1032165 rur coop-may/june pdf - rd.usda.gov · orientation, and marital or family status. (not all...

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USDA / Rural Development May/June 2003USDA / Rural Development May/June 2003

2 May/June 2003 / Rural Cooperatives

At times, it’s worth reflectingupon what we in the cooperativebusiness are really all about. Wework hard in our daily lives—inthe fields, in the shops, in theoffices, en route to the next pro-ducer meeting—and may notspend much time thinking aboutwhat all this good effort is about.We don’t take the time to askthe basic question, “Why coop-eratives?” But we should.

Cooperatives are all aboutpeople—people doing goodwork to benefit themselves. Buteven more basic, it’s peopleworking with other people tomake themselves better off. It’speople recognizing that togetherthey can do more than they cando by themselves. Call it syner-gy; call it teamwork; call it self-help. However you describe it, itis through the miracle of coop-eration that people can make lessinto more. It’s people recogniz-ing that, for those willing toshare the pie, the pie just keepsgetting bigger.

We cooperate. We worktogether. We share commongoals and aspirations. And wetake matters into our own handsto fulfill those aspirations. Partof working together coopera-tively is taking responsibility todo the work. When we cooper-ate, we are making a statement

that says: “we want this doneand we are willing to do it.” Incooperatives, we take theresponsibility and are account-able to ourselves. And in thatsense, cooperation equates tofreedom.

It’s also about democracy. Iclearly recall a statement madeby Dr.V. Kurien, chairman ofIndia’s National Development

Board, when he accepted theKellogg Food Prize for his lead-ership in building the ground-upsystem of dairy cooperatives inhis native country. “If you wantto teach democracy,” he said,“build cooperatives.”

Whether we’re talking about agroup of large farmers investingmillions in a new bio-mass facto-ry; or a group of small, ruralcraftsmen and women bandingtogether to market their arts; orsmall town hospitals seekingways to jointly purchase expen-sive supplies, the basics of coop-eration remain the same. It’sthose basics that we celebrate,when we take the time to evengive them thought.

The old cliché that the“world is changing” is certainlyaccurate. And the winds ofchange keep blowing withincreasing velocity. Tomorrowwill not look like today and willnever look like yesterday. Butone thing will never change:People can do great things, andno problem is too big, whenthey work together in the fun-damental spirit of cooperation.That’s why cooperatives.

James Haskell, Acting Deputy Adminis-trator, USDA Rural Business-CooperativeService

C O M M E N T A R Y

Why Cooperatives?

When we cooperate, we are making astatement thatsays: “we want thisdone and we arewilling to do it.”In cooperatives, we take theresponsibility andare accountable toourselves.

Rural Cooperatives / May/June 2003 3

Rural COOPERATIVES (1088-8845) is publishedbimonthly by Rural Business–Cooperative Service,U.S. Department of Agriculture, 1400 IndependenceAve. SW, Stop 0705, Washington, DC. 20250-0705.The Secretary of Agriculture has determined thatpublication of this periodical is necessary in thetransaction of public business required by law of the Department. Periodicals postage paid atWashington, DC. and additional mailing offices.Copies may be obtained from the Superintendent ofDocuments, Government Printing Office, Washington,DC, 20402, at $21 per year. Postmaster: send addresschange to: Rural Cooperatives, USDA/RBS, Stop3255, Wash., DC 20250-3255.

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The United States Department of Agriculture (USDA)prohibits discrimination in all its programs and activities on the basis of race, color, national origin,sex, religion, age, disability, political beliefs, sexualorientation, and marital or family status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means forcommunication of program information (braille, largeprint, audiotape, etc.) should contact USDA’s TARGETCenter at (202) 720-2600 (voice and TDD).

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Ann Veneman, Secretary of Agriculture

Thomas C. Dorr, Under Secretary, USDA RuralDevelopment

John Rosso, Administrator, Rural Business-Cooperative Service

James Haskell, Acting Deputy Administrator,USDA Rural Business-Cooperative Service

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?Call (202) 720-6483, orFax (202) 720-4641, Information Director,

This publication was printed with vegetable oil-based ink.

United States Department of Agriculture

.Rural

COOPERATIVESCOOPERATIVESMay/June 2003 Volume 70 Number 3

O n t h e C o v e r :

These Iowa cattle may wind up heading for a newly retrofitted packing plantin Tama, Iowa, owned by the Iowa Quality Beef Supply Cooperative. It’s oneof several new livestock co-ops profiled in this issue. Story on page 4. Photoby Arthur C. Smith III, Grant Heilman Photography

F E A T U R E S

4 New kids on the blockIowa beef co-op sees strategic partnership as best way to break intohighly competitive retail beef marketBy Dan Campbell

9 House callsIn-home care givers form cooperative to provide vital service forelderly, disabled in rural WisconsinBy Margaret Bau and Dianne Harrington

13 TrailblazersLeadership development programs key to more women winningseats on co-op boardsBy Kristine Rose

19 Co-ops increase share of farm marketings; shareof farm supply sales dips slightlyBy Charles A. Kraenzle and E. Eldon Eversull

22 No mountain too highRural broadband service helping to save lives of isolated patientsBy Steve Thompson

26 Tune-up your meetingsPeriodic analysis is necessary to ensure that cooperative boardmeetings are efficient, effective and productiveBy Jim Wadsworth

D E P A R T M E N T S2 COMMENTARY

15 VALUE-ADDED CORNER28 NEWSLINE


New k ids on the b lockIowa beef co-op sees strategic partnership as best way to break into highly competitive retail beef market

By Dan Campbell, [email protected]

hen you’re the new kid on the block—and it’s apretty rough neighborhood—you have to growup quickly. The Iowa Quality Beef SupplyCooperative (Iowa Quality Beef) is attemptingto do just that in a business that co-op Presi-

dent and CEO Joel Brinkmeyer describes as “cut throat.” Hesees the co-op as the best vehicle for keeping a large number ofIowa family farmers active in beef production during a time oftremendous concentration in the meat industry.

There is little room for error if the co-op is to succeed. Butso far the pieces seem to be falling together for the co-op of875 beef producers, which is set to begin processing beef at anewly retrofitted plant in Tama, Iowa, this summer.

“We want to provide our members with ongoing marketaccess that pays them a competitive price and rewards produc-ers for high quality, consistency and for a safe product thatmeets our customers’ needs, including the opportunity tobrand or private-label our products,” says Brinkmeyer.

Speaking at USDA’s Agricultural Outlook Conference inFebruary, Brinkmeyer thanked USDA Rural Development forassisting the cooperative with a Value-Added Market Develop-ment Grant, saying that were it not for that help, “we wouldnot have gotten to the level we are at today.” The Iowa Cattle-men’s Association, of which Brinkmeyer has served as execu-tive vice president for the past 17 years, got the ball rolling forthe co-op in 1999, leading to incorporation last August.

Adding more value at homeIowa was the nation’s sixth leading state for beef production

in 2002, with 2.3 million head marketed. But 70 percent of thecattle are shipped to out-of-state packers and processors.

“We want to capture a larger share of thepacking industry for Iowa to help maintain thestate’s independent, family farm operations, tothe largest extent possible,” Brinkmeyer says.Nearly 45 percent, or 34,000 Iowa familyfarms, are in the beef business, be it with seed-stock, cow-calf or cattle-feeding operations.Family farms are raising beef in all 99 Iowacounties, and the co-op has members in 96 of

them, as well as in Illinois, Minnesota and 9 other states. While co-op leaders have a strong vision of what they want

to accomplish, they could find no exact model to follow. How-ever, Brinkmeyer said Iowa Quality Beef has tried to emulatesome of the strategies of the U.S. Premium Beef cooperative.Like it, Iowa Quality Beef based its plan on finding a compati-ble partner with experience in processing and marketing beef.The major differences between the two co-ops, he said, is thatIowa Quality Beef owns 100 percent of its land, plant andequipment and will own the brands it is developing.

The process of launching the co-op has been “a bit likebuilding an airplane in flight,” Brinkmeyer says. The flight ofthis co-op, he adds, is “being watched very carefully by beefproducers and processors all over the United States.”

Packer partner sought Because the expertise of the co-op’s members is in raising

beef, it was decided early on to forge a strategic partnershipwith an experienced meat packer/marketer.

“Our cattlemen can compete with the best cattle-produc-tion systems in the nation and world,” says Brinkmeyer, whosits on the Iowa State University Animal Science AdvisoryCommittee. “But they are not experienced in managing the

W

Iowa Quality Beef’s new packing plant inTama is slated to begin processing 1,200 cat-tle per day this summer. At left, constructionwork progresses on the shipping dock, partof a two-story addition to the existing plant.Photos courtesy Iowa Quality Beef

By Dan Campbell, editor, andRenee Hawkins, Kansas Sate UniversityExtension

A group of small family farms in eastern Kansas andwestern Missouri—including the All-Natural Beef Producers Coopera-tive—have joined forces, embracedtechnology and formed partnershipsto create a market niche for theirGood Natured Family Farms brandline of food products. Their market-ing effort also relies heavily on edu-cating consumers about the healthand other quality attributes of theirproducts, which include natural andcertified-organic beef—the “anchorproduct” of the line—plus naturalpoultry, free-range eggs, natural-beef hot dogs and glass-bottled milk, among others.

Good Natured Family Farms (GNFF) marketing direc-tor Diana Endicott refers to the marketing strategy as“horizontal product diversification,” which she said cre-ates economies of scope rather than economies of size.Her family’s Rainbow Organic Farm in Bronson, Kan., is also a member of the beef co-op and processes theco-op’s cattle.

GNFF has formed a marketing alliance with BallsFood Stores, which is selling the co-op’s beef and oth-er products through its 15 up-scale Hen House super-markets and two Price Choppers supermarkets (thenumber of Price Choppers outlets is set to increase)in the metro Kansas City area. GNFF also recentlybegan selling through the Community Mercantilehealth food co-op in Lawrence, Kan. The co-op has

successfully employed in-store product sampling inthese stores to broaden its reach to more consumers.

To further differentiate its products in the market,GNFF has applied for process-verified label certificationthrough USDA’s Agricultural Marketing Service. This

quality system, based on ISO 9000principles, allows groups to write theirown manuals for production, completewith paper trails to provide sourceand process verification. A program ofthis sort benefits producers andprocessors alike in that it helps themmonitor production and identify placeswhere improvements in efficiency canbe made. Retailers appreciate the program because the source of beefcan be linked back to the original pro-duction operation.

In order to help develop the manu-al and the process-verified program, Endicott decidedto take advantage of assistance available through theAgricultural Marketing Research Center (AgMRC) (seerelated article, page 15). Michael Boland, an agricul-tural economist at Kansas State University and a mem-ber of the AgMRC management team, was able to hirean Extension assistant, Renee Hawkins, to help withthe effort.

Hawkins’ primary responsibilities include helping todevelop the process-verified manual and training theproducers on their roles in the process-verificationsystem. She also studied the feasibility of smallgroups, such as the Good Natured Family Farms AllNatural Beef program, becoming process verified.

Currently, the All Natural Beef Co-op supplies 20head of beef per week, a number that is expected to rise

Natural beef anchors product line for co-op of Kansas family farms


The McKay family (Kelly, Jay,Tricia and Elizabeth), membersof the All Natural BeefProducers Cooperative, ismarketing its Kansas-raisedbeef in Hen House and PriceChoppers supermarkets in themetro Kansas City area. Theco-op’s “Good Natured FamilyFarms” label is proudly dis-played on a fresh-meatcounter at a Hen House mar-ket. Photos by Bob Cunningham

continued top of page 6


day-to-day operations of a packing plant, nor in marketingbeef to the retail trade. “We needed a professional to help usin that business.”

The initial vision called for the co-op to build a new, state-of-the-art processing plant from the ground up. That meantfinding a community that would welcome a new packingplant and have an adequate labor force and the needed infra-structure in place.

That is a very difficult combination to find these days,Brinkmeyer says. During the search process, a packing facili-ty in Tama, Iowa, became available (it had been closed in1999 by IBP). Iowa Quality Beef leaders felt that the plantcould be retrofitted into a state-of-the-art facility, and pro-posed a possible partnership with meat-packing heavyweight

Excel Corp. to run the plant. While Excel eventually optednot to pursue the project, the co-op still felt it was “too goodof an opportunity to pass up.”

So it sought new partners, eventually selecting AmericanFoods Group, the nation’s ninth largest meat processor, witha packing plant in Green Bay, Wis., and two case-readyplants in Ohio and Wisconsin.

The co-op has found “tremendous community support”for reopening the plant, Brinkmeyer says. By using an exist-ing facility, the co-op was able to get its plant for between$12 million and $15 million, a fraction of the $100 million itestimated a brand new plant would have cost.

“That’s a very small investment compared to other beefbusinesses that have tried to start in the past couple of

in the near future. The cooperative was recently auditedfor verification and is fine-tuning its program in someareas to meet the USDA criteria. Theprocess-verified points the co-op is seek-ing confirmation on include the following:

■ Raised on local, family-sized farmoperations

■ No growth hormones used ■ No sub-therapeutic antibiotics used■ 100 percent vegetarian ration (no

animal by-products) used■ No antibiotics used during finishing

phase■ Source-of-origin verified, from pro-

ducer through retail■ Beef dry aged 10–14 days“Through certification and consumer

education, we anticipate gaining astronger presence in the grocery storeswhere we now market our products,”says Endicott, “and we expect additionalmarketing opportunities to present them-selves in the future.”

Some of the farms are also seekingcertification under USDA’s organic labelprogram.

The 24 producer-members of the All-Natural BeefProducers Cooperative are committed to the conceptthat “there is a way to raise food that is good for bothconsumers and the environment, and that they canmake a living doing it,” Endicott said at a panel discus-sion of new meat-producer cooperative representativesheld during USDA’s Agricultural Outlook Forum. Partner-ships that have supported the co-op in its efforts to dateinclude USDA Small Business Innovative Research pro-gram, Kansas State University and the Arthur CapperCo-op Center, Kansas Agriculture Products Develop-ment Division and USDA Rural Development.

Since the majority of the co-op members have nooff-farm income, the success of this business is criti-

cal to each producer, says co-op Presi-dent Eugene Edelman, who farms inSabetha, Kan.

Members of the beef co-op have seen adramatic increase in their ability to earn apremium for their product in just the pastcouple of years. In 2000, the average pricepaid for a dressed beef carcass in DodgeCity, Kan., was $1.11 per pound, Endicottsays, while co-op members earned $1.12.That equaled a premium of just $7.50 for a750-pound carcass.

But in 2002, co-op members averaged$1.27 per pound vs. the Dodge City aver-age of $1.07 a pound, equaling a premiumof $150 per head. (Conventional pricesused for comparison are based on livesteer and heifer prices from Dodge City,Kan. A 63 percent yield was used to con-vert to dressed price. Reported live steerand heifer prices were based on 1,100-1,300 pound choice yield grade 2.)

Endicott credits much of that increase toa pricing system based on the actual wholesale primalcutout value of each carcass. That information, in turn,helps them fine-tune their production systems. Using aKansas Sate University Office of Local Government-cal-culated multiplier factor of 1.8 on the extra profits gener-ated by the co-op, Endicott estimates these premiumshave helped to pump an additional $350,000 annually backinto the rural communities where the producers live.

“Limited product shelf space, slotting fees and adver-tising costs will continue to present obstacles for smallproducers,” she says. “However, horizontal productdiversification and development of micro-brands canhelp generate higher returns.” ■

Co-op members Carol and EdLehman participate in an in-store promotion of their naturalbeef at a Hen House supermar-ket in Leawood, Kan. Consumereducation plays a major part inthe co-op’s marketing strategy.Photo courtesy Good NaturedFamily Farms


years,” Brinkmeyer said. “We think it will help keep us verycompetitive.”

The plant includes 280 acres, including about 60 acres ofupdated, environmentally sound lagoons and 120 acres ofprime real estate for future expansion.

Shared visionFor its part, American Foods wanted to find a second

plant to help increase its efficiency and to expand from theHolstein cow business into high-quality fed cattle (whichmost of the co-op’s animals will be), says Brinkmeyer, whoworked for the Farm Credit System in Nebraska and Iowafor 10 years earlier in his career.

American Foods did not want to build a plant from theground up or to enter a location where it would have to comein from scratch to compete with existing packers to procurecattle. So the vision of both partners meshed nicely at Tama.

The plant purchase was finalized in April 2002, and theletter of intent with American Foods was signed last July.

The co-op structure and business model were formalized onAug. 5, after several years of discussion. “All we needed wasthe money, equity and financing to get the job done.”

The equity drive included the sale of Class A shares, cost-ing $50 to $60 per head (depending on delivery date) com-mitted to the co-op. This stock represents both a right andan obligation to deliver cattle. Class B stock was sold for $7per share, and provides a right (but not an obligation) todeliver cattle to Excel in Nebraska, where they are to be paidon a special Iowa Quality Beef Supply Co-op-dedicated, val-ue-based marketing grid. Class C stock has also been sold,accounting for about 10 percent of total equity.

Quality to be rewardedThe new plant is scheduled to initially process 1,200 cattle

per day, but it can easily expand to 1,600 head per day. Theco-op is closely tied to the Iowa Cattlemen’s Association(ICA). All co-op members are also members of ICA, and “forthe past three years, they have learned about selling cattle on

Dakota Lamb Growers Cooperative is seeking to earngreater returns for its members by marketing high-quality,natural lamb to up-scale retail grocery stores, natural foodstores and white-tablecloth restaurants. It’s primary mar-keting strategy is based on convenience, consistent high-quality meat and safety through source-verified lambs.

The only assets the co-op holds are its reputation andbrand name. It has no physical assets,and has only two staff members, bothof whom work out of home offices.

All lambs sold through the co-opmust be less than one year old andmust have been raised without growthhormones and not fed any animalbyproducts. Each producer signs anaffidavit vowing to have met the co-op’s standards, as does the processor,who warrants that the co-op’s lambshave not been co-mingled with others.This constitutes a double-verificationsafety system to ensure customers ofthe highest product quality standards, according to co-op CEO David Merwin.

Dakota Lamb Growers is a closed co-op throughwhich only grower-investors can market their lambs.The co-op was incorporated in 1999 and held its firstequity drive in the fall of 2000. This drive attracted 104producers who invested a total of $160,000 and commit-ted 8,000 lambs to the co-op. A second equity drive end-ed in March 2002, which generated an additional 12,000head of lambs and $240,000 in additional equity. There

are currently 184 members (located in North and SouthDakota, Montana and Minnesota) who have committed20,273 head to Dakota Lamb.

The co-op expects to attain “break-even” status thisspring while paying producers an over-market premium.

Growers are responsible to deliver their lambs to acombination feedlot/receiving station in Emery, S. D.

Lambs stay there from three daysto three weeks, until they meet theco-op’s specifications. In additionto being raised without antibioticsand being less than one year old,the lambs must weigh between 120and 130 pounds, have been fedgrain for the final 60 days and haveno more than seven months of woolgrowth when shipped for process-ing. Those animals which cannotbe brought up to the co-op specifi-cations in a timely way are soldinto the commodity market.

Because lambs are hauled only five miles from thefeedlot to the processing plant, they suffer low stresslevels, which helps to improve meat quality. Highestsanitary conditions are maintained in the plant andduplicate bar-codes allow each individual animal to beidentified at any time during processing or marketing.

As a secondary market, the co-op can processfor the kosher market. This market uses only the fronthalf of the lamb, which tends to be the most difficult partto sell in the traditional lamb market. ■

Low-overhead approach taken by Dakota Lamb Growers Co-op

More than 20,000 lambs have been commit-ted to the new Dakota Lamb Growers Co-op. Photo courtesy American Sheep ProducersAssociation

ICA’s quality grid, which has helped them improve theirmanagement expertise to produce the right kind of productto earn quality bonuses,” Brinkmeyer says.

“Our member cattle will be priced off an individualizedmarketing system, based on week-of, or week-prior-to, deliv-

ery retail beef prices. That is quite different than what youfind in most of the cattle business today, where cattlemenprice their product based on live cattle prices and wherepackers pay them as little as possible.”

Members have currently made an annual commitment of100,000 head of fed-beef cattle, 22,000 fed Holstein steers(dairy beef), and a small number of dairy or beef cows.

“Just 18 months ago, I didn’t believe it was possible, but weintend to process all three types of cattle at this plant,”Brinkmeyer says. “This mix of three species creates wonder-ful synergies” for the co-op’s customer base.

A future for $10,000 per beef producerThe co-op’s equity drive has raised a little more than $8 mil-

lion, or about $10,000 per member. “$10,000 is about half theprice of a good used pickup truck—not much for the opportu-nity to participate in a project this exciting that could potential-ly change the future of the cattle business,” Brinkmeyer says.

While the co-op will own 100 percent of the land, plantand equipment, it will lease these assets to a joint venture


One fish just slipped off the hook, but the Ohio-basedGreat Lakes Pork Cooperatives is still fishing. The co-op,which was formed last year by pork producers in threestates, recently bid to purchase a veal processing plantin South Bend, Ind., out of bankruptcy. But the co-opwas unable to raise the approximate $7 million it needed(about half the plant’s cost) from its members in the rela-tively short time frame required by the court.

The funding effort was hampered by a generally badyear for farmers in the eastern Cornbelt, where Ohio had“an especially lousy crop year,” says co-op Vice Presi-dent Brian Watkins.

“So we’re basically going back to the drawing boardnow, but are still actively searching for other opportuni-ties,” says Watkins. This could involve finding a pro-cessing partner.

The co-op’s membership drive last year netted 108members in Ohio, Michigan and Indiana. Each paid$1,000 to join the co-op. “We got at least half of the com-mercial pork producers in the region, including almost allof the ones we felt we really had to have,” Watkins says.

Great Lakes Pork then secured some grants to do afeasibility study. This resulted in a plan for an operationthat would produce 600,000 hogs per year and sell pri-marily into the Chicago market.

This effort involves bringing about a change in themind set of the region’s pork producers. Watkins says too

many producers still see their future tied to a cost-controlstrategy via greater production efficiency or control ofinput costs. “This is not irrational—it is what has madethem money in the past,” Watkins says. “But now we arereally challenging them to do something different.” Thismeans re-focusing away from a production-driven, sup-ply-push system (in which farmers produce first, then fig-ure out a way to sell it) to a demand-pull system (in whichthey find markets first, then produce for it).

Many of the co-op’s large swine producers have pro-duction contracts with large packers. While these con-tracts limit some of their risk, they have posed an obsta-cle for the co-op because they reduce the availability ofhogs for Great Lakes Pork.

Watkins says these contracts may help producersfeel secure in the short term, but they need to be think-ing about a much longer timeframe than most contractsprovide for. “You need to be thinking about the next con-tract, and the next contract beyond that.” With the co-op, the outlook is for the long-term future of producers.

“We are not against contracts—everyone of our mem-bers will still maintain relationships with other purchasers.But we as producers will be better suppliers to our cus-tomers if we are also involved in a process where we are incloser touch with the consumer. The more we understandthe supply chain—what we can do at farm level to differen-tiate our product—will make us better pork suppliers.” ■

Great Lakes Pork Co-op adjusts plan to seek alternative packing plant

Sides of beef roll through the Rainbow Organic Farm plant inBronson, Kan. Photo courtesy Good Natured Family Farms

continued on page 31

By Margaret Bau andDianne Harrington

Editor’s Note: Bau is a cooperative devel-opment specialist with USDA RuralDevelopment in Wisconsin; Harrington isa Wautoma, Wis.-based elder care special-ist who is coordinating efforts in Wisconsinto address issues relating to long-termretention of care givers.

aren Taylor likes helpingpeople. Ever since shewas a little girl, it seemsTaylor has always beenthere to help an elderly

neighbor with household chores, or tohelp a relative recuperate from a hospi-tal stay. Nearly 30 years ago, Taylordecided to make this calling to helpothers her life’s work by becoming acertified nursing assistant (CNA), spe-

cializing in providing in-home care.

Taylor swears that theelderly and people withdisabilities feel healthierand more alert when theylive in their own homes.“When a person can comehome and sit in his favoritechair, eat his favoritehome-cooked foods andget up or go to bed whenhe wants to, those littlethings help make a personhappy,” Taylor says.

Her observations aresupported by research. Asone study suggests that home caremaintains the recipient’s dignity andindependence, qualities that are all toooften lost even in the best care institu-tions. Through assistance with dress-

ing, bathing, feeding, shop-ping, meal preparation andhousework, the elderly andpeople with disabilities can,and do, live independently intheir own homes.

In Waushara County, Wis.,a new, worker-owned cooper-ative formed by in-home careproviders is helping moreelderly and disabled peopleremain in their homes, pro-viding them with a preferredalternative to a nursing homewhile also improving pay andbenefits for care providers.

Demand growing for in-home care

Besides maintaining aperson’s dignity and inde-

pendence, in-home care is much morecost effective than institutional care.Typical annual cost for home-careservices is just under $5,000, whichcompares favorably to the $55,000average annual cost for a nursinghome stay.

Most people want to live in theirown homes as they age. In a 1998 sur-vey conducted by the American Asso-ciation of Retired Persons (AARP),eight out of 10 people over age 65said they want to stay in their ownhome and never move. Most peoplelive according to their wishes. Only 4percent of those over age 65 live innursing homes (though that numberincreases to 20 percent for persons 85and older).

Demand for home care will onlyincrease as the population ages, espe-cially as the baby boom generationnears retirement. By 2030, one in fiveAmericans will be over the age of 65.In many rural areas, the elderly alreadyhave reached this critical mass.


House ca l lsIn-home care givers form cooperative to provide vital service for elderly, disabled in rural Wisconsin

KCooperative Care member Pam Swendryzynski provides amanicure for client Leona Renner. Swendryzynski earned aCertified Nursing Assistant certificate through the co-op.As a co-op worker-owner, she now earns $2 per hourmore than her prior wage. Photos courtesy Cooperative Care

“Cooperative”comes first

Wisconsin law requires all coopera-tives incorporated under Chapter 185 statestatutes to use the term “cooperative” or “co-op” in its legal name. In fact, any businessthat misidentifies itself as a co-op may face a$100-a-day fine. Usually, cooperatives placethe term “co-op” at the end of their name(much like the use of other business termssuch as “Inc.” or “LLC”). The organizers ofthis home care business chose to place theword “cooperative” first in its name toemphasize the primary importance of mutualassistance and reliance upon one another.


Critical shortage of in-home care workers

Despite the growing demand and costeffectiveness of in-home care, there is aserious shortage of home care workersand CNAs. Low wages and lack of bene-fits provide a disincentive for people toenter into this profession. Nationally, the

average in-home care employee works29 hours per week at a median hourlywage of $7.58. Workers often receivefew, if any, benefits. Turnover within theindustry is very high, between 40 and 60percent annually.

The nature of the work can lead to asense of isolation. Most caregivers

work one-on-one with elderly and dis-abled clients and rarely have contactwith fellow caregivers. They have onlyoccasional contact with supervisors,other health professionals and theclient’s family.

Providing care is a physicallydemanding occupation. Care providersmust move clients for bathing, toiletingand positioning in and out of bed. Job-related injuries, especially to the backand neck, are a constant threat. Elderssuffering from Alzheimer’s disease orother cognitive impairments can some-times physically strike out at a worker.

The work can also be emotionallydraining. Some clients with Alzheimer’sor those adjusting to a disability feelanger, which they may direct at thecaregiver. Various cognitive impair-ments may cause paranoia, leading aclient to accuse a caregiver of stealingor mistreatment.

At times, workers are exposed to sex-ual comments or advances on the partof a client or family member. Some-times clients or their families treat care-givers as maids or domestic servants.

1) Concept: September 1999—Waushara Countyreceived a grant from the Wisconsin Department ofHealth and Family Services to creatively addressrecruitment and retention of long-term care workers.Agency Director Lucy Rowley contracted with SocialWorker Dianne Harrington to explore the idea of a work-er-owned cooperative. Cooperative Development Spe-cialist Margaret Bau of USDA RuralDevelopment agreed to provide educa-tion and technical assistance in co-opdevelopment.

2) Exploratory meeting: November 15,1999—Project coordinators (Harringtonand Bau) met with workers of theWaushara County In-Home Providers pro-gram. Coordinators introduced the coop-erative concept, reported on other homecare worker co-ops across the country,answered questions and gained approvalto proceed with exploring this project.

Potential-member survey—Careproviders were surveyed to determine

desired wages, benefits, distance willing to travel, expe-rience and skill levels. This information was key to thedirection of the co-op and the business plan.

Steering committee—Interested care providers vol-unteered to serve on the steering committee. Thisgroup met monthly for 15 months to provide guidanceand feedback to the coordinators as the initiative

evolved.

3) Market analysis, feasibility study,business plan: November 1999 to January2000—With funding from the state grant, a

Co-op development stages & timeline

Cooperative care logo loaded with symbolism

The encircled twin pines emblem used in the co-op’slogo is the international symbol of cooperatives. The pinetree is an ancient symbol of life. Two pines are shown toemphasize the mutual nature of cooperation. The trees aredark green—the color of chlorophyll and a basic building block of life one earth.Fittingly, Waushara County grows an abundance of evergreen trees in its sandysoils for harvest at Christmas. In fact, Wautoma, the county seat of WausharaCounty, calls itself the Christmas tree capital of America.

Usually, the twin pines symbol is enclosed in a circle to symbolize eternity.Cooperative Care chose to encircle the twin pines with a heart, to symbolize itscommitment to caring. At the center of the heart and twin pines is a home, avisual reminder that caring for people in their own homes is the focus of Cooperative Care’s existence.

For more than 20 years, Dorothy Spaulding, whorecives services from Cooperative Care, hasbeen an effective advocate for people with dis-abilities. She was instrumental in starting theCommunity Options Program, a Medicare waiv-er program that helps rural Wisconsin residentsneeding care services to remain in their ownhomes.

Many caregivers also report feeling alack of respect—that society in generaldoes not appreciate their work. The nature of care giving requires aspecial disposition and a sense of call-ing to serve the elderly and peoplewith disabilities. In a tight labor mar-ket, individuals can easily work in lessstressful retail or service industries forsimilar wages. Given the low wagesand lack of benefits, the demands ofthe job and the low status societyplaces upon care giving, is it any won-der that home care workers are inshort supply?

Meeting care needsin Waushara County

Waushara County, population23,000, is a scenic area in east-centralWisconsin. The landscape is dottedwith glacial lakes, sandy soils and ever-green forests. Few industries exist, sopeople make a living growing Christmastrees, working in tourism or traveling40-50 minutes to urban areas foremployment. The largest city, Wau-toma, boasts a population of 2,000 and

four of the county’s five stoplights. Inone important aspect, Waushara Countyreflects the future of America: one outof five residents are over the age of 65.

To serve the rural elderly, theWaushara County Department ofHuman Services (DHS) developed theIn-Home Providers Program. Formore than 20 years, DHS pairedhomemaker and personal care (CNA)providers with low-income, disabledadults and frail elderly residents whoqualified for state-funded programs orMedicare. In this arrangement, careproviders were not county employees,but rather considered domestic workershired by the service recipient and paidby a third party fiscal intermediary.

This arrangement stretched limitedpublic resources, but it left careproviders without workers compensa-tion and benefits. Compounding thesituation, state and federal funding hasnot kept pace with cost-of-livingexpenses, resulting in lower than aver-age wages.

This arrangement posed a potentialliability to Waushara County. Another

rural Wisconsin county with a similararrangement was recently sued to covermedical costs incurred by a caregiver’sinjury on the job. Despite the existenceof a third-party fiscal intermediary, theIRS has ruled that counties in thisarrangement are the true employersand therefore liable for workers com-pensation and payroll reporting.

Could a co-op work?Faced with these issues, a light

bulb clicked on in the mind of LucyRowley, director of the WausharaCounty DHS. For years, careproviders had asked the county forhigher wages and benefits, but tightbudgets had tied Rowley’s hands. Shewas aware of a worker-owned, in-home care co-op in the south Bronx,N.Y., called Cooperative Home CareAssociates.

Rowley wondered if it would be pos-sible for rural Waushara County care-givers to form a similar worker-ownedco-op. The county, she figured, couldsign a contract with the co-op to con-tinue providing services to low-income


private consultant was hired to write these studies.After months of delays, the final product was flawed.Project coordinators re-wrote the business plan withthe assistance of Amy Pietsch at CAP Services (a non-profit community action agency in Waushara County).

4) Vote to incorporate: January 17, 2001—Projectcoordinators presented an overview of the businessplan to care providers. At the meetings, care providersvoted to incorporate.

Elected board of directors - Five-woman boardpicked from a slate of eight candidates.

Adopted bylaws—Bylaws were drafted by Bau andthe steering committee.

Collected membership fee—Members paid a $40membership fee. Due to tight finances, some paid in twoinstallments. Co-op starts with 63 original members.

5) Articles of incorporation filed: February 5, 2001—Cooperative Care becomes a legal entity under Chapter185 of the Wisconsin statutes.

6) Financing: March 2001—Cooperative Caresigned a contract worth $800,000 with WausharaCounty to provide home and personal care services.Locally owned Farmers State Bank of Waupaca loanedthe new business $125,000, based on confidence in the

county contract, local leadership, the business planand a modest $4,000 in member equity.

7) New business start-up activities: Spring 2001—Board of directors rented office space, opened bankaccounts, acquired a tax identification number, exploredinsurance options and hired the executive director DonGrothe and other administrative staff. Fred Harasha, aretired executive of the local Adams Columbia Rural Elec-tric Cooperative, served as a key advisor in developing thefinancial systems, hiring staff and supporting the newlyelected board.

8) Begin operations: June 1, 2001—Commenced pay-roll for worker-owners.

9) Board training and guidance: February 2001 to pre-sent—Bau uses the LEADing Board video series (pro-duced by the University of Wisconsin Center for Co-ops,with funding from USDA Rural Development) for boardtraining workshops.

10) Annual meetings: February 2002 and 2003—Report on operations, bylaw revisions, board elections,patronage refunds distributed, awards ceremonies andsocial event. ■


elderly and disabled residents. As a private company, the co-op could

also serve counties beyond Wausharaand care for private clients. By combin-ing public and private revenue sources,would it be possible for a worker-ownedco-op to offer much needed benefits andperhaps higher wages?

Over three years, Rowley wroteapplications for $50,000 in grants fromthe Community Links fund, adminis-tered by the State Department ofHealth and Family Services, toexplore the worker-owned co-op option and other workforceenhancement projects (seesidebar).

Co-op exceeds expectations After a year-and-a-half of

steering committee meetings,co-op education efforts, marketanalysis, advice from collabora-tors and a myriad of relatedbusiness start-up tasks, Cooper-ative Care commenced opera-tions on June 1, 2001.

The co-op has proven suc-cessful beyond anyone’sdreams. Initially, 61 workers in the In-Home Providers program joinedCooperative Care. Membership nowstands at 81.

Current benefits for member-own-ers include increased pay, workerscompensation, time-and-a-half pay forworking holidays, 10 days of paidvacation or sick leave, travel reim-bursement and health insurance. Theco-op pays 75 percent of the healthinsurance premium for individuals and50 percent for family coverage.

Care providers currently earnbetween $7.50 and $9.75 per hour.Benefits add the equivalent of $2 perhour more and patronage refunds addan extra 50 cents to a worker’s hourlywage. Though no one will ever growrich earning the equivalent of $9.75 perhour with benefits, a full-time CNA hasthe potential to earn near WausharaCounty’s per capita income of $18,144.

Financially, Cooperative Care hasexceeded fiscal projections. Year-endprofits for 2001 exceeded $41,000. After

prepaying part of the business loan andsetting aside funds for capital reserves,cash patronage refunds were distributedat the first annual meeting. Checks aver-aged $440, but were as high as $2,000,based on the number of hours worked.

At the end of the co-op’s second yearof operation, net earnings totaled morethan $65,000. Of this, $25,000 was setaside in reserve and about $40,000 dis-tributed in patronage refunds, againaccording to hours worked.

Patronage checks thrill worker-members

Co-op Executive Director JamesGawne recalls the first time the mem-ber-owners learned about the power ofpatronage refunds. “It was Feb. 12,2002, at the first annual meeting. Asthe business meeting drew to a closeand people were preparing for a meal,more door prizes and music, BoardPresident Donna Tompkins calledevery member forward to receive asealed envelope with her or his cashpatronage refund check. Soon, audiblegasps were heard around the room aspeople opened the envelopes and real-ized they had received the equivalent ofa two-week paycheck. That day, it feltlike Christmas in Waushara County.”

Turnover among co-op member-workers is virtually nil; two memberswere terminated for cause and oneresigned when her client died. Thisstable workforce provides continuity ofcare for the clients. In fact, the 125

county clients retained their originalworkers, providing a seamless transi-tion for care provider and recipient.

Client and caregiver surveys con-ducted in 2002 by The ManagementGroup, an independent consultingfirm, demonstrated overall satisfactionwith co-op ownership.

A less tangible achievement is theleadership and personal developmentof workers who served on the steeringcommittee and the board of directors.

The board consists of five CNAs,four of whom had never held aposition of power in any organiza-tion. These women have negotiatedcontracts, rented office space, hiredadministrative staff, developed poli-cies and procedures and representedthe co-op at conferences and com-munity events.

As for the general member-ship, members report feeling lessisolated in their work thanks totraining, meetings, the co-opnewsletter, ice cream socials andpay-day events. In fact, caregivershave been known to bring theirclients to member social events. As Board President Donna Tomp-

kins observes, “We still have a ways togo in educating the membership onwhat it means to be a co-owner of ourown business. But given that one out offive workers is caring for a disabledfamily member, we are pleased to seethe level of participation at annualmeetings and social events.”

Cooperative Care has garnered pub-lic attention. The local WausharaArgus newspaper has been particularlyattentive in running stories and photosabout co-op events. Policy makersacross the state and country are observ-ing the progress of Cooperative Careand wondering if the model could bereplicated in other rural areas.Inquiries from Washington, Hawaii,Montana, Kentucky, North Dakota andVermont have arrived, and co-op orga-nizers, staff and members have sharedthe Cooperative Care story at a varietyof conferences and with office visitors.

Harvard’s John F. Kennedy School

Care giver Pat Weis prepares lunch for client DorothySpaulding. The cooperative has proven successful beyondeven the highest hopes of the members and supporterswho launched it in 2001. Photo courtesy Cooperative Care

continued on page 32


By Kristine Rose

Editor’s note: This article is based on thesis research conducted byRose at the College of St. Catherine in St. Paul, Minn. For moreinformation on the research findings, she can be reached [email protected]. She hopes to continue her work withcooperatives in the areas of leadership and diversity.

any co-ops are looking for ways to increasethe number of young people and women ontheir boards. While working for LandO’Lakes and as a graduate student in organi-zational leadership, I led a roundtable discus-

sion on leadership at a conference for women in agriculture.When the women participants learned of my employmentand interest in women in leadership roles, they asked me foradvice regarding how they could become directors.

This piqued my curiosity. It seemed to me that if womenco-op directors would share their knowledge and experi-ences, it might eliminate some of the mystery of how tobecome a director.

Six out of 236To find some examples of women co-op directors, I looked

to National Cooperative Bank’s list of Top 100 Cooperatives,focusing on the 11 that are located in Iowa, Minnesota, NorthDakota, South Dakota and Wisconsin. Of 236 directors serv-ing those 11 cooperatives in 2001, just six were women.

I spoke to each of the six about their experiences—of beingnominated and elected, as well as serving their cooperative.Hopefully, their experiences will serve as a resource for othercooperatives seeking the best possible leaders, and as an inspi-ration for other women.

These six directors interviewed were: ■ Pam Bolin, Swiss Valley Farms, Davenport, Iowa; Years

of board service: 1989—present.■ Connie Cihak, Land O’Lakes Inc., Arden Hills, Minn.;

elected to district board in 1989; served on corporateboard 1994—2003.

■ Ardath DeWall, Foremost Farms USA, Baraboo, Wis.1988—present.

■ Nancy Meulemans, Alto Dairy, Waupun, Wis.; 1998—present.

■ Laura Stacy, Land O’Lakes Inc., Arden Hills, Minn.;1986—2003.

■ Carolyn Verhulst, Foremost Farms USA, Baraboo, Wis.,1995—2001.

Embarking upon the leadership pathway Each of these six female directors had previous involve-

ment in organizations or programs such as Young Coopera-tors, Young Farmers and Ranchers and Farm Bureau, amongothers. This experience was key to their leadership develop-ment and election to the board, all agreed. Their involvementand attaining leadership roles in those organizations did notgo unnoticed, as five of the six were encouraged by men topursue a board nomination. These men included co-op direc-tors, employees or members of the nominating committee.

Bolin’s experience confirms the value of involvement in aleadership development program, such as a Young Coopera-tors program. Her involvement in the program improved hervisibility in the cooperative.

“The YC program is a good starting place because it getsyou involved and it exposes you to things on a national level,”says Bolin, who got involved in the program in 1981. “It getsyou beyond your community. As a result of our YC involve-ment, we knew about Swiss Valley cooperative, the co-op sys-tem and co-op issues.” Bolin and her husband, Dave, wereboth active in the YC program and its contests, winning Out-standing YC Couple honors one year.

As was the case with the other directors, Bolin found thatthis leadership experience opened the door to a chance to runfor the board.

“Following that, a director who was going to be retiringapproached us, wondering if one of us would be willing torun. Since we were 30 and 32 years old at the time, hethought we were maybe too young to actually get elected. Buthe said, ‘Let’s get your names out now and maybe this issomething you could do in the future.’”

Bolin’s husband felt strongly that she had ability to lead.Indeed, all six directors interviewed said their husbands supportedtheir running for the board. Her husband also thought her first

Tra i lb lazersLeadership development programs key tomore women winning seats on co-op boards

M

Dairy farmer Ardath DeWall, a member of the Foremost Farms USAboard of directors, says she felt well accepted by the male membersof the board when she joined. Five other female board members oflarge co-ops in the Upper Midwest reported a similar, welcomingexperience. Photo courtesy Ardath DeWall


run for the board would just be to buildsome name recognition for a future try.“We won’t get it this time, but then they’reaware that we’re interested in the co-op andmaybe it’s something we can do down theroad when we’re a little older,’ he said. So Iput my name up for the nomination.”

Farm Bureau experience whetsappetite for run

Stacy’s nomination story differs in thatshe was the only one of the six who wasapproached by the nominating commit-tee and asked to consider becoming adirector candidate.

“I was not seeking the director posi-tion,” Stacy says. “ I had been more activein the Farm Bureau and was seeking anoffice there, but was unsuccessful.”

When the co-op nominating committee asked her to run,Stacy said she was honored, but was worried about her lackof governance knowledge.

The committee assured her she could pick up those skillsquickly, and she was elected on her first try. After serving asboard secretary for several years, Stacy was elected president ofher district board in 1992 and went on to join the Land O’Lakes corporate board in 1994.

Verhulst pursued the nomination independently, enteringthe election process because she felt the membership in herdistrict was underrepresented.

Overcoming initial self-doubt When initially encouraged to run for the board, each

woman had concerns about her ability to serve as a director. Although they were already recognized by others for their

leadership in Young Cooperators or other organizations, theywondered if they had enough formal education, knew enoughabout governance or were smart enough to lead and serve theircooperative.

Cihak describes her personal challenges: “I think there area lot of good women in agriculture, but we’re ingrained with[feelings that] ‘You don’t know enough.’ I always felt like Ihad to try harder, read more, be more prepared, always gothat extra mile just to be even. I always felt I had to try hardjust to be on baseline.”

Male director reactionSome of the women encountered individual board mem-

bers who seemed uncomfortable with a woman in the board-room. But each director said that, overall, she felt acceptedby her fellow directors.

“One thing I learned, as far as the co-op board, is theydidn’t have a problem with me being a female. They acceptedme,” says Bolin.

“Each director accepted me very well,” Stacy concurs. “I

think I was accepted readily because I wasknown. You’re with your next-doorneighbor, so to speak, your county people. You’re familiar with them fromco-op annual meetings and the ag com-munity—you just know those people. SoI was well received there.”

Meulemans said entering the board-room was also comfortable for her. “I canhonestly say I was always respected as awoman and a director.” She considersboard work interesting and rewarding,saying she wishes that “everybody couldbe on the board at sometime in their life.”

Adds DeWall, “I felt very well accept-ed. Of course, I had been on the boardbefore, so I was kind of acquainted withmost directors.”

Most of her initial worries proved groundless, Stacy says.“I have had a wonderful experience, was well received and alot better qualified than I gave myself credit for.”

Combined, their board service now totals 68 years (notcounting director experiences outside co-op board rooms).As S.J. Freeman, author of Managing Lives: Corporatewomen and social change wrote: “By the time she has provedherself, a woman’s acceptance has slowly evolved.”

Further proving how well their male peers accepted them,five of the six women directors were elected to co-op execu-tive committee positions.

Cihak’s feelings following her election to the executivecommittee are an indicator that one barrier to women’s par-ticipation might be an internal barrier: “The vice chairmoved up to the chairman’s position on the dairy committee,and they needed to elect a new vice chair. My peers electedme to that position. I [then] realized they had confidence inme and trusted me.”

ConclusionsDirector interviews with these six board members demon-

strate that participation in Young Cooperator and YoungFarmer programs played a key role in each woman directordeveloping confidence in her leadership ability and increas-ing her visibility among other co-op members. This is onemore reason why co-ops should continue their support ofleadership development programs.

Another key to election was the encouragement the womenreceived to pursue the directorship from men in their coopera-tives. Since only one of the six directors was elected as a conse-quence of being nominated by a nominating committee, coop-eratives should review nominating committee procedures andsee if a means can be made to seek more diverse candidates.

Once in the boardroom, these six directors each spoke ofbeing well received by their male peers. Not only did theyspeak of being accepted, their peers elected them to executivecommittee roles. ■

Me and the Boys—Land O’ Lakes boardmember Connie Cihak, second from right,is flanked by male compatriots during adairy farm tour. “I think there are a lot ofgood women in agriculture,” she says,“but we’re ingrained with feelings that‘you don’t know enough.’” Photo by DavidLundquist, courtesy Land O’ Lakes


By Christa Hartsook

Editor’s note: Hartsook is communica-tions specialist for AgMRC.

e Agricultural MarketingResource Center (AgM-RC) is a newly formednational electronic—orvirtual—resource center

for value-added agricultural groups.The purpose and mission of the AgM-RC is to provide producers and proces-sors with critical information to buildsuccessful value-added agriculturalenterprises.

The Center combines expertise atIowa State University, Kansas StateUniversity and the University of Cali-fornia to help clients locate theresources that can aid them in theirefforts to develop a value-added agri-cultural business. The center workswith other leading land-grant universi-ties, such as Oklahoma State University

and Montana State Uni-versity, as well as organiza-tions, such as Sparks Com-panies and CoBank, onvalue-added projects. Par-tial support is derived fromthe Rural Business-Coop-erative Service of USDARural Development.

The Center’s Web site,www.AgMRC.org, con-tains information on vari-ous commodities andproducts, including manymarket niches farmers canpursue. There is also infor-mation on how to start abusiness and selecting abusiness structure. Other topics includehow to write feasibility, marketing andbusiness plans.

This extensive collection ofresources and tools can help anyoneinvolved in agriculture develop andimprove any aspect of their business.

The site contains links andAgMRC-developed pieces oneverything from networks ofethanol cooperatives to organicbeef producers to a value-addedworm business. Directories listvalue-added consultants, value-added agriculture businessesand applicable laws specific toeach state.

The goals of the centerinclude the creation of a pow-erful, electronic Web-basedlibrary with search capabilitiesto make value-added market,economic and business infor-mation available to producers;to provide value-added busi-

ness and economic analysis tools,including information on businessprinciples, legal, financial and logistical issues; conduct research andanalysis on economic issues facingproducers involved in value-addedbusiness ventures and to link produc-ers with electronically availableinformation on major commodities.

Governing AgMRCAn advisory board, comprised of

individuals from across the nationinvolved in value-added agriculture,governs the center.

Current members include DuaneAcker, Talycoed II, Atlantic, Iowa;Mark Hanson, Lindquist & Vennum,P.L.L.P., Minneapolis, Minn.; Eliza-beth Hund, Rabobank, San Francisco,Calif.; Steve Hunt, U.S. Premium Beef,Kansas City, Mo.; Stanley R. Johnson,Iowa State University, Ames, Iowa; JeffKistner, CoBank, Omaha, Neb.; BarryKriebel, Sun-Maid Growers, Kings-

Ag Market ing Resource Center he lp ingproducers develop va lue-added s t ra teg ies

T

V A L U E - A D D E D C O R N E R

Ag Marketing Resource Center board members get aninside look at a California citrus packinghouse. The boardfeatures a number of co-op representatives. Photo by PattyHannapel, courtesy AgMRC

Agri-tourists get a behind-the-scenes look at theTammen Treeberry blueberry and Christmas treefarm near Braidwood, Ill. For more on this operationand many other informative articles, visit theAgMRC Web site, www.agmrc.org . Photo by MalindaMiller, courtesy AgMRC


By Sandra Clarke

Editor’s note: Clarke is communications manager atthe Center for Agricultural & Rural Development (CARD),Iowa State University.

Named for the central Iowa county where producershave grown soybeans for genera-tions, the Greene Bean Project isintroducing a new kind of bean forits rural community: the ediblebean. The project was formulatedout of the desire of several GreeneCounty farmers to diversify theircrops and promote value-addedagriculture in their area.

Having witnessed failed attemptsby other producers to try alternativecrops, the group of 24 producerstook a more perceptive approach tothe challenge—one that led them to an attitude of coop-eration and risk sharing.

“We learned early on that a cooperative effort, shar-ing the learning curve and risks and rewards, far out-paced any one individual’s effort in all aspects of start-ing a new business,” says Chris Henning Cooklin,

project manager for the Greene Bean Project–Alterna-tive Crop Enterprises. “No one person could have exper-tise in all areas, but by sharing freely of our individualexpertise, we could overcome obstacles more quickly.”

In their 2001 inaugural year, the group adopted amindset of experimentation and research to evaluate

the potential of the alternative cropand to establish a baseline of pro-duction practices. First, they had todetermine if they could grow aquality, edible bean with marketpotential before they could seekadditional resources or capitalinvestment.

The Greene Bean Projectsought help from Iowa State Uni-versity Extension and the Agricul-tural Marketing Resource Centerfor information and access to

research. Production and management practices ofgrowers in other regions were collected, and regionalvariations of weather, soils, pests, and other agronomicvariables were considered.

The Project steering committee used Internetresearch, collaborated via e-mail and brought in experi-

The Greene Bean Project:Growers’ field of dreams is edible beans

A 2002 field day at the Henning Cooklin farm inGreene County, Iowa, gave growers a chance tocompare 15 varieties of edible beans. Photos byCarola Wicenti, courtesy Greene Bean Project

burg, Calif.; Eugene Quast, Swiss Val-ley Farms, Dubuque, Iowa; Richard E.Rominger, Rominger Farms, Winters,Calif.; Kenneth Rutledge, West Liber-ty Foods, West Liberty, Iowa and ChrisWilliams, 21st Century Alliance, Man-hattan, Kan.

A representative from the RuralBusiness-Cooperative Service ofUSDA Rural Development also sits onthe board.

Web site contentInitially, staff conferred with indi-

viduals from the USDA Ag Library todevelop the most efficient method forcategorizing information and to sharecommon resources, whenever possible.Since the Web site became available tothe public in April 2002 it has receivedmore than 1.4 million hits. The con-

tent portion of the AgMRC Web site isdivided into four main sections:

1. Commodities and Products; 2. Markets and Industries;3. Business Development;4. Directories and State Resources.The Commodities and Products

section and the Markets and Industriessection are for producers to use toexplore the market potential of a value-added idea. The Business Developmentsection is for producers to use to put“wheels” under an idea after determin-ing its feasibility.

The Commodities and Productssection provides information from theperspective of adding value to the com-modities and products traditionallyproduced on the farm. Examples arecorn, beef, fruits, etc. Information isprovided along the supply chain, from

production, processing and marketingfor each commodity/product, focusingon marketing.

Specific information on the productdifferentiation is presented. For example, organic, natural and directmarketing aspects of each specific com-modity are detailed in the individualcommodity sections. General foodindustry information is presentedunder Food Industry in the Marketsand Industries section.

Only information specific to value-added agriculture is provided in thecommodity section.

The Markets and Industries sectionprovides information on the majormarkets and industries (food, energy,etc.) that producers may enter duringthe process of adding value to theircommodities.

The Business Development sectionfocuses on information needed to cre-ate and operate a viable value-addedbusiness. The information is providedsequentially for use during the businessanalysis, creation, development andoperation process.

The Directories & State Resourcessection includes directories created forthe Web site by AgMRC staff. Staffinitially compiled a list of 300 serviceproviders and notified them of a newdirectory for “Value-added Consultantsand Service Providers.” In the pastyear, 200 service providers registeredon the directory, providing assistanceto groups with legal, commodity-spe-cific, financial, marketing expertise andmore. A value-added business directorywas also created to give new value-added businesses a resource to contact.

Currently, 90 successful and non-suc-cessful businesses are listed on the site.

A state resource directory was estab-lished to give producers at least onecontact name in value-added agricul-ture for each state. Additionally withinthe directory, individual state laws havebeen added pertaining to specific regu-lations within each state such as estab-lishing a cooperative, sale of foods, etc.A calendar of value-added events isincluded. This allows producers inter-ested in attending value-added eventsto determine what is coming up withintheir region.

Research focusSeveral of the AgMRC partners are

focusing their efforts on research pro-jects geared to assist producersinvolved in value-added agriculture.

The Center for Agricultural and RuralDevelopment (CARD) at Iowa StateUniversity finalized research on fourprojects and submitted working papersfor the AgMRC Web site. These fourpapers are now listed in the BusinessDevelopment and New Informationsections of the site. The four papersare: “Farmer-Owned Brands”; “Infor-mation Sharing and Oligopoly in Agri-cultural Markets: The Role of Bargain-ing Associations”; “An Initial Analysisof Adoption of Animal Welfare Guide-lines on the U.S. Egg Industry”; and“Can Spot and Contract Markets Co-Exist in Agriculture?”

Kansas State University started acase research study on Ocean SprayCranberries to understand brand cre-ation and valuation. Other studies haverecently been compiled on South


enced producers for numerousmeetings before the first growingseason. “From organizational andcommunication skills to agronomicsand marketing, the AgMRC and ISUExtension staff brought their ownspecial skills and shared experi-ences with our growers,” says Henning Cooklin.

As the Greene Bean Project devel-oped, so too did the Agricultural Mar-keting Resource Center. The AgMRCadded more and more resources toits Web site, and offered outreachopportunities to clients. Henning Cooklin took advantage ofthe Center’s Grant Writing 101 and Marketing Your Busi-ness workshops.

“Both were helpful in networking and with basicskills training in writing press releases, talking with thepress, and in preparing budgets for grants,” she says.

Once the group had obtained the critical marketresearch and had formulated its production and risk-management plan, they were ready to embark on begin-ning their crop-diversification experiment. The othercrucial factor in launching the alternative crop was tofind a buyer for their untested crop. This is an areawhere the cooperative nature of the enterprise reallyhelps. Several producers can grow quantities on a scalethat can attract the attention of the marketplace.

Two edible beans were selected for compatibility with

the producers’ existing croppingpractices: the adzuki and the chick-pea. Producers were encouraged togrow only the number of acres theywere willing to put at risk, to per-form their own production tasks andto absorb all personal productioncosts. A common machine andoperator harvested the crop, andsales revenues were divided equal-ly among the growers, based onacres in production.

In the group’s first growing sea-son, it was able to raise enough

product to truly test the market and members were leftwith a favorable impression. They continued theendeavor into the 2002 growing season, and were excit-ed by the results. “We have this year’s crop of adzukibeans almost sold already,” says Henning Cooklin, “andat a good price, too.”

The group plans to adopt a quality management sys-tem in the future to further differentiate their product.

Greene Bean Project growers also are contemplatingthe potential of other additional crops. Expansion of thegroup base and acres is predicated on further researchand careful evaluation of new markets, a prime exampleof what the Agricultural Marketing Resource Center aimsto provide. “There are so many good resources out there,”says Henning Cooklin. “Do the research, share the knowl-edge and you’ll be able to share the benefits, too!” ■

Co-op members—including (clockwise fromtop) Sheila Dotts Hebenstreit, Ivan Kenney, GlenCarstensen and E.R. Henning—relax and com-pare notes following the field tour.


Dakota Soybean Processors, DakotaGrowers Pasta and 21st CenturyAlliance. KSU completed an ethanolpre-feasibility model—which can beaccessed on the Internet at: www.age-con.ksu.edu/renewableenergy/—work-ing with CoBank and Sparks Compa-nies. They are now beginning a similarproject for bio-based diesel.

Kansas State visited with GeneralMills on the feasibility of developing acertification program for hard whitewheat varieties and tracking thoseindividually from producer to elevator,to flour mill and baking lab. Thishelped develop research for the hardwhite wheat incentive program in theFarm Bill.

The University of California hasbegun studies designed to improvepractical understanding of how differ-ent industries have evolved in theirapproaches to value-added marketing.Studies include:

■ Investigating the effect of publicpolicy, especially milk marketingorders, on marketing and process-ing cooperatives;

■ The role of pistachio industrymarketing orders in maintainingquality and the industry’s reputa-tion for food safety.

The University of California alsohas launched a project to better under-stand the value-added relationshipsbetween growers and processors in thetomato industry, especially the effectsof vertical integration by growers onthe processing side of the industry. Acase study will focus on four largegrowers who have joined together tobuild a tomato processing plant.

UC has also begun to apply an eco-nomic model to evaluate the payoff toproducers from innovations in the useof whey proteins. This work representsclose collaboration among food scien-tists and economists. The costs andpotential market for the new uses ofwhey have been analyzed. Now thoseresults are being applied in a model ofdairy supply and demand that includesthe complications of federal and statepolicy such as price supports and milkmarketing orders. UC is also studying

several key aspects of the wine grapeindustry and is compiling data on Chi-na’s production and demand for horti-cultural crops. This is the first timesuch information has been available forindustry analysts to consider the role ofChina in many of these commodities.

Other projectsRecognizing that many farmers are

selling directly to consumers via farm-ers markets, Community Supported Ag(CSA) programs and other avenues,AgMRC teamed up with the IowaFarm Bureau Federation to pilot a pro-ject that gives farmers the opportunityto sell their product via a Web site andassists in the development to provide asite for producers to list their goods atan affordable price. This service isbeing offered as a pilot project in Iowaand will be expanded to other states inthe coming months.

Another unique opportunity for theAgMRC Web site is the developmentof a Web site for a Pork Niche MarketWorking Group. This group, com-prised of individuals from commoditygroups, ISU Extension and other agri-

businesses, works to develop new nichemarket opportunities for small porkproducers. Because their activitiesdirectly influence value-added porkoperations, AgMRC is hosting a Website within the AgMRC Web site forthe group.

In addition to external links, staffmembers write pieces for posting onthe Web site. Staff interviewed value-added agriculture businesses andwrote business profiles from thoseinterviews. Business profiles wereadded for four enterprises, includingCory’s Country Lamb, County LineOrchard, Tammen Treeberry Farmand Northern Vineyard Winery. Addi-tional profiles have been started forU.S. Premium Beef, Loess HillsAquaculture and West Liberty Foods.

Staff developed an ethanol pre-feasi-bility model that included an Iowaemphasis with Co-Bank. The model isadaptable to most corn-belt states. Staffmembers also wrote several otherpieces within Business Development,including “Introduction to Grant Writ-ing,” “Farmer Alliances—A New Breedis Emerging” and “Funding Sources.”

AgMRC staff organized and planneda workshop for producers titled“Telling Your Story, Selling Your Idea.”The two-day workshop focused on thecommunication needs of value-addedagricultural groups.

Contact AgMRCProducers, extension personnel and

rural development specialists contactthe resource center either via toll-freephone at 866-277-5567, e-mail at [email protected] or the Web site,www.agmrc.org.

AgMRC staff will speak at large, val-ue-added agricultural gatherings or atannual meetings to share with yourgroup what the Center can offer. Addi-tionally, we would be happy to providepromotional or other backgroundinformation for meetings and events.

Please contact us through the abovechannels with any questions or oppor-tunities to share the message of theCenter. We look forward to hearingfrom you. ■

AgMRC teamedup with the IowaFarm BureauFederation to pilota project that givesfarmers the opportunity to selltheir product via aWeb site.


Charles A. Kraenzle, DirectorStatisticsE. Eldon Eversull, AgriculturalEconomistUSDA Rural Development-RBS

Editor’s Note: Mr. Kraenzle died last yearduring the compilation of cooperative datafor this report. Assistance in developingestimates of cooperatives’ share of farmmarketings and farm production expendi-tures was provided by the staff of the RuralBusiness-Cooperative Service of USDARural Development, including: TonyCrooks, grains/oilseeds and rice; DavidChesnick, 100 largest cooperatives; AndyJermolowicz, fruits/vegetables and tobacco;Bruce Reynolds, cotton/cottonseed andCharles Ling, dairy.

armer cooperatives’ shareof total farm market-ing—including crops,livestock and poultry—climbed to 28 percent in

2001, up from 27 percent in 2000. Themarket share is based on cooperatives’net marketing business volume of $75billion in 2001. That’s $3 billion morethan in 2000, but down from the record$79.4 billion collected in 1996, whenthe market share of co-ops peaked at 31percent (figure 1).

Cooperatives’ gained market shareon a wide front, including milk/milkproducts, fruits/vegetables, livestock,dry beans/peas, rice, tobacco and sugar.Most of these gains were modest, withmilk/milk products and fruits/vegeta-bles each climbing 1 percent and ricegaining 2 percent. Sales decreased forgrains/oilseeds, cotton, poultry/eggsand nuts.

Cooperatives also rang up $24.8 billionin net sales of farm supplies in 2001,about $700 million more than in 2000and only $400 million less than the recordof $25.2 billion set in 1997. However,their market share for major farm produc-tion supplies—including feed, seed, fertil-izer, crop protectants and petroleum—dropped 1 percent from 2000.

Milk sales top $20.5 billion Farmer cooperatives paid producers

$20.5 billion for milk/milk products in2001, up $3.5 billion from 2000. U.S.farm cash receipts for milk/milk prod-ucts also climbed nearly $4 billion from2000. Cooperatives’ market share oftotal U.S. farm cash receipts formilk/milk products increased from 82to 83 percent (table 1).

However, milk/milk products marketshare estimates for both years have beenrevised downward by 5 to 7 points,based on recent studies by USDA Rural

F

Co-ops increase share of farm market ings;share of farm supply sales dips s l ight ly

Figure 1—Cooperatives’ shares of U.S. farm marketings and majorfarm supply expenditures, 1992-2001

35

30

25

20

15

10

5

01992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Farm Marketings1

Major Farm Production Expenditures2

1 Based on U.S. farm cash receipts.2 Based on U.S. cash expenditures for fertilizer, petroleum, crop protectants,

feed, and seed used for farm production.

Perc

ent


Development economist Charles Ling.His newest study covers 2002 market-ings and will be released later this year.The revision in milk/milk productsshare lowered overall co-op marketshare by 0.5 percent.

Cooperatives’ market share ofgrain/oilseed marketings at the farm-gate decreased 6 percent, from 44 per-cent in 2000 to 38 percent in 2001.During 2001, farmer cooperatives paidproducers about $15 billion for theirgrains and oilseeds, about $300 million,or 2 percent, less than in 2000. Totalmarketings of all grains and oilseedsproduced in the United States increasedalmost 12 percent from 2000 to 2001.

Cotton and cottonseed cooperatives’share of cash receipts was 42 percent in2001, 7 percent less than in 2000. Farmcash receipts for cotton and cottonseedcontinue to decline, down $300 millionfrom last year.

Total U.S. average cash receipts forfruits/vegetables were up almost $2 bil-lion, or 10 percent. Cooperativesaccounted for 19 percent of thenation’s fruit/vegetable sales in 2001, 1percent more than in 2000. Coopera-tives’ paid fruit/vegetable producersabout $5.6 billion in 2001, up from$4.9 billion a year earlier.

Cooperatives’ share of livestock/wool/mohair marketings was 13 percentin 2001, 1 percent more than in 2000.Cooperatives paid these producers $7.7billion in 2001, almost 12 percent morethan the $6.9 billion paid in 2000.

Cooperatives’ share of “all other”

marketings—including poultry/eggs,dry edible beans and peas, tobacco,nuts, rice, and sugar—was 12 percent,down 1 percent from 2000. Coopera-tives paid farmers $5.6 billion for “allother” products marketed in 2001,down 13 percent from $6.4 billion in2000. Sharp drops in prices for sugarand tobacco contributed to the decline.

Figure 2 shows the most recent five-year market-share trends for selectedfarm commodities marketed by farmercooperatives. Milk/milk products,fruits/vegetables, and livestock/wool/mohair shares have been fairlylevel. Grains/oilseeds and cotton/cot-tonseed shares have varied, with bothtrending downward in 2001.

Farm supply share dips 1 percent Cooperatives’ share of major farm

production supply sales—feed, seed,fertilizer, crop protectants and petrole-um—was 26 percent in 2001, down 1percent from 2000. Cooperatives’share of fertilizer, petroleum and seedall increased while sales of crop pro-tectants and feed decreased (table 2,figure 3).

Total U.S. farm cash expenditures

Table 1—Cooperatives’ shares of U.S. farm marketings, by selectedcommodity group, 1997-2001

Commodity group 2001 2000 1999 1998 1997Percent of U.S. farm marketings1

Milk/milk products 83 82 83 83 83Grains/oilseeds 38 44 34 39 43Cotton/cottonseed 42 49 27 43 38Fruits/vegetables 19 18 18 19 19Livestock/wool/mohair 13 12 13 14 12All other2 12 13 12 12 12Total 3 28 27 26 29 28

1 Values rounded to the nearest whole percent. Some prior year values were revised.

2 Includes poultry/eggs, dry edible beans/peas, nuts, rice, tobacco, sugarcane, sugarbeets, honey, and all other marketings.

3 All farm commodities weighted by value.

Figure 2—Cooperatives’ shares of U.S. farm products marketed bycommodity group, 1997-2001

100

80

40

20

01997 1998 1999 2000 2001

Milk/milk producs Grains/oilseedsCotton/cottonseed Fruits/vegetablesLivestock/wool/mohair

Perc

ent o

f U.S

. cas

h re

cept

s


for the five major supply itemsincreased about 4 percent, to $60 bil-lion, from 2000 to 2001, while coop-eratives’ sales growth remained flat at$15.8 billion in both years. Coopera-tives’ fertilizer sales of $4.7 billionwere up from $4.3 billion in 2000, orabout 9 percent. Total fertilizerexpenditures for all of U.S. agricul-ture were up about a third of thatamount in 2001.

Cooperatives’ 46-percent share ofpetroleum expenditures in 2001 was upfrom 43 percent in 2000. Cooperativesales increased by 5 percent while U.S.petroleum sales for farm production, at$ 7.2 billion, were unchanged.

Crop protectant sales for coopera-tives declined 2 percent from 2000 to2001, to about $2.9 billion, and theirshare of this market dropped one per-cent, to 34 percent. Total expendituresby all U.S. farmers for crop protectantsincreased 1 percent, to $8.6 billion, dur-ing that time.

Feed sales by cooperatives declinedabout 14 percent, to $3.9 billion, whiletotal U.S. feed expenditures increased1 percent, to $25 billion. Coopera-tives’ share of feed expenditures

declined 3 points, to 15 percent. The lowest market share for co-ops

among the major farm supply items isseed. Co-ops held 13 percent of theseed market in 2001, unchanged from2000. Cooperatives’ seed salesincreased by $100 million, or 15 per-cent, in 2001, while total U.S. cashexpenditures for seed increased 14 per-cent, to $8.3 billion.

How co-op share is calculated Cooperative-share estimates for

selected commodities and farm supplies are based on data from severalsources. These include the annual sur-vey of farmer cooperatives conductedby the Cooperative Services programof the Rural Business-Cooperative Ser-vice, other Cooperative Services stud-ies, cash receipts from farm marketingsand farm production expenditures pub-lished by USDA’s Economic ResearchService (ERS), and from CooperativeServices’ commodity specialists.

Cooperatives’ shares of farm marketings represent estimates ofcooperative activity at the farm-gate,or first-handler, level.

Cooperatives’ shares of farm mar-ketings were estimated by first sub-tracting gross margins from net coop-erative business volume. Theseestimated “payments to farmers” werethen related to their respective totalU.S. cash receipts to calculate the percentage shares.

Shares of the major farm supply itemswere estimated by subtracting fromcooperatives’ net business volume: exportbusiness volume, sales to other firms andsupplies sold for non-farm purposes.These adjusted business volumes werethen related to their respective total U.S.cash expenditures to calculate percentageshare estimates. ■

Table 2—Cooperatives’ shares of major U.S. farm supply expenditures, by production item, 1997-2001

Farm production item 2001 2000 1999 1998 1997Percent of U.S. farm supply expenditures1

Fertilizer 45 43 45 45 45Petroleum 46 43 45 50 45Crop protectants 34 35 34 34 34Feed 15 18 19 21 22Seed 13 13 10 10 10Total2 26 27 27 29 29

1 Values rounded to the nearest whole percent. Some prior year values were revised.

2 The five major farm supply items weighted by value.

Figure 3—Cooperatives’ share of selected U.S. farm productionexpenditures, 1997-2001

60

50

40

30

20

10

01997 1998 1999 2000 2001

Fertilizer PetroleumCrop protectants FeedSeed

Perc

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f U.S

. cas

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pend

iture

s

By Steve Thompson, Writer-EditorUSDA Rural Development

heva is a healthy, happy three-

year-old boy, a joy to his parents

and grandparents. But soon after birth he

was a very sick baby, with a potentially fatal

heart defect.

To make matters worse, he was born in a

rural hospital hours from the nearest

neonatal cardiologist, a specialist who

could treat his illness. He is alive today

because new technology made it possible

for the specialist to diagnose and treat the

child from over 90 miles away.

Telemedicine, made possible by broadband

telecommunications, saved Dheva’s life.

D

No mounta in too h ighRural broadband service helping to save lives of isolated patients


Winchester Medical Center, a small rural hospital, is more than 90 miles from the medical specialists at the University of VirginiaHospital (inset, opposite page). Photo courtesy of Winchester Medical Center; Background photo of Blue Ridge Mountains courtesy of University of Virginia Hospital

“Broadband technology isgoing to be incredibly

important for us to stayon the cutting edge of

innovation here in America.”—President George W. Bush

Heart murmur endangers infantDheva Muthuramalingam was born Dec. 29, 1999, at

Winchester Medical Center, in the town of the same name inthe northern tip of Virginia. His family lived across the stateline in West Virginia. It was soon apparent to his attendingphysician, Dr. Edward Lee, a neonatologist, that all was notright with the child. Examination revealed a heart murmur,prompting Dr. Lee to call for an ultrasound scan.

The scan was scrutinized by a specialist in adult cardiology,who discovered a small hole in the infant’s heart. But it wasnot clear that this defect was the cause of the baby’s distress.And the expertise required to make a proper diagnosis was notavailable. The Winchester area doesn’t have the populationnecessary to support a cardiologist specializing in newborns—a problem it shares with thousands of rural hospitals.

Says Dr. Teresa Clawson, Dr. Lee’s fellow neonatologist atWinchester, “We’re considered a rural hospital. We do pro-vide neonatal intensive care to critically ill and pre-term new-borns. But Dr. Lee and I are the only pediatric sub-specialistsat this hospital, and we are geographically isolated by themountainous region around us.”

Dr. Lee decided to use the hospital’s telemedicine hookupto consult with Dr. Karen Rheuban, a neonatal cardiologist atthe University of Virginia Hospital in Charlottesville, andcoincidentally a strong advocate of the useof telemedicine.

Dr. Rheuban suggested that the scan be sent to her elec-tronically, and within minutes was looking at a high-qualityrendering of the ultrasound picture, made possible by thehigh-speed connection between the two hospitals. Dr.Rheuban was quickly able to spot what the adult cardiologistwas not trained to see. Dheva’s descending aorta—the mainartery that carries blood from the heart to the lower part ofthe body—was completely blocked.

The only reason he was still alive was that newborns havea blood vessel connecting the aorta and the pulmonary artery,which takes blood to the lungs. Enough blood was gettingthrough to keep the baby alive, but the passage would soonclose. When that happened, his kidneys and other lowerorgans would cease to function, and the child would die.

Dr. Rheuban quickly prescribed a drug that would keepthe passage open and recommended that the baby be imme-diately transported to UVa for open-heart surgery. Gettingthe baby to UVa Medical Center, including sending a van toWinchester, took abo