch many sources for all thepertinent information possible about anindustry. A team approach may, in someinstances, be utilized to develop a study.For example, a cooperativedevelopment specialist could workjointly with industry specialists to createa feasibility study. The consultant should alsounderstand the unique aspects ofcooperatives. Tax implications,distribution of net margins (profits),management, and other businessconsiderations (e.g., governance) ofcooperatives differ from those of otherbusinesses, and the nuances of eachmust be properly presented. The consultant should avoidpreconceived notions about how theproject will function. The study shouldnot be an “off-the-shelf” documentassembled from previously createdstudies. Rather, the consultant shouldpay particular attention to the ideas thatthe group has developed and craft aunique study suited to the group’sneeds. The consultant should workclosely with the group and be receptiveto its suggestions. The consultant should also beprepared to make technical revisions orto correct errors, given grouprecommendations and wishes. Revisionsare a normal part of the study-development process. Revisions shouldfocus on the validity of the assumptionsand the technical design of the study. Using an outside consultant bringsobjectivity to the feasibility study ratherthan merely providing the results thatthe group wants. Consultants have alegal obligation to provide a responsibleanalysis. They should not be asked toalter the results merely to conform to

members’ desires for a project’sviability.

Balancing time and need Timeliness is an importantconsideration when selecting aconsultant. Projects are time sensitive.Usually, decisions to proceed awaitinformation provided in the feasibilitystudy. So care and diligence requiredfor a well-crafted study must bebalanced against the desire for speed. Aqualified consultant must be able tocomplete a well-designed study within atimeframe that serves the group’s needs. On the other hand, the timelinemust be realistic. A consultant can onlyprogress as fast as a group makes therequired decisions, providesinformation to the consultant, andcarries out its other projectresponsibilities. Cost is an important factor. Theexpertise and skills that consultantsoffer a project must be weighed against

their cost. A quicker timeline couldincrease a consultant’s fee. Preparing apre-feasibility analysis may decrease theeffort required to complete thefeasibility study and reduce the cost. Some public programs offered by theUSDA’s Rural Business-CooperativeService, community developmentoffices, the Small BusinessAdministration, some cooperativedevelopment centers, and local businessincubator programs provide technicalassistance at little or no cost forcreating feasibility studies. There arealso grant programs available, such asUSDA’s Value-Added Producer Grantsprogram, which can provide funding fora feasibility study if a project meets theprogram’s criteria and is selected. Thisprogram requires a one-to-onematching contribution from theapplicant. A consultant should provide the dataused to generate the financial tables andscenarios reported in the feasibilitystudy and, preferably, an electronicspreadsheet format that can be easilymanipulated. Although requesting thisinformation can moderately increasethe cost of a feasibility study, access tothe actual data permits the group to usethe information for later needs withgreater flexibility. The group shouldn’t,however, expect the consultant tocontinually revise the study after it hasbeen finalized. The data can also reduce the cost ofcreating the business plan if the groupproceeds to that stage. Additionally, itcan decrease the effort required forrevisions if, in the future, the groupchanges the project’s assumptions todiffer from those in the study.

After the selection Once the consultant has beenselected, the group should providedetailed instructions on the studyrequirements. There should be a legallybinding contract between the parties.The group should consult legal counselfor assistance. The contract should stateclearly the requirements and role of

Using an outsideconsultant bringsobjectivity to thefeasibility study

rather than merelyproviding theresults that thegroup wants.


both the group and the consultant. Itshould have timelines, delivery dates,explicit deliverables, and what is to beaccomplished before payment is made.Often, the consultant receives a down-payment before the feasibility study hasbeen conducted. The balance is paidonly after the study has been reviewedand accepted by the group (and possiblefinanciers, if appropriate). This givesthe group more leverage to encouragetimeliness or revisions. The contractshould designate a third-party arbitratorto resolve any disputed items. A complex, large-scale project mayrequire several consultants to completevarious aspects of the study. Multipleconsultants can reduce the group’sdependency on a single person orcompany. It also can permit the groupto select experts from several fields.However, it also can complicate thecoordination and consistency of theinformation received. Before signing the contract, thegroup should discuss with theconsultant arrangements for costoverruns, time delays, revisions, andwhat considerations will be made forthese issues. Changes after signing thecontract can be costly or delay the studyresults. All parties should be clear aboutwhat to expect prior to signing thecontract and initiating the study.

Working relationships A few qualified members of thesteering committee (if the committee isa large one), or the entire steeringcommittee (if it is a small one) shouldbe designated to work closely with theconsultant or person developing thestudy. These group members must seethat the feasibility study properlypresents and reflects the right aspects ofthe project as it has been designed, andin accordance to the definedassumptions. Through this workingrelationship, the study should betracked through all of its stages and itsideas reviewed and clarified. Steering committee members withappropriate backgrounds and the ability

to commit sufficient time to workingwith the consultant should be selected.These contact members represent thegroup’s interests to the consultant.They are the contact to provideclarification and additional informationthat the consultant may require. Plus,they should provide periodic reports to

the group about the study’s progress.They should also work with othergroup members and advisors to gatherthe information needed for thefeasibility study. These members areobliged to express the wishes of theentire group and not just their ownviews. Members or outside financiers willoften perceive the reliability of theentire study based on its least accuratepiece. An otherwise well-conductedfeasibility study could be viewed asinaccurate or useless because of asimple mistake. To prevent this, thefeasibility study should be carefullyexamined for overall clarity and logicalconsistency: Is the languageappropriate? Is the document wellorganized? Can someone who is notfamiliar with the project understand thestudy and its findings? Reviewers should confirm that thestudy’s assumptions are clearlydocumented, well described, justified,and as accurate as possible. Although the contact members takethe lead in working with the consultant,others should review the study carefullybefore the group decides to accept it.Advisors — such as staff of acooperative development center, USDAcooperative development specialists,consultants, university professors, orExtension agents — can provide anobjective review and offer insights oncontent or study assumptions. Thisoutside review can be especially usefulwhen the group has used consultants toprepare the report. Often, a series ofdraft reports are presented to the groupas the study proceeds. Issues identifiedthat warrant changes to the study arethen conveyed to the consultant. This article covers just one of thekey topics examined in Vital Steps: ACooperative Feasibility Study Guide(Service Report 58). Any groupsexploring the possible formation of acooperative are strongly urged to readthe entire report (see editor’s note atthe beginning of this article). n

Criteria for a co-op feasibilitystudy consultantw Has previous experienceconducting feasibility studies.

w Has experience with the industryto be studied, or access toexperience and associatedprofessionals.

w Works independently andobjectively (e.g., of equipmentmanufacturers, marketers, etc.).

w Understands cooperatives fully(their operations, governance,financial workings, etc.).

w Is willing to listen to the group’sideas.

w Works closely with designatedcontact members of the steeringcommittee or group.

w Is willing to revise study, basedon feedback.

w Accomplishes the study within anagreed-upon timeline.

w Works within the group’sdesignated budget.

w Is a strong writer with skills indata analysis and spreadsheetdesign and presentation.

w Provides clear, useful informationin the completed study.


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

Co-op developments, coast to coast

Members approve dairy co-op merger Prairie Farms Dairy and Swiss ValleyFarms announced in early February thatmembers of both cooperativesoverwhelmingly approved a merger.Both companies are industry-leading,farmer-owned cooperatives included onUSDA’s list of Top 100 Cooperatives.The merger is expected to close onMarch 31. “We have had a great businessrelationship with Swiss Valley for manyyears and are pleased to have reachedthis important milestone,” says EdMullins, CEO of Prairie Farms. “Muchhas changed since our cooperative wasfounded in 1938; the merger reflectsour purpose, which is to generate salesand profit for our cooperative members. “Consumption of fluid milk, ourcore product, has been declining foryears, while cheese consumption hasincreased nearly 150 percent since1975,” Mullins continues. “Thecomplementary nature of Swiss Valley’sproduct line will help counter thismajor shift. At the same time, SwissValley is looking to grow its exportbusiness; with the merger, it will gainaccess to many Prairie Farms products,such as extended-shelf-life milk andcream.” The combined company will operateunder the name of Prairie Farms DairyInc., with both organizations retainingtheir brand names: Prairie Farms Dairyand Swiss Valley Farms. Mullins will beCEO of the merged cooperative, whileChris Hoeger, former CEO of SwissValley, becomes president of the newlyformed Prairie Farms Cheese Division. Prairie Farms, based in Carlinville,Ill., is owned by more than 600 farm

families and has annual sales of morethan $3 billion. It has 5,700 employeesand operates 35 manufacturing plantsand over 100 distribution facilities.Swiss Valley Farms, Davenport, Iowa,has 400 producer-members andoperates five cheese production facilitiesthat manufacture a variety of award-winning cheeses.

Northwest grain co-ops to merge Members of Pacific NorthwestFarmers Cooperative (PNW), Genesee,

Wash., and Cooperative AgriculturalProducers (Co-Ag), Rosalia, Wash.,voted in December to merge. The newco-op, which will operate under thePacific Northwest Farmers Cooperativename, will become official in June.According to a news item posted onPNW’s website, the merger “passedwith a super-majority vote from bothcompanies.” The leadership of both co-opsstrongly advocated for the merger inthe months leading up to the vote. “PNW feels that with the relationship

It’s now official: co-op members have voted to approve the merger of Swiss Valley Farms withPrairie Farms. The brand names of both co-ops will continue to be used in the marketplace.Photos courtesy Prairie Farms and Swiss Valley


we have established with Co-Ag andour partnership in McCoy, this is anatural fit,” PNW CEO Bill Newbrysays in a column in the co-op’s mostrecent newsletter. “Co-Ag performsmany of the same functions that PNWdoes and we only enhance each other’soperations. We have been able to workwith each other and are findingcommonalities and synergies that willbring greater opportunities to ourmembers.” “We feel this (merger) is a great fit,provides our growers with newopportunities and solidifies our place inthe market,” Co-Ag General ManagerDerek Teal wrote in a recent co-opnewsletter. “The grain business ischanging faster than it ever has beforeand is becoming more competitive bythe day. We feel that by merging withPNW, we can be ahead of the game andset precedence in the Pacific Northwestof what a grain company will look liketoday and many years into the future.” PNW was formed in 2008 through amerger of the Genesee UnionWarehouse and Whitman CountyGrowers. It now has 26 facilities in 17locations with storage capacity of morethan 14 million bushels, according to anarticle in the Lewiston Tribune. It hasabout 750 member-growers. It also hasownership in barge terminals on theupper Snake River and two rail loadingterminals. Co-Ag was formed in 1998 througha merger of farmer cooperatives inOakesdale, Rosalia and Fairfield. Itoperates 21 elevators in Washingtonand Idaho and has a Snake River barge-loading facility, as well as loadingfacilities on two railways.

Land O’Lakes reports record earnings Powered by growth in its corebusinesses, as well as by unification withUnited Suppliers, Land O’Lakes Inc.has reported record net earnings for theyear ending Dec. 31, 2016. The co-opreported a record $320 million in netearnings on $13.2 billion in sales and

returned a record $187 million in cashpatronage to its member-owners. Thiscompares to net earnings of $304million and cash patronage to member-owners of $161 million in 2015. “We are pleased with another recordyear, particularly under current marketconditions, and appreciate thededication of our workforce and the

support of our farmer-owners,” saysLand O’Lakes President and CEOChris Policinski. “We attribute ourcontinued strong performance to our‘marketplace back’ approach to doingbusiness, which is different from theproduction orientation of many of ourcompetitors. Our strategy is based ondeeply understanding what our

Co-op plans new soybean plant in North Dakota Governor Doug Burgum and leaders of Minnesota Soybean Processors(MnSP) and its subsidiary, North Dakota Soybean Processors (NDSP),have announced that steps are being taken toward construction of a $240-million soybean processing plant at Spiritwood, N.D. The plant would bean integrated soybean crush facility and refinery, crushing 125,000 bushelsof soybeans per day. It would produce soybean meal; refined, bleachedand deodorized soybean oil; and biodiesel. MnSP is a cooperative that owns and operates a soybean crush facilityand biodiesel operation in Brewster, Minn. It has selected a site on 150acres near Spiritwood, where construction would begin following furtherdue diligence, necessary approvals and a successful engineering study. By selecting the Spiritwood site, MnSP is able to conduct a preliminaryfront-end engineering and design study, which will be used to determinefeasibility of construction. MnSP is working with the North DakotaAgricultural Products Utilization Commission to complete the constructionfeasibility study. “The potential for this type of value-added project is great news for ourfarmers and the entire state of North Dakota,” Burgum said. “The NDSPplant will create value in the local community and beyond by creating 55to 60 full-time jobs, supporting local service companies, vendors, andsuppliers and supporting the soybean price paid to local farmers.” Burgum, MnSP Board President Bruce Hill and MnSP GeneralManager Scott Austin made the announcement during the annualNorthern Soybean Expo and Trade Show in Fargo, where they were joinedby North Dakota Agriculture Commissioner Doug Goehring. “Our preliminary market analysis shows there are markets this facilitywould serve that would complement our current efforts at the Brewsterfacility to reach both global and domestic markets for meal and oil,”Austin said. “We also believe that the biodiesel from this plant wouldserve both domestic and international markets.” The NDSP plant would annually produce 900,000 tons of soybean meal,which is usually used as livestock feed for poultry and swine but can alsobe used for cattle, and 490 million pounds of oil. Half of the oil will be usedto produce biodiesel while the other half will be used for food-gradesoybean oil. The plant would use steam from the nearby SpiritwoodStation, a coal-fired power plant operated by Great River Energy.


consumers, customers and farmers needto be successful, and on developinginnovative, value-added products — andincreasingly services — to meet thoseneeds. We know that our successdepends on their success.” Land O’Lakes currently touches 50percent of the nation’s harvested acresand 25 percent of the producersthrough its independent, retail-ownernetwork. It strives to serve as the voiceof the farmer for its farmer-owners. Coming off a record year in 2015,the company also achieved recordperformance in 2016 with growth ineach of its core businesses despitechallenging market conditions. Thecompany increased the size and scale ofits Crop Inputs and Insights divisionthrough acquisitions and the integrationof WinField United. Further, itaccelerated the revitalization of itsAnimal Nutrition division and sawcontinued growth of its Dairy Foodsdivision. The cooperative expanded itscommercial footprint in Africa andChina, through a partnership withBidco Africa to create BIDCO LANDO’LAKES LTD, a new joint venturethat helps farmers in East Africaimprove animal nutrition. It alsoentered into an agreement with theintent to form a seed distribution jointventure in China. The company announced severalnew steps in 2016 to its commitment tosustainability, including the creation ofLand O’Lakes SUSTAIN (see relatedarticle, page 4). The SUSTAIN effortfocuses on helping to ensure sustainablecrop production by delivering insights,products and services and enhancingsustainability within the Dairy Foodsand Animal Nutrition businesses. Theseefforts include working with otherentities (including government) toimprove efficiency and collaboration onconservation and sustainabilityprograms. In May, the company announced apublic-private partnership withMinnesota Governor Mark Daytondesigned to assist with water and soil

conservation in the state by workingwith growers and producers to helpprotect waterways. In the fall of 2016, the companyannounced an expansion of itscorporate headquarters in Arden Hills,Minn., growth that will add 200 jobsand allow all headquarters-basedemployees to work on one campus.Employees currently work on threecampuses in Arden Hills, Shoreviewand Roseville. Through its business units, the co-opacquired Ceres Inc., completed a newtrait agreement through ForageGenetics International, entered into asupply agreement with Southern StatesCooperative (through Winfield United)and also signed a letter of intent toacquire the Southern StatesCooperative feed business to furtherenhance services for customers in thoseregions. These efforts further support acommitment to help customerscompete with industry-leading productsand services in an era of industryconsolidation.

Troike named CEO of Ceres Solutions Co-op Jeff Troike has been named presidentand CEO of Ceres SolutionsCooperative, created by the merger oftwo large, regional agriculturalcooperatives: Ceres Solutions LLP andNorth Central Co-op. The merged co-op will begin operating under the newname on Sept. 1. Troike brings more than threedecades of cooperative management tothe new co-op, most recently aspresident and CEO of Ceres SolutionsLLP. Raised on a family farm in StarkeCounty, Ind., Troike is a PurdueUniversity graduate and a current LandO’ Lakes board member. “With North Central Co-op CEOMark Tullis’ support, our collective goalis now to come together, utilizingshared strengths and vision, to servefarmers in the most innovative andrelevant ways,” says Troike. “We’ll workhard on every level to transitionseamlessly so that we can grow this

business for members and deliverresults that bring maximum benefit toall members and customers.” While North Central Co-op andCeres Solutions LLP will continue asseparate business operations throughAugust, the board’s decision to name aCEO well in advance will help facilitatesome decisions the combined leadershipteam will be making. Collaboration andidea sharing between the twoorganizations has already begun onseveral projects. The merged co-op will serve energy,agronomy, animal nutrition and grainmarketing needs in almost 30 Indianacounties and 7 Michigan counties. Thenew cooperative will encompass morethan 60 facilities throughout the twostates. The merger unifies twoorganizations with very similarstructures, products and serviceofferings. It will have about 600employees.

CoBank reports record net income, patronage CoBank’s net income for 2016 rose 1percent, to a record $945.7 million,reflecting increased net interest income.The number was offset by a greaterprovision for loan losses, as well ashigher Farm Credit insurance fundpremiums and other operatingexpenses. Net interest income increased by 7percent, to $1.4 billion, as a result ofhigher loan volume and increasedearnings from balance sheetpositioning, partially offset by lowerspreads in the bank’s loan andinvestment portfolios. CoBank’s averageloan volume increased 10 percent in2016, to $91.6 billion. This trend wasdriven by higher levels of borrowingfrom affiliated Farm Creditassociations, grain cooperatives, foodand agribusiness companies, ruralelectric cooperatives andcommunications service providers. “2016 marked another year of strongbusiness and financial performance forCoBank," says CEO ThomasHalverson. “Loan volume and net


income reached all-time highs, whilecredit quality, liquidity and capital levelsremained solid. Most importantly, wecontinued to fulfill our mission bydelivering dependable credit to ourcustomers, partnering effectively with

other Farm Credit institutions, andproviding support for rural industriesand communities." In March, the bank will distribute arecord $588.1 million in total patronageto customers, including $473.9 million

in cash and $114.3 million in commonstock. Patronage “effectively lowers theoverall cost of borrowing for customerswhile enabling them to build equity inthe bank and have a voice in the

GROWMARK is the first agriculturalcooperative system and complete farmsupply and service organization to earnthe Ag Data Transparent seal, the co-op says in a recent news release. Thisaccreditation recognizes GROWMARKfor its transparency working withfarmers and the standards of privacyand security of data. The GROWMARK System’s MiFieldApplied Research initiative and FS AIS(Advanced Information Services)enterprise decision tool aid in thecollection of field data that are thenused to show successful managementtrends and assist with the developmentof agronomic recommendations. The Ag Data Transparency sealrecognizes the GROWMARK System’scommitment to growers on how farmdata are collected, where and howthey are stored and more. In other GROWMARK news, the co-op is working with 4-H clubs to boosthabitat for bee pollinators and toincrease understanding of the vital rolethese pollinators play in agriculture.Honey bees and other pollinators areneeded to pollinate crops such asapples, almonds, peaches, alfalfa,green beans, lima beans andstrawberries, among dozens of others. But pollinators are under stressfrom a number of factors, includingpests, disease and lack of habitat,among others. The co-op’s pollinatorprogram, now in its second year, isopen to 4-H clubs in Illinois, Iowa,Missouri and Wisconsin. Prior to submitting an application, 4-H clubs should locate a public place

and secure permission to plant apollinator garden there. GROWMARKwill provide enough seed to plant a700-square-foot area, as well aseducational signage. “Last year, we had nearly 40 clubsparticipating in the program,” saysKaren Jones, GROWMARK Youth and

Cooperative Education Specialist.“Growing the number of pollinatorgardens this year will help provideeven more habitat for bees and otherbeneficial pollinator species.”Questions may be directed to Jones at:[email protected] or 309-557-6184.

GROWMARK is working with 4-H clubs to increase habitat for bees and other croppollinators that are vital to American agriculture. Photos courtesy GROWMARK

GROWMARK earns data transparency seal; promotes pollinator habitat


governance of our business,” Halversonsays. “Agribusiness borrowers are facing anumber of challenges, including thecontinuing softness in commodityprices, a strong dollar and slowereconomic growth in China and otherinternational markets,” says David P.Burlage, CoBank’s chief financialofficer. “It’s possible CoBank will seefurther deterioration in credit quality asa result of these trends. That said,overall credit quality continues to bestrong, and we remain confident in thebank’s risk-bearing capacity and itscontinued ability to meet the borrowingneeds of its customers.” CoBank will provide moreinformation about its 2016 financialresults at its ongoing series of regionalcustomer meetings around the countrythrough April. The bank is a member ofthe Farm Credit System, a nationwidenetwork of banks and retail lendingassociations chartered to support theborrowing needs of U.S. agriculture,rural infrastructure and ruralcommunities.

Co-op Festival slated for D.C. The inaugural Co-op Festival will beheld Sept. 30-Oct. 1 on the NationalMall in Washington, D.C. TheNational Cooperative BusinessAssociation (NCBA) CLUSA says theevent will be “an unprecedentedopportunity to amplify the economicimpact, diversity and sustainability of abusiness model 70 percent of consumerssay they already trust.” Designed to kick off CooperativeMonth, this two-day public awarenessevent will feature live music, high-profile speakers, games, giveaways andinteractive booths to engage a potentialaudience of more than 65,000 peopleon the National Mall. The event willalso serve as a visual reminder of thesuccess and diversity of the co-opbusiness model to elected officials inthe nation’s capital. By leveraging public recognition ofwell-known cooperatives, NCBA saysthe Co-op Festival will connect the

trust consumers say they have for theco-op business model with the brandsthey already buy, while introducingthem to the full spectrum of co-opsbuilding a better world in the U.S. andglobally. For more information visit:www.coopfestival.coop.

Despite lower sales, CRI takes steps to bolster future Lower milk prices and other factorsmade 2016 a tough year, but Shawano,Wis.-based Cooperative Resources

International (CRI) — a holdingcooperative consisting of AgSourceCooperative Services, GENEX andMOFA Global — still took strong stepsto further the organization’s mission. “It was a challenging year,”Chairman John Ruedinger said in hisaddress to member-elected delegates atthe CRI annual meeting, Jan. 24-25 inBloomington, Minn. “Low milk pricesfor members and customers, coupledwith a strong dollar, contributed toreduced revenues for your cooperative.Challenging as the year was in the faceof economic adversity, CRI and itssubsidiaries accomplished somesignificant steps to position yourcooperative for the future.” CRI revenue for the fiscal yearending Sept. 30, 2016, was just under$190 million, down from fiscal 2015.

“While 2016 did not deliver our desiredfinancial results, CRI staff worked hardto advance the spirit of our strategicplan,” Ruedinger said. Among highlights of the year was anupdate to the GENEX IdealCommercial Cow index, which providesdairy producers around the world theopportunity to breed for even healthiercommercial cows. The economic-based,genetic index was updated to includeproprietary health traits for a number ofcow health factors. In addition, AgSource took steps to

improve efficiency and capacity byexpanding its Midwest-based dairy herdimprovement association (DHIA)program to include herds west of theMississippi River and in the Northeast.To provide greater efficiencies in dairyherd testing services, AgSource andEastern Wisconsin DHIC formed ajoint venture called Co-DairyLyticsLLC. On the laboratories side,AgSource expanded and upgradedprocessing technologies for soil, water,milk, food and environmental testing.The Ellsworth, Iowa, laboratory wasrelocated to a new, larger and fullyintegrated facility. The year’s accomplishments alsoincluded further organization of CRI’sresearch program, known as theInternational Center for Biotechnology(ICB). Scientists at ICB conduct

Even though lower milk prices took a toll on the co-op’s bottom line in 2016, these delegates at theannual meeting of Cooperative Resources International (CRI) heard positive news about stepstheir co-op took last year to better position the business for the future. Photo courtesy CRI


cutting-edge research that spans severalanimal species and specifically focuseson advances in reproductivetechnologies and molecular and cellbiology, along with DNA and genomicsresearch.

Vandenheuvel new VP at Calif. Dairies Rob Vandenheuvel has joined thesenior management team at CaliforniaDairies Inc. (CDI) as vice president ofindustry and member relations.Vandenheuvel will serve as the face ofCDI to the industry, governmental andregulatory bodies, and will workdirectly with member-owners of thecooperative. Based at CDI’s corporateheadquarters in Visalia, Calif., hereports to Andrei Mikhalevsky, co-oppresident and CEO. Vandenheuvel had served as generalmanager for the Milk ProducersCouncil (MPC) since 2007. Prior to histenure at that trade association, he wasa press secretary for the U.S. House ofRepresentatives Ways and MeansCommittee in Washington D.C. Heholds a BA degree in business fromCalifornia State Polytechnic University,Pomona. “As CDI continues to be aninfluential member of the dairyindustry, Rob’s indepth understandingof dairy policy and of the industry as awhole, on both the state and nationallevels, will make him an essential fixtureon our team, especially as the industrycontinues to evolve at such a rapidpace,” says Mikhalevsky. “Plus, hisrelatability to dairy producersstrengthens CDI’s ability to moreefficiently respond to the market’sneeds. His extensive knowledge,experience, and existing relationships inthe dairy industry complement CDI’svision to become the leading source ofdairy nutrition for a healthy world.” California Dairies Inc. is the largestmember-owned milk marketing andprocessing cooperative in California,producing 43 percent of the state’s milk.Co-owned by more than 390 dairy

producers who ship 17 billion poundsof milk annually, CDI manufacturersquality butter, fluid milk products andmilk powders.

FARM Program addsstewardship module In its continued effort to share thecompelling story of continuousimprovement on America’s dairy farms,the National Dairy Farmers Assuring

Responsible Management (FARM)Program has opened participation in itsthird component, FARMEnvironmental Stewardship (ES). The Environmental Stewardshipmodule joins the FARM Program’s twoother pillars, FARM Animal Care andFARM Antibiotic Stewardship. Thevoluntary FARM EnvironmentalStewardship program helps dairyproducers augment their environmentalmanagement efforts by identifying waysto improve their on-farm sustainability. “America’s dairy farmers have longbeen active stewards of theenvironment,” says Jim Mulhern,president and CEO of NMPF.“Farmers should be proud that, today,producing a gallon of milk uses 65percent less water, requires 90 percentless land and has a 63-percent smallercarbon footprint than it did 70 yearsago. The FARM EnvironmentalStewardship program captures moredetailed data on these great advances,while at the same time presentingfarmers with useful information thatcan help them improve their farmsefficiency and use fewer naturalresources, all while saving money.” FARM ES provides a comprehensiveestimate of the greenhouse gas (GHG)emissions and energy use per pound ofmilk produced on dairy farms by askingproducers a limited set of questions.The tool is based on a life-cycleassessment (LCA) of fluid milkconducted by the Applied SustainabilityCenter at the University of Arkansas,incorporating existing data from morethan 500 dairy farms across the UnitedStates. By tracking advances in dairyproduction efficiency, farmers can useFARM ES to assure dairy customersand consumers of their commitment toongoing environmental progress.Producers can also use the results toidentify opportunities for changes thatcould increase their farm’s sustainabilityand reduce their cost of production. Dairy cooperatives and farmerswishing to use the ES module can optin through the existing FARM Program

Farmers Union Oil merges with CHS Ag Services

Members of Farmers Union OilCo., a diversified agriculturalretailer based in Oslo, Minn., havevoted to join CHS Inc. The votepassed with 96 percent approvingthe proposal. The merger becameeffective in January. “Our members are lookingforward to the merger with CHS,”says Curt Haugen, board chairman,Farmers Union Oil Co. “This willenhance products and servicesavailable to us. It will also offer ourmembers and employees stability inthe years ahead. It was important tous to remain a cooperative thatpays dividends.” “We are encouraged about theopportunities ahead for both thecustomers and employees ofFarmers Union Oil,” says MikeJohnston, senior vice president,CHS. “Their business mix andexpertise aligns well with thecapabilities CHS currently has in theregion. We look forward toenhancing and building upon that aswe look to continue helping ourfarmer-owners grow successfuloperations.” Customers should expect asmooth transition, includingcontinuity of staffing at its currentlocations as the group combineswith the CHS Country Operationsbusiness, CHS Ag Services.


database, which allows FARMevaluators to see the assessment in theexisting Web and mobile applications.FARM has created a random samplingprotocol for the organizations thatchoose to use the ES module. Thisvoluntary protocol allows FARMProgram milk handlers to randomlyselect farms for an assessment andprovides instructions for how todocument and promote the resultingimprovements in their dairy supplychain. The FARM Program has releasedseveral documents, videos and trainingsto educate those interested inparticipating in the FARMEnvironmental Stewardship program.They can be found on the Environmentpage of the FARM website:http://nationaldairyfarm.com/environmental-stewardship. NMPF, along with its dairycommunity partners, DairyManagement Inc. and the InnovationCenter for U.S. Dairy, support the useof safe and efficient environmentalpractices to help dairy operationsremain stewards of a healthy ecosystem.

Health clinic to serve ag workers and families UnitedAg — a member-ownedagricultural trade associationrepresenting more than 600 agorganizations in California and Arizona— opened its first Health and WellnessClinic Jan. 17 in Visalia, Calif. Open toall UnitedAg members’ coveredemployees and dependents, the clinicwill provide a full range of servicesfocused on the unique needs of theagricultural community – from acuteand episodic care to health-risk anddisease management, along withwellness and prevention. It will not charge the service co-paysor deductibles required by most healthplans. UnitedAg Health & Wellness Clinicwill emphasize short wait times andfeatures onsite lab services; it can fillmany prescriptions onsite. The clinic “represents a new model

in health and wellness — one thatdelivers the comprehensive, high-quality services that ag workers andtheir families need at a cost they canactually afford,” says Kirti Mutatkar,president and CEO of UnitedAg. “Atthe same time, our clinic’s operatingmodel focuses on helping to lower ourmember organizations’ employeehealth-coverage costs by treating healthproblems early, before they worsen;reducing unnecessary emergency-roomvisits; and lowering workerabsenteeism.” This is only the first of several suchclinics UnitedAg plans to open. Theclinic’s services will be provided byVisalia-based Elite Corporate MedicalServices, a respected health-servicesprovider operating workplace clinicsthroughout California. UnitedAg also met with healthcare

and insurance industry leaders fromacross the country for a HealthInnovation Forum on March 17 inNapa, Calif. Focused on findingaffordable healthcare solutions for theagribusiness community and beyond,the Health Innovation Forum broughttogether innovators from across thehealthcare spectrum to explore trendsand implications of value-based vs. fee-for-service reimbursement on

consumers, providers and payers. Founded in 1980, UnitedAg’smember organizations includecooperatives and other agriculturalcompanies, including growers, shippers,coolers, processors, dairy and livestockproducers and supporting businesses,among others.

Census of worker co-ops announced The first national study of workercooperatives is a new research projectof The Democracy at WorkInstitute and the U.S. Federation ofWorker Cooperatives, in partnershipwith researchers at the University ofWisconsin-Madison. This study will further collectivework to build the field, advocate forworker co-ops in the political arena andserve grassroots members, according to

Laura Hanson Schlachter, studydirector. “Our movement has spentyears telling stories about howdemocratic worker ownership impactspeople’s lives, and this is DAWI’s firsteffort to tell that story with high-quality, empirical data that representthe entire spectrum of workplaceexperiences and attitudes across thecountry.” The study will roll out in two phases,

UnitedAg opened this Health and Wellness clinic in Visalia, Calif., in January. The organization,which includes co-ops and other agri-businesses, hopes to open several similar clinics aroundthe state to cater to the health needs of farmworkers and their families. Photos courtesy UnitedAg


the first of which started in January.The research team will inviteindividuals at worker cooperativesacross the country to participate in abrief, confidential survey about theirworkplace experiences and attitudes.

Responses will be aggregated across allparticipants, and no individual orworkplace will be identifiable in the results. In March, the research team beganinviting a small group of employees and

worker-owners to participate in face-to-face interviews and draw out keythemes in the quantitative data. Again,all individuals and workplaces willremain anonymous. Workplaces that would like toparticipate in the Worker Co-opCensus, or which are interested in usingthe final data for other research, cancontact Schlachter at: [email protected], or (608) 262-9588.

Gaskalla to lead Ag in Classroom program Lisa Gaskalla, executive director ofFlorida Agriculture in the Classroomfor 13 years, has been named executivedirector of the National Agriculture inthe Classroom Organization(NAITCO). She served as interimexecutive director of NAITCO whilethe organization conducted a nationalsearch to fill the position in 2016. “National Agriculture in theClassroom has grown to a point whereit needed a full-time executive directorto oversee the business of our growingorganization,” says Chris Fleming,president of NAITCO. “Lisa Gaskalla’sexperience managing a successfulprogram in Florida will serve NAITCOwell.” “I will strive to make NAITCO apremier K-12 agricultural literacyprogram for formal and informaleducators interested in educating youthabout the importance of agriculture atthe state and national level,” saysGaskalla. NAITCO helps K-12 teachers useagricultural concepts to teach reading,writing, math, science, social studiesand more by providing Web-basedlessons and companion resources, anational conference, a national teacherawards program and professionaldevelopment opportunities forAgriculture in the Classroom statecontacts. It is a non-profit organizationwith a network of state contacts innearly all 50 states and six territories. For more information about theprogram, e-mail: [email protected]. n

Merger creates grower-owned ag data co-op A cooperative of growers and an agricultural data nonprofit have agreedto combine their technology platforms and create a vital resource for data-driven agriculture — a neutral, secure and private data storage repositorycontrolled by growers. In a joint announcement, the businesses said thecombined platforms will be known as AgXchange and will be an independentdata repository commercially available through the Growers Ag DataCooperative (GADC), where producers can control, store, view and sharetheir farm data. The effort resulted from dialogue between Grower Information ServicesCooperative (GiSC), a grower-formed data warehouse and sharingcooperative, and Agricultural Data Coalition (ADC), a nonprofit corporationformed by 14 founding members, including universities, industryorganizations, agricultural groups and companies. The two organizationshave been in communication since the ADC announced its mission to helpfarmers better control and manage their electronic data and facilitatenoncommercial research. The merger will provide the opportunity for the power of big data inagriculture to be firmly in the hands of America’s farmers, says Zippy Duvall,president of the American Farm Bureau Federation, according to an article inthe Farm Press. “Today is an exciting day,” Duvall told the paper. “Thesekinds of revolutionary changes in agriculture are rare, and this mergerprovides farmers the kind of certainty and security they have been seekingwhen it comes to agronomic data management.” Realizing their common vision and missions based on grower-controlleddata, GiSC and ADC agreed to combine their efforts and create more synergybetween the two organizations and their members. GiSC will rebrand andbecome Growers Agricultural Data Cooperative. The two organizations willwork closely to provide producers, universities and others a platform tosecurely store, control and, if they choose, share their data. “After meeting with each other, we realized we were working toward thesame end goal, though from slightly different approaches. It was quicklyclear that combining efforts would provide substantial benefits and move usall toward the objective of a grower-controlled, independent data storagerepository,” says ADC President Ben Craker. AgXchange is a platform developed through the collaboration of GiSC andADC. GiSC has a working data storage and visualization platform. ADCdeveloped a data storage and sharing pilot repository, featuring dataconnections to several precision farming data platforms. The two entities willintegrate their complementary platforms to improve functionality and value,improve grower control over their data and allow growers to share their datawith universities and other researchers, in addition to other serviceproviders, if the growers choose to do so.

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Now available from

Co-ops 101: An Introduction to Cooperatives (CIR 55)

Probably the most widely read co-op primerin the nation, this report provides a bird’s-eye view of the cooperative way oforganizing and operating a business. Nowin an attractive new, full-color format. Idealfor classroom use and member organizationmeetings.

Co-op Essentials (CIR 11)

A companion volume to Co-ops 101, this isan educational guide that teaches furtherbasic information about cooperatives. Itexplains what cooperatives are, includingtheir organizational and structural traits. Itexamines co-op business principles and theresponsibilities and roles of cooperativemembers, directors, managers andemployees.

How to Start a Cooperative(CIR 7)

This long-time favorite has been freshenedwith updated editorial content and a newdesign. This guide outlines the process oforganizing a cooperative business,including the necessary steps involved intaking the co-op from idea to launching pad.

Organizations Serving Cooperatives(July-Aug. ’15 magazine)

This special issue of USDA’s RuralCooperatives magazine includes completecontact information for nearly 150organizations that provide services tocooperatives, with detailed overviews of 52of the larger organizations. Listings includeco-op financial institutions, trade/legislativegroups, co-op development and co-opeducation organizations, among others. Alimited number of these back issues are stillavailable.

Agricultural Cooperative Statistics 2015(SR-79)

The nation’s agricultural cooperatives set anew income record of $7 billion in 2015,despite total revenue being down to $212.6billion, the lowest sales revenue level in thepast five years. This annual report providesa detailed overview of the financialperformance of the nation’s farmer-ownedco-ops in 2015, with 80 pages of data. Itincludes analysis by state and ag sector.

Farmer, Rancher, and FisheryCooperative Historical Statistics (CIR 1)Section 26 (in three volumes) Web only USDA began its survey of ag co-ops in 1913,when it counted 5,424 cooperatives with$636 million in sales and about 651,000members. The 2014 survey shows 2,106 co-ops with sales of $244.5 billion and 2.1million members. Historical co-op statisticshave been compiled in three volumes: 1913-1950; 1951-1999; and 2000-2012. Alsoavailable in Excel format. Available at:www.rd.usda.gov/ publications/publications-cooperatives

USDATo order: USDA co-op publicationsare free, and available both in hardcopy and on the Internet, unless “Webonly” is indicated.

NEW!

Rural Cooperatives / January/February 2016 35

The Nature of the Cooperative(CIR 65)

These collected articles, written by USDAag economist Charles Ling, were originallyprinted in Rural Cooperatives magazine toexamine the nature of cooperatives andtheir place in our free-market economy.Now expanded to 10 articles from theoriginal 5. Especially suited to college-levelcourses that examine the cooperativebusiness model.

Nominating, Electing and CompensatingCooperatives Directors (CIR 63)

This report examines the various methodsco-ops use for nominating boardcandidates, voting policies andcompensation practices for co-op directors.It also includes a look at the types ofleadership skills needed by co-op boardmembers. This collection of articles byUSDA economist Bruce Reynolds originallyappeared in USDA’s Rural Cooperativesmagazine.

Member Satisfaction with TheirCooperatives (RR 229) (Web Only)

Dairy cooperatives have adopted a widerange of organizational structures. In somecases, this resulted in fairly bureaucratic,complex business organizations that requirehigh levels of management expertise. Thisstudy looks at how such organizationaffects the satisfaction members have withtheir cooperatives.

Cooperatives in Agribusiness(CIR 5)

Not only does this publication provide anoverview of the many functionscooperatives play in the agribusinesssector, it also discusses how co-ops arefinanced, the role of utility and telephonecooperatives and other service co-ops.Ideal for use in in schools, FFA and 4-H.

For hard copies: Please include thepublication title and number, as well asthe quantity needed. Send e-mail to:[email protected], or call (202)720-7395.

Send mail requests to: USDA Co-opInfo., Stop 3254, 1400 IndependenceAve. SW, Washington, D.C. 20250.

To download from the Web: Visitwww.rd.usda.gov/publications/publications-cooperatives.

Running a Food Hub, Volumes I–III (SR 77)

Three volumes are now available in USDA’s “Running a Food Hub” series of booklets. Volume1, Lessons Learned From the Field, compiles best business practices for starting or expandinga food hub. It includes profiles of about a dozen food hubs. Volume II, A Business OperationsGuide, focuses on key operational issues faced by food hubs, including choosing a locationand equipment, as well as dealing with transportation and other infrastructure issues. VolumeIII, Assessing Financial Viability, provides insight into how changes in major costs andrevenue affect the overall operations and profitability of food hub businesses.

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USDA/Rural Business—Cooperative ServiceStop 3254Washington, D. C. 20250-3255

Shortcuts in the planning process for launching aco-op can doom the project to failure. USDA’snewly revised publication, Vital Steps: ACooperative Feasibility Study Guide (SR 58),provides a step-by-step process to help ensure youget the clearest possible picture of whether toproceed. It should be read together with How toStart a Cooperative (CIR 7). Both publications areavailable, free of charge, from USDA RuralDevelopment.

For hard copies, send e-mail to:[email protected], or call (202)720-7395, or write to: USDA Co-opInfo., Stop 3254, 1400 IndependenceAve. SW, Washington, DC 20250.Please indicate title, publicationnumber and the number of copiesneeded.

To download from the internet, visit:www.rd.usda.gov/publicatiopns/publications-cooperatives. For a free electronic subscription to USDA’s RuralCooperatives magazine, please go to:http://www.rdlist.sc.egov.usda.gov/listserv/mainservlet.

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