1032239 rur coop-july/aug0 pdf - usda rural … waving the red flag survey examines correlation...

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How co-ops copewith sprawlHow co-ops copewith sprawl

USDA / Rural Development July/August 2003USDA / Rural Development July/August 2003

2 July/August 2003 / Rural Cooperatives

The need for cooperative educationtoday is greater than at any time inmemory. The decade-long interest inthe creation of new-generation, value-added cooperatives aimed at capturingmore income for members clearlypoints toward the need to reshape thedelivery system for cooperative educa-tional efforts. The increasing numberof problems (and outright failures) of“traditional” U.S. cooperatives alsoprovides evidence of this need.

In meeting the challenge to educate,it is critical that the cooperative formof business—as well as variations ofit—be completely understood. It is alsoimportant that cooperative educationinitiatives adequately deal with today’scomplex business, marketing and finan-cial issues.

We in the cooperative educationbusiness need to know why these issuesare so critical to the future successes ofcooperatives. We must effectively com-municate alternative solutions to thechallenges facing cooperatives. Appro-priate audiences must be identified andchallenged to learn. All involved mustbe committed.

The recent USDA report, “Agricul-tural Cooperatives in the 21st Century”(discussed in the January/February2003 edition of this magazine) pointsto the need for stronger educationefforts for cooperative directors. Theseefforts must also extend to youth,young farmers, members, employeesand the general public.

The report waives a flag of caution,warning that resources needed foreducational endeavors have beenreduced all across the spectrum. Thisincludes cooperatives and related stateand national co-op associations, educa-

tional institutions and federal pro-grams. The report recommends theneed for renewed investment in educa-tion and making it a top-level concernonce again.

What is the real level of commit-ment and investment in cooperativeeducation? What does the future holdfor it?

There are problems we mustaddress. A number of regional coopera-tive leaders indicate that a continuinglack of financial and human resources(and, in some cases, lack of interest) ispressuring them to reduce or end edu-cational efforts. The most strikingexample of this, at the national level, isthe demise of the long-runningNational Institute of Cooperative Edu-cation (NICE). Its last program tookplace in Chicago in 2002.

However, there are positive signs forthe future of cooperative education. A

concerted effort is being made to con-tinue a NICE conference for youth.This new program is taking place inJuly at Virginia Polytechnic Instituteand State University in Blacksburg, Va.The new Political Awareness andLeadership (PAL) program that theNational Council of Farmer Coopera-tives (NCFC) hosted in Washington,D.C., in June is another attempt torebuild an educational program foryoung cooperators, directors and coop-erative employees.

Other national conferences andworkshops are ongoing. In some areas,the upper Midwest for example,regional efforts carried out by statecooperative councils, universities andcooperative centers remain strong.(Technology has proffered a number ofco-op educational computer programsand Web sites.)

Efforts such as these should contin-ue to be advanced and built upon. Inmoving forward with these and otherinitiatives, it is imperative that cooper-ative education not be forced into amold that may have been appropriateyesterday, but not today. Fresh ideas,new resources, programs developedaround the current and future complexissues and coordinated efforts of thecooperative community are crucial todevelop and carry out sound educa-tional programs. It is up to the entirecooperative community, throughinvestment of time and resources, collaboration and dedication, toreverse recent trends and commitanew to cooperative education.

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

C O M M E N T A R Y

Cooperative education can help renew and revitalize co-ops

The report waives a flag of caution,warning thatresources needed for educationalendeavors have beenreduced all across the spectrum.

Rural Cooperatives / July/August 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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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

COOPERATIVESCOOPERATIVESJuly/August 2003 Volume 70 Number 4

O n t h e C o v e r :

On the cover: Urban sprawl is posing major challenges for cooperatives inmany parts of the nation. While some co-ops have had to fold when farmfields were replaced by subdivisions and strip malls, others have survived byadjusting their marketing strategy. Story on page 4. USDA photo by Bob Nichols

F E A T U R E S

4 Living with SprawlAs farms give way to subdivisions and traffic lights, America’srural cooperatives struggle to adjustBy Catherine Merlo

9 USDA plays active role in farmland protection

10 Merrills first Northeast dairy family to winnational land conservation prize

12 U.S. Premium Beef offers to buy Farmlandshare in processing business

13 Waving the red flagSurvey examines correlation between ethical environment and fraud in co-opsBy Tommie Singleton, Frank Messina and Richard Turpen

15 More than a power sourceBrunswick Electric typifies commitment of cooperatives to support rural communitiesBy Steve Thompson

22 Talking with picturesPhoto experts offer tips on how to better tell your co-op story with strong photosBy Dan Campbell

28 NMPF scales back CWT milk supply-balancingplanBy Patrick Duffey

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

20 VALUE-ADDED CORNER30 NEWSLINE


L iv ing wi th SprawlAs farms give way to subdivisions and traffic lights, America’s rural cooperatives struggle to adjust

By Catherine Merlo

Editor’s Note: Merlo is a freelance writer based in Bakersfield,Calif., with extensive experience working for, and writing about,cooperatives.

im Roskam used to head out each morningalong the Rivertown Parkway to his job as gen-eral manager of Farmers Co-op Elevator Co.in Hudsonville, Mich. Along the way, he passeda dozen flourishing corn and bean farms—and

not a single traffic light. That was 15 years ago. Today, that same route would take

Roskam past new subdivisions, one ofMichigan’s largest shopping malls, 12 traf-fic lights—and not a single farm.

Roskam is not alone in his transformedcommute. Across the United States,increasing suburban development of farm-land is not only altering the rural land-scape, it is forcing many rural cooperativesto take a hard look at their future opera-tions and customer base.

Between 1992 and 1997, the UnitedStates paved over more than 6 million acresof farmland, an area roughly equal in size toMaryland, according to American FarmlandTrust (AFT), a private, nonprofit farmlandconservation organization. AFT recentlyreleased a study, “Farming on the Edge:Sprawling Development Threatens America’s Best Farmland.”

“The problem is getting worse,” says Ralph Grossi, AFTpresident. “America developed twice as much farmland in the1990s as it did in the 1980s.”

While business and community leaders, futurists and pro-fessors debate the pros and cons of urban sprawl—the loss ofprime farmland, the apparent random, unplanned nature ofurban expansion—rural cooperatives are on the frontlinecoping with the challenges caused by sprawl.

Some co-ops have found their membership and customerbase so affected by suburban development, they have beenforced to close whole divisions. Others have merged withneighboring co-ops in an effort to survive. Others have

refocused their efforts on new services targeted at a moresuburban customer base. Still other co-ops, especially ruralutilities, are thriving as a result of the increased populationthat suburban development is bringing to their once-ruralterritories.

New customers, new servicesIn Roskam’s case, more urbanization has compelled the

Michigan co-op he manages to expand its services in at leastthree areas. Farmers Co-op Elevator, a traditional grain mar-keting and farm supply cooperative formed in 1917, serves a2,500-square-mile territory between Holland and GrandRapids. In recent years, the co-op has branched out beyond

its shrinking base of traditional farmer-members.

“Rather than complain about increaseddevelopment in our area, we’ve diversi-fied to make things happen,” saysRoskam.

In addition to providing farm suppliesand services for farmers, Farmers Co-opElevator now targets homeowners, green-house growers and nurseries. It also focus-es on the turf and ornamental business,such as lawn and garden care, golf coursesand city municipalities.

“At 640, our membership is the largestit has ever been,” says Roskam. “Our grosssales grew from about $6.5 million in 1989to $19 million in 2002—by diversifying.”

Only 30-40 percent of Farmers Co-op Elevator’s mem-bership now is represented by traditional farmers. Therest, says Roskam, are suburban customers and retired orpart-time farmers.

The shift from its old ways hasn’t been without some pain.Between 1998 and 2000, Farmers Co-op Elevator closed afull-service agronomy and feed service facility that oncecatered to traditional farmers. It curtailed the operations ofseveral service stations that pumped gas for customers. And itclosed a portable feed-grinding division that delivered on-farm services.

“As a co-op, we have to shift and change gears to continueto roll with the urban growth,” Roskam says.

J

Co-op Manager Bill Rohrbaugh saysthat until two years ago, this housingdevelopment in Medina County, Ohio,was a 150-acre field farmed by one ofthe members of Town & Country Co-op.Photo courtesy Town & Country Co-op

Customer shift in MinnesotaAt Federated Co-ops in central Minnesota, a similar tran-

sition is taking place. Built by local growers in 1914, Fed-erated Co-ops serves 14 counties in Minnesota and six inWisconsin. Subdivisions and hobby farms are sprouting upacross the land, where property values now range from$3,000 to $24,000 per acre.

Today, Federated Co-ops counts more than 35,000 cus-tomer-members, only 2,000 of whom are conventional growers.

“This was once a traditional dairy area with between 2,500and 3,000 dairy farms,” says Tim Kavanaugh, general managerof Federated Co-ops, based in Princeton, Minn. “That num-ber is declining at the rate of about 200 dairy farms per year.”

Replacing them are cash-crop operations, mostly with acorn-soybean rotation, and part-time farmers.

“Our traditional feed business is disappearing,”Kavanaugh says. “We’re seeing more growth in the hobbyfarms with small animals, horses and pets.”

As a result, Federated Co-ops has shifted its product lineto more bag feeds. It’s opened two Country Stores in the pastyear, and expects to open two more within the next two years.These retail stores offer feed, animal health products, petsupplies, lawn/garden supplies and equipment.

As further proof of how suburban its customer base hasbecome, Federated Co-ops’ propane home-heating businesshas become its fastest-growing and most profitable opera-tion, with 25,000 accounts.

Kavanaugh doesn’t downplay the challenges of refocusingthe co-op’s efforts on a new customer base. In particular,marketing to reach consumer business is different from tradi-tional farm customers, and is often more difficult.

“We’re reacting to this shift, but we don’t have all theanswers,” says Kavanaugh. “Some ventures are successful,some are not. We honestly don’t know where this will all gofrom here. But with land values increasing and more peoplecoming in, we have to figure out a way to capture more busi-ness from more people. The future is bright if we can do that.”

He adds, “Local cooperatives must become more entre-preneurial. Those that do will adapt; those that don’t will disappear.”

An old-time Ohio co-op disappearsPerhaps few co-ops have felt the impact of urbanization as

profoundly as Ohio’s Medina Landmark Cooperative.Formed in 1934, the co-op no longer exists in its originalform. In January 2003, it merged with three other Ohio farmco-ops, becoming part of Town & Country Co-op Inc., basedin Ashland, Ohio, about 65 miles southwest of Cleveland.

Medina Landmark had been located in northern Ohio’sMedina County, one of the state’s fastest-growing counties.About 20 years ago, Interstate 71 was built through MedinaCounty, connecting Cleveland and Columbus. About 12years ago, houses began popping up almost overnight as thearea became a bedroom community for Cleveland. Old-timers pinpoint the arrival of Interstate 71 as the beginning


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of Medina County’s urbanization—and the end of MedinaLandmark Co-op.

“Medina Landmark’s market had become extremelyurbanized, which made the merger with Town & Countryvery attractive to us,” says Bill Rohrbaugh, former generalmanager of Medina Landmark and now vice president of feedand energy for Town & Country Co-op. “Our territory hadbecome so inundated by urbanization that we had troubletaking care of our farmers.”

The co-op could not justify the costs of handling fertiliz-ers, crop protectants and other products for its 250 members,a number down sharply from the 1,000 members the co-opcounted in its heyday. “It was starting to negatively impactour bottom line,” says Rorhbaugh.

The merger was an attempt by the four co-ops to stayafloat in a market with diminishing numbers of farmers. Infact, Town & Country’s name was retained from one of thefour merging co-ops to reflect its urbanized market. Nowone of Ohio’s biggest co-op’s, Town & Country expects itssales to reach $75 million this year. But its achievements havenot come without difficult decisions.

Closing traditional businessIn February 2003, Town & Country closed the grain sorting,

crushing and milling operations that once had been bread-and-butter services for Medina Landmark Co-op. While memberscan still take their grain crops to other mills nearby, the closuremarks the end of an era for the area, Rohrbaugh says.

Like Roskam at Michigan’s Farmers Co-op Elevator,Rohrbaugh has seen prime farmland turn into shopping cen-ters and housing tracts. While Town & Country Co-op still

has enough farm base to support its farm supply business, ittoo is looking for ways to adapt to and survive the suburbandevelopment Rorhbaugh says is “inevitable.”

“To survive, we need to look at other business areas,” hesays. “We recently bought a convenience store and havestarted to expand our petroleum business.”

Town & Country’s 14 retail farm stores now target subur-ban shoppers. The largest feed seller is no longer dairy feedbut horse feed, followed by dog and cat food. Alpaca feed isNo. 3. Town & Country’s agronomy division has also begunfocusing on Medina County’s 28 golf courses, which useplenty of fertilizers and other products.

“Farmland values have skyrocketed to as much as $10,000an acre in Medina County,” Rohrbaugh says.“You can’t blame farmers who want to sell; it’shard not to sell.”

But with low commodity prices and highproduction costs, farmers often find land at$10,000 an acre just too expensive to buy.“They just can’t make the numbers work,”Rohrbaugh says.

As a result, many farmers will sell a 200-acre farm to a developer, “hitting the jack-pot,” says Rohrbaugh. Then they pull upstakes and move their farming operations tosouthern Ohio or nearby Indiana or Iowa,“where they can buy a farm three times thatsize at $2,000 an acre,” he says.

Adds Rohrbaugh, “At the present growthrate in Medina County, there will come atime, maybe 25 years from now, when everyavailable piece of property will be taken andthere’ll be no more vacant land.”

Still, rising land values aren’t all bad newsfor farmers.

“Rising real estate prices create greaterfarmer equity,” says James Miller, vice presi-

This map was produced by American Farmland Trust (AFT) to show where high-qualityfarmland is facing the greatest threat from development. Graphic courtesy AFT

High Quality Farmland & High DevelopmentHigh Quality Farmland & Low DevelopmentFederal & Indian LandsUrban AreasOther

Co-op employees such as Kathy Belmore and Tom Jackson, at oneof Federated Co-ops’ Country Stores in Minnesota, are dealing withincreasing numbers of non-farm members in the co-op’s 20-countytrade territory. Of 35,000 members, only 2,000 are conventionalgrowers. Photo courtesy VistaComm.


“Farming with 8.5 million neighbors is not easy,” saysJohn Rigolizzo, Jr., a fifth generation farmer in Berlin,N.J.

Rigolizzo, who farms 400 acres in Camden County insouthern New Jersey, should know. He has seen andfelt the impact of suburban development firsthand.

“New Jersey is the nation’s most densely populatedstate, with more people per square mile than any otherstate,” says this former state Farm Bureau president.

Rigolizzo says 8.5 million residents live on 25 percentof New Jersey soil, while 9,000 growers farm just 1 mil-lion acres—or 20 percent—of the state’s landscape. It’sgetting hard-er and hard-er to operatewith subur-ban neigh-bors, whocomplainabout thedust, smellsand pesti-cides asso-ciated withfarming. He has worked, sometimes successfully, tohelp bring about farmland preservation programs, buthis patience has worn thin.

A brand new housing tract sits just 100 yards behindRigolizzo’s farmhouse. Since the tract—85 houses on 50acres—was built, Rigolizzo has encountered problemswith vandalism, theft, kids and dogs.

“I never know what batteries are going to be stolenfrom my equipment, what gasoline siphoned from mytractors,” he says. “I have 17 tractors; more than once,I’ve found them all out of gas.”

Many of his new neighbors give no thought to anoth-er person’s privacy, says Rigolizzo. “The kids ride theirrecreational vehicles over my fields and rows ofpipeline,” he says. “It costs me thousands of dollars for

their tres-passing andvandalism.For them tohave their 10minutes offun in theafternoon isaggravatingand costly forme.”

Rigolizzoscoffs at NewJersey’s des-ignation as“The GardenState.”“We’re losing

that moniker quickly,” he says. “New Jersey is anexpensive state to live in, let alone farm in. Our higherproduction costs are a disincentive to stay in farming.”

A member of nearby Vineland Cooperative ProduceAuction and Landisville Cooperative, which buys andsells produce, Rigolizzo says area co-ops have sufferedfrom the impact of urban sprawl. “In the last 10 years orso, we’ve lost 10 to 12 co-ops in a 40-mile radius ofwhere I live,” he says.

The future for farmers may not be so different. “It’sjust a matter of time for farmers in New Jersey,” Rigoliz-zo says. ■

—Catherine Merlo

Farming with 8.5 mill ion neighbors

dent of finance with First Pioneer Farm Credit, which pro-vides financing services to 10,000 customers in six NewEngland states.

“That can give a farmer a stronger balance sheet and cre-ate the opportunity to borrow and expand his operations orinvest in new ones,” Miller says. “The urban area offers ahuge consumers’ market for farmers, especially in retail andhorticultural products.”

Rural utilities find opportunityNew housing tracts, giant shopping malls and more

schools can be good news for some rural cooperatives.Numerous rural utilities have found opportunity in theshift from farmland to suburban development. Many have

pursued diversification of operations, while others haverefocused their efforts on a new customer base.

For example, when upscale suburban developments beganspreading out from Indianapolis in the 1990s, several electricdistribution cooperatives that served the once-rural area took afresh look at their new residents. What they saw was not thetraditional co-op customer but rather a new group with dualprofessional incomes, high performance expectations and expe-riences with competitive Investor-Owned Utilities (IOUs).

In 1996, five electric distribution co-ops that circledIndianapolis formed Circle City Group (CCG), a limitedliability company formed to respond to their growing andchanging customer base. CCG is helping its five co-opsobtain economic advantages by consolidating services and

John Rigolizzo Jr. tends to some of his green-house tomatoes in southern New Jersey, wheredevelopment is making it increasingly hard forfarmers. At left, a new subdivision abuts one ofRigolizzo’s orchards. USDA photos by Bob Nichols

sharing costs. The alliance is composed of Boone REMC,Hendricks Power Cooperative, South Central IndianaREMC, Johnson County REMC and Central Indiana Power. Together, they represent almost 90,000 electric customers and 7,800 miles of line.

Working together through CCG, the co-ops haveachieved numerous benefits that not only allow them to servetheir customers, but significantly reduce operating costs.They have implemented automated meter reading (AMR)equipment, remittance processing, a meter lease program andan underground location service—new operations the co-opsmight not have been able to afford on their own.

“Along with improved customer service, our meter readingcosts have been reduced by 30 to 40 percent,” says Dale Geisel-man, president and CEO of Boone REMC. “Remittance pro-cessing costs have dropped 30 percent. We also achieved a 30-50 percent reduction in AMR meter conversion costs.”

CCG’s efforts in advertising and communications alsohave contributed to a more positive image for the co-ops. “We have definitely seen an increased awareness and animproved image of the CCG systems,” Geiselman says.

A sense of urgency—and lossAs farmland gives way to housing tracts, shopping centers

and busy streets, some effort is taking place to slow the devel-opment, or at least to plan it better. A sense of urgency com-pels farmland conservation groups—as they work at local,regional and national levels—to develop and implementfarmland protection programs. AFT is working to increasefunding for ag conservation easements at all government lev-els. It targets conservation funds to threatened ag areas andsupports effective planning and smart growth to steer devel-opment away from the nation’s best farmland.

But, for now, rural cooperatives are largely on their own indealing with the challenges of suburban development. Thestakes remain significant for them and the eroding farm baseon which they stand. While most co-ops in the path of devel-opment realize they must adapt to and change with the mar-ketplace, some are nostalgic for the days before the citymoved in.

“I’ve been in the traditional agriculture business for 25years,” Town & Country’s Rohrbaugh says wistfully. “It’s notwhat it used to be. I miss it.” ■


Urban sprawl has been a fact of life for Southern California growers and their cooperatives since the1950s. The Los Angeles area—once called the OrangeEmpire but now known as the Inland Empire—has beencalled the worst stretch of sprawl in America. It wasonce the center of U.S. citrus production in the West—and the birthplace of Sunkist Growers—but thatchanged long ago.

In the years after World War II, a population explo-sion in Southern California led growers in Los AngelesCounty and Orange County to bulldoze out their citrusgroves to make way for new houses, factories, schoolsand freeways.

After selling their farms in Southern California atprofitable prices, many citrus growers began looking fornew lands to farm. They found them in California’s SanJoaquin Valley, and further south in the desert areas ofthe Coachella Valley. They also found new opportunity inArizona. Many Sunkist farmer-members, as well as theirpackinghouses, picked up stakes and moved to larger-acreage operations on the abundant new land.

Packinghouses took the hardest hit from urbansprawl. The local, member-owned associations oncenumbered in the hundreds throughout California. Due tothe urban shift, as well as modernization, those numbershave dropped dramatically. In Orange County alone,where 20 packinghouses once operated, only oneremains today. Sunkist Growers, the nation’s largest cit-

rus marketing co-op, has seen its packinghouse mem-bers drop from 115 in 1968 to just 52 today.

Yet, for Sunkist, the shift in its production areasproved positive. The opening of new lands for its mem-bers boosted its supply channels. The San Joaquin Val-ley is now one of California’s major citrus-producingregions. In 1981, Sunkist Growers built a new processingplant near Tipton, in the heart of the valley. Not far away,in Visalia, Sunkist now operates a centralized salesoffice.

While consolidation to fewer but larger-acreagegrowers resulted in a membership drop from about12,000 in the 1950s to about 6,000 in California and Ari-zona today, Sunkist Growers has adapted to the change.

“Due to our members’ geographical shift and moreconcentrated plantings, the total numbers of citrusacres under cultivation actually remained the same, andour volume increased,” says Mike Wootton, vice presi-dent of corporate affairs for Sunkist Growers, based inthe urban setting of Sherman Oaks, Calif.

The geographical shift also has provided Sunkist withthree major citrus-producing districts with harvests thatoccur at different times. Having members in the CentralValley, California’s coastal areas and the desert areas ofsoutheastern California and Arizona gives Sunkist, aleading international citrus supplier, a steadier stream ofcitrus –- and an edge in the market. ■

—Catherine Merlo

Orange Empire bows to urban sprawl in Southern California

he U.S. Department ofagriculture, through itsNatural Resources Conservation Service(NRCS), is an active

partner with America’s farmers andranchers in helping to protect agricul-tural land. One way it accomplishesthis is with the Farm and Ranch LandsProtection Program (FRPP), a volun-tary land conservation program.

The program provides matchingfunds to state, tribal or local govern-ments and non-governmental organi-zations with existing farm and ranchland protection programs to purchaseconservation easements. The programwas first authorized in 1985 as theFarmland Protection Program. TheFarm Security and Rural InvestmentAct of 2002 (2002 Farm Bill) addedranch land to the program and reau-thorized it as the Farm and RanchLands Protection Program (FRPP).

Under this program (through2002), more than 170,000 acres havebeen protected in 35 states.

How FRPP Works Eligible entities acquire conserva-

tion easements from landowners. Par-ticipating landowners agree not toconvert their land to non-agriculturaluses and to develop and implement aconservation plan for any highlyerodible land. All highly erodiblelands enrolled must have a conserva-tion plan developed based on the stan-dards in the NRCS Field Office Tech-nical Guide and approved by the localconservation district. Landownersretain all rights to use the property foragriculture.

To participate, a landowner submitsan application to an entity—a state,tribal, or local government or a non-governmental organization—that hasan existing farm or ranch land protec-tion program. The NRCS state con-servationist, with advice from theState Technical Committee, awardsfunds to qualified entities to purchaseperpetual conservation easements.

Eligibility To qualify for FRPP, the land

offered must be part or all of a farm orranch and must:

■ Contain prime, unique or otherproductive soil or historical or archae-ological resources;

■ Be included in a pending offerfrom a state, tribal or local govern-ment or non-governmental organiza-tion’s farmland protection program;

■ Be privately owned; ■ Be covered by a conservation

plan for any highly erodible land; ■ Be large enough to sustain agri-

cultural production; ■ Be accessible to markets for what

the land produces; ■ Be surrounded by parcels of land

that can support long-term agricultur-al production; and

■ Be owned by an individual orentity that does not exceed the Adjust-ed Gross Income (AGI) limitation.

The AGI provision of the 2002Farm Bill impacts eligibility forFRPP and several other 2002 FarmBill programs. Individuals or entitiesthat have an average AGI exceeding$2.5 million for the three tax yearsimmediately preceding the year thecontract is approved are not eligible

to receive program benefits or pay-ments. However, an exemption isprovided in cases where 75 percent ofthe AGI is derived from farming,ranching, or forestry operations. Thefinal rule for this provision has notyet been published.

If the land cannot be converted tonon-agricultural uses because ofexisting deed restrictions or otherlegal constraints, it is ineligible forFRPP.

Funding FRPP is funded through the Com-

modity Credit Corporation. TheFRPP share of the easement costmust not exceed 50 percent of theappraised fair market value of theconservation easement. As part of itsshare of the cost of purchasing a con-servation easement, a state, tribal, orlocal government or non-governmen-tal organization may include a chari-table donation by the landowner ofup to 25 percent of the appraised fairmarket value of the conservationeasement. A cooperating entity mustprovide, in cash, 25 percent of theappraised fair market value of theconservation easement or 50 percentof the purchase price.

For more information If you need more information

about FRPP, please contact your localUSDA Service Center, listed in thetelephone book under U.S. Depart-ment of Agriculture, or your localconservation district. Information alsois available on the World Wide Webat: http:// www.nrcs.usda.gov/programs/farmbill/2002/. ■


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USDA p lays act ive ro le infa rmland protect ion


Editor’s Note: This article is reprintedcourtesy AgriMark News.

griMark dairy coopera-tive members John andLorraine Merrill ofStratham, N.H., havebeen awarded with

American Farmland Trust’s (AFT)2003 Steward of the Land Award, thelargest nationwide award for landstewardship. The Merrills were cho-sen out of 117 applications from 41states to win the $10,000 prize, whichwas presented to them for their life-long commitment to environmentalstewardship, public education, policyactivism and farmland protection.

“For decades, the Merrills havebeen devoted to protecting not justtheir farmland, but water, wildlifehabitat and natural resources on thefarm,” says AFT President RalphGrossi. “They truly are stewards of

our land and a great inspi-ration to farmers acrossthe nation.”

Stuart Farm is situatedin the Great Bay Estuaryregion, a coastal habitatthat encompasses morethan 10,000 acres of tidal

Merr i l l s f i r s t Nor theast da i ry fami ly towin nat iona l land conservat ion p r i ze

AFor their leadership in protect-ing farmland from developmentand their commitment to soundenvironmental stewardship,John and Lorraine Merrill andfamily of Stratham, N.H., arethe winners of AmericanFarmland Trust’s Steward ofthe Land Award for 2003. At leftis their son Nathan and hiswife Judy with daughtersSamantha, 3, and Hannah, 6.Lorraine and John Merrill areon the right. Photo by JimNewton, courtesy AFT

Farmers often say, “The best way to protect my landis to farm it.” This is true, but where will you and yourfarm be 10 or 15 years from now? Too often, familymembers who inherit farmland unexpectedly are leftwith little choice but to sell out.

Fortunately, good estate planning can help landown-ers achieve financial stability without cashing in on theirland. “Your Land is Your Legacy: A Guide to Planning forthe Future of Your Farm” offers practical estate planningadvice for today’s landowners and their financial advi-sors. American Farmland Trust’s (AFT) revised and

updated guidebook illustrates strategies for transferringland to the next generation while addressing your per-sonal financial goals.

“You can’t take your farm with you when you die, saidJeremiah Cosgrove, an attorney with AFT who co-authored the guide. “But proactively planning for thefuture of your land before you retire gives you a stake inits outcome.”

The third edition of AFT’s bestseller incorporatesrecent tax changes, serving as a reminder that estateplanning, not estate taxes, is the critical issue for farm

AFT guide helps farmers and ranchers transfer land to the next generation


waters and is considered one of themost important estuarine systems onthe East Coast. The Merrills havegone to great lengths to ensure thatthis fragile ecosystem remains intact:they constructed a freshwater wet-land to treat waste runoff, and coop-erated with Partners for Fish andWildlife to restore a salt marsh ontheir farm.

“The restored salt marsh on the

Stuart Farm is one of the most thor-oughly researched on the East Coastand has become a model for similarefforts,” said Bruce Marriott, retiredagriculture program leader at Universi-ty of New Hampshire CooperativeExtension, who nominated the Merrillsfor AFT’s award.

The Merrills’ operation, StuartFarm, is a 200-cow dairy farm run byJohn and Lorraine, in partnership with

their son, Nathan, and daughter-in-law, Judy. They were early pio-neers in rotational grazing andother conservation practices, andtheir family was among the first inthe state to permanently protecttheir farm with an agriculturalconservation easement in 1981.

“It was wall-to-wall dairyfarms when we first moved here,”said Lorraine, who noted thatthere used to be more cows thanpeople in the town. The farmmoved to its current location in1961 after construction of anInterstate highway forced herfamily out of northern Massachu-setts. Today, Stuart Farm is theonly dairy farm remaining inStratham.

The family’s environmentalachievements were accomplishedwith the help of state and federalconservation programs that

encourage stewardship on privatelands. They have also partnered withnumerous local and state conservationorganizations. Whether it’s hosting anational Environmental ProtectionAgency tour or being featured in anationally distributed video by theU.S. Fish and Wildlife Service, theMerrills know that to truly championconservation activities, educationmust play a central role. ■

families. While estate tax laws change, “Your Land isYour Legacy” presents a general planning frameworkthat will stay relevant for years to come. Although theguide isn’t intended as a replacement for professionaladvice, it has been lauded as an excellent foundationfor both landowners and financial planners.

This guide “is the best resource I’ve seen for edu-cating rural landowners about their estate planningoptions,” said Lynne H. Hardey, vice president andtrust officer for Comerica Bank & Trust. “Since manyrural landowners are land-rich and cash-poor, figuringout how to pass down your land to the next generationis one of the most important financial decisions you’llever make.”

“Your Land is Your Legacy” guides readers throughthe maze of estate planning options and pitfalls using

real-life examples and worksheets. One unique aspectof the guide is its emphasis on land conservation at atime when 1.2 million acres of farmland get consumedby development every year.

“Land is most vulnerable when it passes from onegeneration to the next,” explained co-author JuliaFreedgood, director of AFT’s Technical Assistance Ser-vices. “With millions of acres of land changing handsover the next 10 years, the power to protect our nation’sagricultural resources lies with those who currentlyown and manage them.”

For details on ordering “Your Land is Your Legacy, ”which costs $13.95, call 800-370-4879. An order form isalso available on American Farmland Trust’s Web site atwww.farmland.org. For information about AFT, contactJill Schwartz at 202-331-7300, ext. 3011. ■

The Merrill’s Stuart Farm is located in an environmentally sensitive estuarine ecosystem on thetidal Squamscott River, near Great Bay. Photo by Sarah Thorne, courtesy AFT

or a while, it looked likeFarmland Industries Inc.,the nation’s largest agri-cultural cooperative,might survive by selling

off all of its farm production supplyassets and concentrating on its success-ful beef and pork processing enterprises.

Moving in that direction, it re-cently sold its fertilizer operations toKoch Nitrogen of Wichita, Kan., asubsidiary of Koch Industries, in adeal valued at $293 million. Farmlandis still seeking buyers for its petrole-um assets, including a refinery at Cof-feyville, Kan. The fertilizer dealincludes plants in four states plus ter-minals in Minnesota, Iowa, Illinois,Kansas and Texas. Also sold was itshalf interest in Farmland MissChemLtd., which owns an ammonia plantin the Republic of Trinidad and Toba-go. Completion of that sale and oth-ers has enabled Farmland to cut itsbank debt from $330 million in May2002 to less than $30 million, and itposted a $29 million profit in its lastquarter.

Now U.S. Premium Beef, minoritycooperative partner in FarmlandNational Beef, has offered to buy theentire beef business from its partner for$232 million in cash. When FarmlandNational Beef (FNB) was formed in1997, U.S. Premium Beef became itsminority cooperative partner, with a29-percent interest held by its 1,850cattle-producer owners from 37 states.At the moment, it only has 10 employ-ees. But that could change if it becomessole owner. Farmland National Beefhas 6,200 employees.

“We are excited about the potential

purchase of Farmland Industries ’interest in Farmland National Beef,”U.S. Premium Beef CEO Steve Huntsaid in a press release, jointly issuedwith Farmland. “While the beef pro-cessing industry faces many challenges,FNB has established a reputation forsuccessfully delivering consistentlyhigh-quality beef products to con-sumers in both domestic and interna-tional markets.”

Farmland President and CEO BobTerry said the agreement to sell FNBto its co-op partner “is fully supportedby Farmland’s Creditors’ Committees,as we continue to maximize value forthe benefit of our creditors.” He calledFNB “a company with a strong balancesheet and a history of success.”

The door was left ajar for others tooutbid the beef co-op’s offer by July 7.If that occurs, a July 9 auction woulddecide who is to be the future owner.Larry Franzen, Farmland’s lead bank-ruptcy attorney, indicated proceduresapproved by the bankruptcy courtjudge would require a minimum bid of$239.5 million. If Farmland acceptedthe larger bid, U.S. Premium Beefwould receive a breakup fee of $5 mil-lion to $7 million. If that minority-owner cooperative is unable to financeits bid by the time the deal is ready toclose, it will forfeit its $5 milliondeposit.

Franzen said 25 companies hadshown an interest in buying the beefenterprise, but only three examinedits financial information. Court docu-ments are pending which will indi-cate how much Farmland believes itwill be able to repay its unsecuredcreditors.

Farmland National Beef processes3.2 million head of cattle per year at itsfive packing plants which supply pack-aged beef for grocery meat cases.Farmland’s part of the beef businessearned $5.8 million in the quarter end-ing Feb. 28, down from $10.2 million ayear ago.

Farmland also is seeking buyers forits separate pork processing operation.Neither of the meat operations wereinvolved in the original bankruptcyproceedings, although money from thesale of them could help repay the unse-cured creditors.

And that line was just extended toinclude former chief executives whosegolden retirement parachutes werecurtailed. The bankruptcy courtagreed with the cooperative’s newadministration and ruled theirpromised exit premiums did not meritseparate consideration and they shouldjoin the growing line of unsecuredcreditors. Farmland’s report to thebankruptcy court will show how muchit believes it will be able to repay itsunsecured creditors.

Judge Jerry Venters also told a com-pany that leased 100 barges to Farm-land in 1997 to take its $18 millionclaim and join the other unsecuredcreditors. The dispute centers aroundFarmland’s half interest in Pinacle, apartnership with River Barge and itslender, CIT Group/EquipmentFinancing, that leased the boats. Farm-land had agreed to take Pinacle’s placein the deal if it failed to make a quar-terly payment. That occurred in July2002 after Farmland had alreadydeclared bankruptcy in May and discontinued using the barges. ■


U.S. Premium Beef o f fe rs to buyFarmland share in p rocess ing bus iness

F


By Tommie Singleton, FrankMessina and Richard Turpen

Editor’s note: Singleton is an assistantprofessor, Messina and Turpen are associateprofessors at the Department of Accountingand Information Systems at the Universityof Alabama at Birmingham. They can bereached at (205) 934-8820, or by e-mailat: [email protected] .

raud and ethics are sub-jects of great concern toeveryone involved inbusiness. Conservativeestimates place the cost

of fraud to American businesses in thebillions of dollars.

Several techniques, guidelines andtools have been created and promotedto help businesses better detect fraud.Yet all of these advances and high-techtools cannot compensate for the oldestaccounting technique of all for fraud: asound ethical environment for thecooperative. This article examines thecorrelation between ethics and actualinstances of fraud, based on a survey ofcooperatives, identifying the “red

flags” that precede fraudulentactivities.

Fraud & ethicsOver the past 40 years, the

accounting community hasincreased its efforts to detectfraud. Recent accountingscandals have caused Congressand other regulatory boards toexpand the responsibilityrelated to the detection of fraud.Researchers have produced a wealth ofempirical research related to ethics andfraud. Some of this research providesinsights into the role ethics play infraud and fraud detection.

A new report, “Landmark Study onFraud in Financial Reporting,” pro-vides many insights into 200 randomlyselected cases of alleged financial fraudinvestigated by the Securities andExchange Commission (SEC) from1987 to 1997.1 Published by the Com-mittee on Sponsoring Organizations, aresearch group of accounting associa-tions, the study results indicate that:

■ companies that experience fraudare generally smaller in size;

■ board members lack inde-pendence and/or experience;

■ 83 percent of the casesinvolved the CEO, the CFOor both. Thus, the ethicalstandards of executives arecritical to the occurrence offraud.

A previous fraud study oncooperative fraud funded bythe Rural Business-Coopera-tive Service of USDA RuralDevelopment, KPMG and theNational Society of Accoun-

tants of Cooperatives (NSAC) revealedthat weakening societal values and weakethics policies were causes of concernfor cooperatives.2

Focusing the board and manage-ment’s attention on fraud and develop-ing or revising ethics policies or codesof conduct is essential to a solid foun-dation for internal controls and fraudprevention or detection. Data from theU.S. Sentencing Commission showsthat an effective ethics program canprevent an organization from beingprosecuted and help reduce fines infederal cases involving employeewrongdoing.3

Fraud & ethics research studyA recent survey funded by USDA

was conducted to gather empirical evi-dence related to ethics and actualinstances of fraud. The study revealsthat an appropriate ethical environmentin cooperatives can provide a founda-tion for preventing fraud and for build-ing effective internal control systems.

The survey instrument asked coop-eratives various questions about ethicsand actual instances of fraud. A total of484 cooperatives participated in thestudy, of which 209 reported havingexperienced actual or suspected occur-

Waving the red f lagSurvey examines correlation between ethical environment and fraud in co-ops

F

Table 1—Reasons for reported fraud

Insufficient internal controls: 20%Collusion, management override of controls,

and lack of active director control over management: 17%

Weak ethics policy or code of conduct: 14%Lack of segregation of duties: 12%

Figure 1—Does your cooperative havea code of ethics? Unsure

3%

Yes49%

No48%


rences of fraud. Loss estimates for asingle incidence of fraud ranged fromless than $50 to $2.5 million. Thelargest accumulated loss disclosed by asingle cooperative for all types andoccurrence of fraud totaled approxi-mately $5 million.

Data analysisWhen asked if their cooperative had

a code of ethics, 49 percent said “yes,”48 percent said “no” and 3 percent werenot sure (see figure 1). Interestingly,when asked if the cooperative providedethics training, 80 percent of therespondents said “no” (see figure 2).

In addition, 95 percent of the coop-eratives stated that they had no personin charge of monitoring ethical matters.

Internal controls & environmentsThe survey results also indicate that

most cooperatives believe that they haverelatively strong internal controls andcontrol environments. Using a scale of 1(highly ineffective) to 5 (highly effec-tive), the cooperatives were asked to ratetheir own internal controls and controlenvironments. The results for the rat-ings of internal controls (average ratingof 3.99) and the control environments(average rating of 3.90) indicate thatmost cooperatives view themselves ashaving effective controls to help preventfraud. The cooperatives also rated theirdegree of vulnerability of fraud as beingvery low, with an average rating of 1.35(using a scale in which 1 equals “verylow,” to 5, being “very high”).

The reasons given for occurrences of

fraud are quite interesting, giventhe cooperatives’ view that mostare not vulnerable to fraud.“Insufficient internal controls”was the top reason given forfraud (table 1). Ranking secondwas “collusion, managementoverride of internal controls andlack of active director controlover management.” Ranking third was“weak ethics policy or code of conduct.”These findings are consistent with otherfraud and ethics studies. Thus, the ethicalenvironment appears to hold up as thefoundation for sound internal controls andprevention of fraud. Likewise, a weak ethi-cal environment, such as lack of trainingor not even having an ethics policy, hasthe potential to weaken internal controlsystems and lead to fraud.

Red flags & instances of fraudAnother objective of this study was

to find out what cooperatives wouldidentify as “red flags” that indicatedfraud was present (see table 2). The topfour red flags reported were: unusualactivity, unexplained losses, poor inter-nal controls and changes in the lifestyleor behavior of an employee or manage-ment. Unusual activity and unexplainedlosses hint at the possibility that thefraud could have been prevented.

The next two indicators (poor inter-nal controls and change in lifestyle orbehavior of the perpetrator) are no sur-prise, in that they have been found to bered flags in many prior research studieson fraud. Poor internal controls lead tofraudulent activities. Remember, the

same cooperatives rated theirinternal controls as being effec-tive. Apparently, this is a mani-festation of “the other person”syndrome, where cooperativesalways think their internal con-trols are adequate while theother cooperative is the onewith problems. This view offraud and ethics must change.

Cooperatives also need tomake a concerted effort to useprofessional skepticism andsomething more than a paperinquiry to ascertain the

lifestyle and behaviors of key employ-ees and managers in cooperatives. Personal financial pressure, vices(drugs/alcohol), being disgruntled,work pressures, unexplained workinghours, extravagant lifestyles, severedepression and employees livingbeyond their means can all signalfraudulent activity.

Conclusions Fraud and ethics continue to be

important business issues. Personalethics and the ethical environment ofthe cooperative both play a fundamen-tal role in preventing fraud andstrengthening internal controls. Coop-eratives need to stress ethics.

This study found that cooperativeshave problems similar to those foundin all types of businesses, no matter thetype of entity. The results also lead toa set of red flags that should be identi-fied and appropriately addressed bycooperatives.

This research provides evidence thatdeveloping a corporate culture thatstresses honesty and scrupulous behav-ior is not only the right thing to do, butproduces real savings to the coopera-tive as well. Additional guidance tohelp prevent fraud can be found in thereport “Management Antifraud Pro-grams and Controls,” available at:www.aicpa.org/download/antifraud/SAS-99-exhibit.pdf. ■

References1 AICPA. COSO Releases Landmark Study on

Fraud in Financial Reporting, March 26, 1999. 2 Messina and Turpen “Fraud Prevention and

the Management Accountant: Back to Basics.Management Accounting, 1997, February. 34-37. Reprinted in Cooperative Accountant, 1997,Fall. 72-78.

3 Ponemon, L. ‘Effective’ Ethics Programs.Management Accounting, 1995, December, 22.

Table 2—Red flags

Unusual activity: 19.1%Unexplained losses: 12.9%Poor internal controls: 12.5%Change in lifestyle or behavior of person: 11.3%

Figure 2—Does your cooperative pro-vide formal ethics training?

Unsure 2%

Yes18%

No80%


By Steve ThompsonWriter-EditorUSDA Rural [email protected]

Editor’s Note: This is the first in aseries of 3 articles examining electrical co-ops that are heavily involved in communitydevelopment.

here’s an 84-year-oldwoman in Winnabow,N.C., who knows whatcommunity involvementby utility co-ops means.

The woman, whom we’ll call Mrs. P.,was living on a small, fixed income andhaving trouble paying her bills. So shewrote to the President of the UnitedStates to ask for help.

Her letter wound up on the desk of

Hilda Gay Legg, the admin-istrator of USDA RuralDevelopment’s Rural Utili-ties Service. Legg got intouch with Mrs. P.’s electriccooperative, the BrunswickElectric Membership Cor-poration (BEMC).

Robert W. “Chip”Leavitt Jr., the CEO ofBEMC, sent someonearound to look in on Mrs.P., who was a life-longmember of the co-op.What he found was anelderly lady confined to awheelchair, living in an oldhouse with heat only inone room and fewresources to improve herhome.

This started a chain of events thatshows that the rural tradition of takingcare of neighbors is alive and well. Theco-op employee brought Mrs. P. somefood treats and a small Christmas tree.He got in touch with a relative at thesheriff’s department, whose employeesgot together a package of food, suppliesand clothing. Meanwhile, employees ofthe co-op took up a collection for her,and contacted the appropriate local

Judy Gore (at left), BEMC vice president forcustomer service, presents high school facultymembers and students a “Bright Ideas” grantto purchase personal heart monitors for theschool’s P.E. program. The monitors havehelped students achieve substantial gains in fit-ness, while one student discovered an abnor-mal heartbeat, leading to early treatment for aserious heart condition. Photos courtesy BEMC

BEMC’s Judy Gore visits with “Mrs. P,” a co-op member who was given assistance by the co-op and its employees after she was discovered living in a house with only one heated room.

More than a power sourceBrunswick Electric typifies commitment of cooperatives to support rural communities

T


officials to make sure she was gettingall the government help to which shewas entitled. Leavitt even got help topay Mrs. P.’s gas bill.

Electric co-ops’ have vitalstake in community welfare

Helping out Mrs. P. is only oneexample of the ways Brunswick Electricparticipates in the life of the communi-ties it serves. BEMC, like utility coop-eratives around the country, has a poli-cy of using its resources to improve theeconomic and social conditions of theareas it serves. Besides helping out

indigent members, Brunswick takes anactive role in improving educationalopportunities for students, encouragingthe development of small businessesand providing funding for causes asdiverse as obtaining and training policedogs, cultural programs, transportationfor disabled veterans, raising funds forhospitals and sponsoring a local base-ball tournament.

BEMC’s activities are part of a longtradition in rural America, where elec-tric co-ops have played important rolesin community life since the first werefounded in the 1930s. As the only non-governmental organization that servesall families living in a service area, anelectric co-op is a true grassroots orga-nization with a unique position in ruralcommunities.

Annual membership meetings areimportant social events that bring peo-ple together from miles around. Politi-cians running for office have tradition-ally found an electric cooperative’sannual meeting or picnic an ideal venuefor pressing the flesh and kissing babies.

After the immense job of electrifyingrural America was accomplished, elec-tric co-ops remained engaged in theirmembers’ lives in many other ways.Many have used their resources toencourage economic develop-ment, by setting up revolving loanfunds for business ventures andother uses. Business incubatorsare operated by some utility co-ops to help launch new business.

Building hospitals and com-munity centers and purchasingemergency equipment are othercommon activities of powercooperatives. Power co-ops usetheir positions as communityinstitutions to encourage otherentities to participate in partner-ship efforts, and their fiscalexpertise to raise and administerfunds. USDA Rural Develop-ment’s Rural Economic Develop-ment Loan and Grant program isone source of funds for thesepurposes (see sidebar).

BEMC working to stimulate economy

BEMC’s service area is in southeast-ern North Carolina, a region that hassuffered economically in recent yearsdue to shutdowns in local manufactur-ing and declining farm incomes. Theco-op has responded to the situation ina number of ways, including providingfacilities to encourage the developmentof small businesses, a tactic used byutility cooperatives around the country.

BEMC tackled the project by settingup a spin-off corporation, the RuralConsumer Services Corporation(RCSC), in 1989. The co-op financedRCSC through partnerships with anumber of local and national entities,including the Rural ElectrificationAdministration (now USDA RuralDevelopment’s Rural Utilities Service),the Farmers Home Administration(whose business, community and hous-ing programs are now part of RuralDevelopment), and the North CarolinaTechnological Development Authority.Further funding and other supportcame from local community colleges,local development organizations andlocal businesses and individuals.

The first funds were used as seedmoney to open a Business Develop-

The Bright Ideas program gives grants tolocal schools for special projects toenhance education. Begun in 1994 byBEMC, it has since been adopted by allelectric distribution co-ops in NorthCarolina.

Though the main business of BEMC and other dis-tribution cooperatives remains providing reliableelectric power to their members, electric co-opsalso regard participation in community life as animportant part of their activities.

ment Center in Whiteville, N.C., in1991. Two more centers were lateropened, using additional funding, innearby Winnebow and Tabor City.The facilities offer inexpensive com-mercial space, including office space,for new and expanding small business-es. The rental fees include high-speedInternet hook-ups, access to lightoffice equipment (including faxmachines and copiers), secretarial sup-port, conference rooms and trainingfacilities. Each Business DevelopmentCenter can accommodate professionaloffices, service businesses and evenlight manufacturing.

“We have really enjoyed our part-nership with Brunswick Electric andthe business development center,” saysSandra Gore, president and owner ofCoastal Temporary Services, which“graduated” from a BEMC incubator.“They encouraged us, they gave us theopportunity to open our own businessand it has been a great success story.Without the opportunity to be in thisbuilding [the BEMC incubator], wewould not be in business today.”

Leavitt notes that the co-op mini-mized expenditures of members’ funds.

“The basic approach wasfor BEMC to serve as acatalyst for the project,” hesays. “Our investment wasnot in membership dollars,but primarily in staff andmanagement resources todevelop partnerships, pur-sue other financing sourcesand garner communitysupport for the project.”BEMC did provide a loanof $128,000 to help financethe building in Winnabow.(see sidebar).

RCSC is now self-sup-porting from rentalincome. Annual expendi-tures for the business cen-ters total $160,000, includ-ing management andtechnical support, mainte-nance, utilities, etc. Sincethe first center opened in1991, the program has

housed 32 businesses and helped create

almost 800 new jobs. In a strugglingrural area, this is no small contributionto economic health.

Bright IdeasAnother co-op program seeks to

improve education for students in itsservice area. The Bright Ideas pro-gram, which began in 1994, offersgrants to local teachers for educationalprojects in kindergarten through highschool that otherwise would not befunded. Since the program’s founding,all of the 27 electric distribution co-opsin the state have joined. Together, theyhave distributed over $3 million.

Three years ago, BEMC joined theTouchstone association of power coop-eratives, which provides marketingresources and assistance to members.Bright Ideas and other community pro-grams are now presented under Touch-stone’s auspices as well as BEMC’s.

This year’s lineup of BEMC BrightIdeas awards emphasizes reading skills.One school got a grant to build a “lit-


The Rural Economic Development Loan and Grant (REDLG) program,administered by the Rural Business-Cooperative Service of USDA RuralDevelopment, provides zero-interest loans and grants to Rural Utilities Ser-vice-financed electric and telephone utilities. The funds are to be used topromote sustainable rural economic development and job creation projects.

The utility is required to re-lend the funds, at zero-percent interest, to aneligible third party. These third-party recipients may be private or publicorganizations having corporate and legal authority to incur debt. They caninclude businesses, nonprofits, municipalities and other entities. Eligiblepurposes include:

■ Business expansions and business start-ups, including cost of build-ings; equipment, machinery, land, site development and working capital;

■ Community infrastructure necessary for economic development andjob creation purposes;

■ Community facilities and services necessary for economic develop-ment and job creation purposes;

■ Medical facilities and equipment to provide medical care to rural resi-dents;

■ Educational facilities and equipment to provide training and jobenhancement skills to rural residents to facilitate economic development;

■ Business incubator projects to assist in developing emerging enter-prises.

Priority is given to financing third-party recipient projects that are physi-cally located in rural areas having a population of less than 2,500 people. ■

USDA’s REDLG program

Teacher Alisa Duncan reads to students in the LiteracyRoom at Jessie Mae Monroe Elementary School. Designedas a “cozy reading place” where students feel encouragedto delve into books, the room was funded through BrightIdeas after Duncan submitted a grant proposal.


Brunswick Electric Membership Corporation(BEMC) development affiliate, the Rural Consumer Ser-vices Corporation (RCSC), was selected by the NationalRural Electric Cooperative Association (NRECA) to par-ticipate in developing a video presentation and “tool-kit” for utility co-ops on promoting economic develop-ment. The following is an overview of the BusinessDevelopment Center project, excerpted from materialprovided to NRECA:

Leveraged Funds/Source North Carolina Electric Membership Corporation

zero-percent economic development loans, to RCSC,guaranteed by BEMC, for the construction of theWinnabowand Tabor City buildings. . . . . . . . . . . . $950,000

BEMC 5-percent economic development loan to RCSC for the construction of the Winnabow building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $128,326

For the construction of the Whiteville building andaccess road (which are owned by BEMC and leased toRCSC):

USDA Rural Economic Development Loan (repaid) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000North Carolina Technological Development Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $185,000North Carolina Rural Economic Development CenterInc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000USDA Industrial Development Grant . . . . . . . . $ 32,000Columbus County, N.C., provision of in-kind servicesto build the road to the facility . . . . . . . . . . . . . . $ 32,000

Other PartnersThe ongoing management of RCSC Business Devel-

opment Centers is made possible by the continuing part-nership between BEMC, RCSC and the Small BusinessDevelopment Centers at two local community colleges.Southeastern Community College provides on-site man-agement for the Whiteville and Tabor City facilities, andBrunswick Community College in Supply provides the

management for the Winnabow center. Both communitycolleges also provide business counseling services andentrepreneurial training programs.

Lessons learned• It takes time to develop and doesn’t happen

overnight.• It takes a variety of partnerships to make it happen.• It is critical to develop support from the community.• The reward is for the community, not a direct return

to the cooperative. It is not a profit-making endeav-or. The purpose is to create jobs and stimulate theeconomy.

• It takes a lot of promotional effort both initially andto continually remind the public that the BDCs areavailable.

What might have been done differently• Recommend more allocation for promotional budget;• Develop a more formal marketing plan, with annual

review;• Keep more complete documentation on the project

and each BDC tenant right from the beginning;• Allocate budget for annual maintenance. ■

Funding Business Development Centers

This Business Development Center in Whiteville, N.C., is one ofthree operated by the Rural Consumer Services Corporation, anaffiliate of BEMC.

eracy room” to supplement the library.The literacy room, designed to be cozyand inviting, is staffed by volunteerswho coach children in reading. Part ofthe grant was used to buy books tai-lored to different reading levels toallow teaching each student at his orher level of ability.

Another grant bought portablebookshelves that are brought into class-

rooms and the books to stock them. Allof the projects are the brainchildren ofindividual teachers, who apply forgrants independently of their schooladministrations.

The funds for this and other commu-nity efforts come from an auction of sur-plus co-op equipment and vehicles, heldevery year at the co-op’s annual meeting.

“The annual amount from this auc-

tion varies, but as a non-operatingsource of funds, it doesn’t impact themembers’ electric rates in any way,” saysLeavitt. “Someday we’d like to moveinto a full “Operation Roundup” givingprogram, that would involve the entiremembership.” (Operation Roundup hasbeen adopted by a number of utilitycooperatives. Under it, utility bills ofparticipating customers are rounded up


to the nearest dollar, with theexcess going to fund various com-munity and charitable initiatives.)

Even without utility bill check-offs, however, the co-op has beenable to start up a new communityeffort with auction funds. TheCommunity Grants program isdesigned to help family services,cultural and arts programs andemergency services and economicdevelopment projects.

Judy Gore, BEMC’s vice presi-dent for customer services, says“the Bright Ideas program showsthat with a relatively small annualinvestment in our community, wecan make a big difference. We wantedto expand that investment to includeworthwhile programs that provideimportant social, cultural, educational,and economic services to all citizens inour service area.”

The first awards under the newprogram include help for a sheriff’sdepartment in setting up two canineteams, funds to buy a van to transportdisabled veterans to medical care, agrant for a science exhibit at a localmuseum and a lighted marquee for anelementary school.

A reliable partnerFormal programs are important,

but, as Mrs. P. found out, they are onlyone aspect of the co-op’s participationin community life. “Our communitiesknow that they can count on BEMCfor support,” says co-op spokeswomanLinda Thomas. “We really try hard tomaintain that close connection.”

One example of this is sponsorshipof a youth baseball tournament. Forthe past two years BEMC and Touch-stone have helped host the Beach Dia-mond Invitational Baseball and Soft-ball Tournament, held for three daysduring spring break. This year, 16teams participated in the tournamentin the town of Shallotte, some comingfrom as far as Virginia, Kentucky and

Maryland. The co-op commis-sioned a professionally-designedlogo for the tournament and provided T-shirts for all the par-ticipating team members.

Another example is a Southportcharity golf tournament to raisefunds for the National ShrinersChildren’s Hospital in Greensville,S.C. For two years Brunswick andTouchstone have been the majorsponsors of the event, which isorganized by the Brunswick Coun-ty Shrine Club. More than 125businesses and individuals joined insponsoring the event last August,which raised $35,000.

Other contributions to communitylife include providing space for commu-nity groups to meet at co-op headquar-ters, encouraging employees to partici-pate in community activities,participating in local parades, sponsor-ing breakfasts for volunteers, and pro-viding raffle items for fundraisers.

The BEMC leadership sees nothingremarkable about such activities,regarding them simply as part of theco-op’s natural role. “While our corebusiness is providing safe, reliable andaffordable power, we are also commit-ted to helping our community,” saysLeavitt. “That’s part of the tradition ofelectric cooperatives.” ■

BEMC Director Calvin Duncan checks out a display erect-ed by the co-op at the 2002 Columbus, N.C., County Fair.

“Tough bargaining” helps almond growersLook who’s bucking the trend of low prices usually following overabundant harvests. Doug Youngdahl, chief

executive of Blue Diamond Growers at Sacramento, Calif., credits tough bargaining for his cooperative’s suc-cess in bringing higher prices for 4,000 almond growers, even in the face of a record harvest of 1.1 billionpounds last fall. Growers have increased productivity, new markets have opened, ad campaigns promote thenut as a healthy snack and almond consumption in the United States has grown by 57 percent since 1996. Muchof this due to successful bargaining—with no help from federal crop subsidies. Last spring, Youngdahl negotiat-ed a 15- to 20-percent price increase by arguing that lower prices would force some growers out of the busi-ness and that would lead to higher prices in coming years. He also said if buyers didn’t agree to higher prices,the cooperative and others would withhold product from the market. The state supplies 80 percent of theworld’s almonds, up from 60 percent a decade ago. Conversely, California’s more perishable fruit crops, such asgrapes, apricots and raisins, have suffered from the usual pattern of lower prices following abundant crops inaddition to foreign competition. ■


By Michael Doherty

Editor’s note: Doherty is a cooperative business specialist withUSDA Rural Development’s state office for Illinois. He acted asUSDA’s consultant for the project described below.

good feasibility study that accurately gauges theodds of success is essential for any co-ops con-sidering a value-added project. Two central Illi-nois grain cooperatives recently contracted foran independent feasibility study, which ulti-

mately determined that there was little chance for success fortheir proposal to process specialty tortillas for the Hispanicmarket in Chicago, despite growth of that market andincreasing demand.

While there was undoubtedly some disappointment aboutthat outcome, those feelings would pale compared to whatco-op members would have felt had they pursued the project,only to have it end infailure. Sometimesthe best feasibilitystudy is the one thaturges a “no go,” asthis case shows.

Co-ops form joint venture

The MorrisonvilleFarmers Cooperativeand Assumption Co-op Grain Co. formedILLI MEX AllianceLLC in June 2001 as a joint venture to explore new, value-added markets and new sources of income for their 2,000members. The goal of the alliance was two-fold: 1) to devel-op a premium-based contract market for white corn thatwould add income to the members’ farming operations, and2) to eventually own a piece of the tortilla manufacturingbusiness in Chicago.

The cooperatives have export market access through St.Louis and sell into the domestic processor market inDecatur, Ill., through ADM. They are experienced in grainhandling, identify preservation of grain and in merchandising

high-oil corn, non-GMO corn and food-grade corn. Tom Bressner, general manager of Assumption Co-op,

became interested in the tortilla market while seeking newmarkets and customers on trade missions to Mexico in 1997,1999 and 2000.

To help pay for a feasibility study, the alliance applied fora USDA Value-Added Producer Grant (VAPG) of $40,000during the summer of 2001, which was matched by ILLI-MEX (with funds contributed by the two cooperatives).USDA awarded the grant in October 2001.

Focus on Chicago marketThe immediate objective was to determine the feasibility

of developing a fresh masa tortilla manufacturing business inthe heavily Hispanic areas of Chicago.

Masa is flour, or dough, made of ground corn and used fortortillas. This fresh masa tortilla business would use whitefood-grade corn, which would be produced through premi-

um-based contracts with the Assump-tion and Morrisonville co-ops.

According to the 2000 census, 1million residents of Cook County areHispanic, of whom 72 percent are ofMexican heritage. They, along with490 Mexican restaurants in the Chica-go area, were the primary consumertargets of the proposal.

“No go” can be a good showFeasibility study advises co-ops not to pursue tortilla project

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

Tom Bressner (left) manag-er of the Assumption GrainCooperative Co., and DanLitteken of MorrisonvilleFarmers Cooperative,accept a check from USDARural Development thathelped pay for a corn-tor-tilla plant feasibility study.Photo courtesy The GrainJournal. At left, theAssumption Grain Co-opelevator. USDA photo byMichael Doherty


Impetus for the co-op alliance resulted from discussionswith representatives of the Independent Tortilla Manufactur-ers (ITM) Association, an industry group that controls morethan 50 percent of the tortilla market in Mexico. Meetingstook place in May 2001 with Burt Swanson, a University ofIllinois extension specialist, and the potential Mexican part-ners, which were to be offered a chance to buy an interest inthe venture.

Swanson had studied the tortilla market in Mexico extensive-ly and felt there was potential to increase the tortilla market withChicago Hispanics. Swanson contacted USDA Rural Develop-ment in Illinois to assess the possibility of the cooperativesapplying for a VADG grant. He held discussions in May 2001with a USDA Rural Development cooperative specialist regard-ing the structure of the proposed venture, ownership by farmersof a tortilla business and location of manufacturing facilities.

Letters of support for the USDA assistance were writtenby the Illinois Corn Growers Association, Illinois Depart-ment of Agriculture, Senator Dick Durbin, GovernorGeorge Ryan and several local congressmen.

Most tortillas manufactured and sold in Chicago are pre-pared from rehydrated corn flour mixed with food preserva-tives to increase shelf life. The ITM group believed that His-panic consumers and restaurants in Chicago wouldprefer—and be willing to pay a higher price for—tortillas thatwere made on-site daily from whole grain masa and producedwithout the use of preservatives.

This process would allow the tortillas to be made withmore traditional Mexican flavors and textures than the“American version” of tortillas, which would be more appeal-ing to Hispanic consumers. Tortillas made “in-store” fromfresh masa dough would cost more than competing tortillaproducts, but initial discussion indicated that designing a newand efficient system for delivering the masa to stores couldoffer a significant market advantage over the existing systems.

If the results of the feasibility study were positive, it wasenvisioned that eventually ILLI-MEX LLC would own asmall production plant in the Chicago area.

The Alliance hired SJH and Co. of Danvers, Mass., to con-

duct the feasibility study for the project. Information from theMexican ITM group was also considered, along with agricul-tural research results from the University of Illinois.

Phase I of the feasibility study was to run from Nov. 1,2001 to Jan. 31, 2002, and was to focus on market dynamicsin Chicago, pricing, marketing and industry structure. Ifthose results were positive, the study would advance to amore in-depth technical assessment and financial analysis, tobe conducted in May of 2002.

Study recommendation: “No Go” The findings and recommendations of SJH and Co. were

submitted to the ILLI-MEX Alliance on March 13, 2002.The overall outlook was negative, showing inadequategrowth in market demand for fresh vs. pre-packaged corntortillas. The study found that there was a dwindling relianceon small-scale local shops, excessive costs for making andselling tortillas in stores, dwindling demand for fresh masadough and a maturing market headed toward overcapacity.

The feasibility study results were clear, comprehensible andoffered ILLI-MEX a valuable education about a topical market.It also saved the two cooperatives from investing further effortand money toward a project that carried high risk of failure.

Assumption Co-op Grain’s Bressner says the outcome maynot have been what the co-ops were hoping for, but it gavethem the information they had to have to make an informeddecision.

“You have a big idea and a dream, and some people wantto go out and spend big bucks to make it happen,” Bressnersays. But that dream could turn into a nightmare without agood study. “That’s why you do a feasibility study—to findout if the dream is likely to become reality.

“The study gave us the answers we were looking for,”Bressner continues. “We look at the whole process veryfavorably. And it opened up a dialog between us and Mor-risonville that is ongoing. We’ve kept the joint venture intactand are now looking at other possible projects. So eventhough the decision was made not to pursue this project, ithas been of great benefit to both of our co-ops.” ■

Port OK’S Texas co-op leaseGulf Compress, a Texas-based cotton marketing cooperative, has become the first tenant in Corpus Christi’s

La Quinta Trade Gateway, in what could be a $15.5-million investment in the project. The cooperative’s entrywas approved by Port of Corpus Christi commissioners for the Gateway, a planned container terminal on a1,114-acre tract purchased by the port in 1998. Gulf Compress currently owns land planned for a baseball stadi-um. The cooperative would lease a site of almost 30 acres from the port for $1,918 a month for 30 years. The portwill provide access roads to the site from a major highway, rail access and while the cooperative will add ware-houses, roads and a rail spur. Gulf Compress will act as a catalyst for further economic development. BobWeatherford, co-op president, said the venture would bring jobs to the community. Once the cooperativebecomes operational in 2004, it plans to apply for certification in the New York Cotton Exchange . ■

By Dan Campbell, Editor

good photograph not only communicates visu-ally, it can also attract readers to an article theymight otherwise pass by, in much the same wayan effective sign or window display beckons tocustomers and draws them inside a business. A

strong communications program is essential for a cooperativeto keep its members informed and committed to their co-op,and good photography can play an essential role in improv-ing the quality of co-op publications—be they newsletters,newspapers, magazines or Web sites.

But what makes a strong photograph?

This question was recentlyaddressed by a panelof three photogra-phy experts whoevaluated nearly 200 co-op photos andpublications as partof an annual com-munications compe-tition sponsored by the Cooperative Communicators Associ-ation (CCA). CCA is an organization of some 350communications specialists who work for cooperatives in the

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Talk ing wi th p ic tu resPhoto experts offer tips on how to better tell your co-op story with strong photos


1st Place, Portraits—“Kenny Davis, Row Crop Farmer”—By GlenLiford, Tennessee Farmers Cooperative. Judges’ comments:

“The farmer comes off very sculptural, like an amber statue in the field. He rises up in the fieldlike strong presence in his environment. I don’t usually like the subject looking into the camera, butsometimes it is the strongest portrait, rather than trying to get the subject to do some action thatdoesn’t look natural. You feel his pride and the fun he is having as a farmer.”

2nd Place, Portraits—“Warm Season GrassRancher” by James Fashing, MFA Inc. Judges’comments:

“Nice perspective, has good sense of scale of landscape andmovement that draws your eye through the landscape. Nice dynamicquality and great depth to it. An environmental portrait like this usuallystronger than straight on shot.”

Portraits—

Earl Dotter, Bonnie Stutski (center) and SusanMoeller examine some of the 175 photo entriesthey judged during the 2003 photo contest spon-sored by the Cooperative CommunicatorsAssociation (CCA). CCA also sponsors annualcompetitions to recognize the best in co-op pub-lications, writing and special projects. USDAPhoto by Bob Nichols

United States and some foreign nations. The photo judgesincluded Earl Dotter, a prize-winning photo journalist basedin Maryland, Bonnie Stutski, photo editor for Smithsonianmagazine, and Susan Moeller, a photojournalism professorat the University of Maryland.

Asked for their overall impressions of the photos theyjudged in an all-day session at USDA headquarters in Wash-ington, D.C., the judges said they were impressed—even sur-prised—at the overall high quality of the work. But they alsosaw room for improvement and offered a number of con-structive criticisms and “photo philosophy” that can help

refine the approach to the way we talk to our membersthrough pictures.

Portraying your “human capital” “I would stress that the strong suite of the co-op is the

human capital—the people who are the members,” says Dot-ter. “Next in importance is the product they create that pro-vides for their well-being and supports their communitiesand lifestyle. I would really encourage the photographers toexplain to their subjects that we want you to live out yourlife, rather than act it out, in front of the camera. We want to


3rd Place—“Mr. Simmons” Robin Conover,Tennessee Association of Electric Co-ops.Judges’ comments:

“A charming picture that gives you a feeling of his joy inplaying violin. Composition works—everything is goingtowards his face; you follow the violin strings to the man’sface. Eyes really do resonate behind his spectacles, and that’snot an easy accomplishment.”

Honorable Mention—“The NewFace of West Texas Agriculture” byLynette Cockerell, Plains Cotton Co-op Association. Judges’ comments:

“I like the perspective, looking up at her.You seethat she’s a real farmer—there’s dirt on her shoes.The back-lit quality gives a feeling that she’s almostethereal. I like her looking into the distance like thatinstead of into camera. She breaks the mold of thestereotypical female farmer. She’s mud-spattered andobviously a hands-on farmer. Photo projects that shemakes a real contribution to the farm.”

Honorable Mention, Portraits—“Responsibility” by Sheryl Meshke,AMPI. Judges comments:

“Handles difficult lighting situation effectively. Good depth of field. A bit more fill light might havecalmed down the background more. Natural action, even if it was a set up shot.”

photograph you with the dirt under your fingernails, becausethat’s how you make your living. We want to photograph youin a way that projects the honest labor that you perform.”

A photo assignment, Dotter continues, is a collaborativeeffort between the photographer and their subjects. So take alittle time to get to know the subject before beginning tophotograph them.

“The rules of common courtesy apply in rural America,”Dotter says. “I let you know who I am and, if I’m lucky, thefavor will be returned. Give your subjects a basic understand-ing of why you are there to take their picture: to show theaccomplishments and hard work that create the food on thetable and the sustenance for America. That’s what you reallywant to capture. To a large degree, you see a surface view oflife rather than the inside, intimate story. It’s the photograph-er’s challenge to get behind the closed door or inside the far-

mgate in a way that really projects a sense of the life and workand rewards of that experience.

A good photographer, Dotter says, engenders a sense ofcollaboration, so the subject knows what you are looking for.“I have to let you know who I am, and you need to have asense of trust in who I am. Sometimes that involves just sit-ting down with a cup of coffee at the kitchen table with thecamera still in the car before you take the first shot.”

This process need not necessarily be a long one. “Some-times you can get to know your subject fairly quickly,” addsStutski. This might help you show subjects from a perspec-tive we wouldn’t normally see.

“Think about how you can make something more interest-ing than a straight-on snapshot, either by virtue of lighting orbackground,” Stutski says. “You want photos that people willsay—‘How did they do that, or catch that moment?’”


2nd Place, News—“Bustin’ Broncs” by Bob McEowen, Missouri Asso-ciation of Electric Co-ops. Judges’ comments:

“Captures decisive moment in a contest; strong expression on rider and horse, as well as body lan-guage. Background supports the foreground interest; captured the apex of the action and gesture, angleof the light at time of day highlights the main subjects. I like the dirt flying around horses hooves. Also,the background is nice with repetition of the cowboy hats, one guy in upper right corner has hand up tohead, as if going ‘Oh my gosh.’”

1st Place, News—“Lost Harvest” by SherylMeshke, AMPI. Judges’ comments:

“A provocative image. Nice use of a close up and a high impactphoto that makes the point about drought’s impact. Close compositionallows image to project well on printed page. Depth of field makesthe main area of interest live. Camera’s point of view is a bit differentthan you might expect. Comes from long tradition of using close-upon elements to stand for a larger whole. Hands stand for all farmersfacing drought, and one ear of corn represents fields of corn.”

News—


Wearing two hats poses big challengeFor many co-op publications, the reporter/writer is also

acting as the photographer, which greatly increases the chal-lenge of getting good photos. “You finish your interview, youput down your notepad and say, ‘OK, now I’ll take a few pic-tures. Why don’t you stand there, hold this and smile,” saysMoeller. “It’s very difficult to do both. It’s a big problem. Butwhen you have a small budget and small staff, you may notbe able to get around it.”

A combination reporter/photographer may have to comeinto an assignment with a different mind-set. “Maybe itmeans coming back twice,” Moeller says. “Or thinkingthrough the photos in a way that many of these photos (thatwe saw today) were not thought through.”

Too often, she said, the thinking is ‘I am going to go outand report on this, and I’ll take what photos arise.” Instead,

try to think like a photojournalist who thinks in advanceabout the images wanted, she advises.

The way photo or story assignments are made can alsoimpact success or failure, Dotter says. One way to tran-scend that difficulty of serving as photographer andreporter is for the photographer’s boss to give themenough discretionary time to work on some ongoingassignments where they can take pictures on a member’sfarm—for example—throughout the year to develop astrong photo essay. “You may catch him in the midst ofsome crisis that reveals the life of a working farmer in away that is a little bit unexpected. In this way, you are notstarting from point zero, and you will have time to get inside a story. This can work well for a publicationwhere you may “cross paths” with the subject with someregularity in your travels.

Honorable Mention, Feature—“Dentist’sOffice” By Bob McEowen, Missouri Associa-tion of Electric Co-ops. Judges’ comments:

“Strong composition that has everything going toward the boy’sface. Black and white photography is still a very effective media—itshould be used more often.”

1st Place, Feature—“Twilight at the Picture Show”By BobMcEowen, Missouri Association of Electric Co-ops. Judges’comments:

“Strong shot with a lot going on. Neon colors are great—we love it!”

Feature—

3rd Place, Feature—”Down, and Give Me 10” ByBob McEowen, Missouri Association of Electric Co-ops. Judges’comments:

"Good color qulaity—we like the monochomatic background againstthe stark color of the troops' uniform. A strong panorma shot.”


Avoid “grip and grins”“We saw two types of photographers here—some with a

tremendous amount of talent, who seem to have a facilityto take a wide range of photos of different subjects,”Moeller says. But too many “are taking grip and grins(where the subject poses, smiling into the camera, perhapsholding some object central to the story).” These, she says,tend to be very static photos that do not do justice to thesubjects.

The judges saw a tendency in the publications to be domi-nated by these snapshot-style photos of “smiley-face individ-uals looking right down the lens barrel.” A much more truth-ful attitude would be conveyed if the photographer took timeto photograph people in real working situations—capturingthem on film as they go about their daily routine, or whatev-er activity is the focus of the story.

As a rule, this will create a much stronger photo thanwill subjects standing and looking happy in front of thecamera, they said. Of course, time and other restrictionsoften mean that this won’t be possible, and a set-up shotwill be required. With care and a little imagination, thiscan often be accomplished in a way that they don’t look tooforced or staged.

Dottter urges photographers to capture the best lightwhenever possible by shooting very early in the morning, asthe sun is rising, or in the evening as it is setting. Wheneverpossible, he stresses, avoid shooting photos in mid-day, whenthe sun is directly overhead and the sky is hazy or cloudy.

In many instances, the judges felt the layout of the publi-cations they reviewed (for the photo essay and best use ofphotos in a publication categories) did not live up to the stan-dard of the photography. Moeller said the layouts were often

Scenic—

2nd Place, Scenic “Little Pigeon River” By Robin Conover, Ten-nessee Association of Electric Co-ops. Judges’ comments:

“This is kind of standard shot but very pretty—handled well. Has that little somethingextra that makes it evocative and gives it some mystery. Slow shutter speed gives move-ment, but not overdone. Plays well with mist or fog lifting up in back.”

3rd Place, Scenic —“Sugar Coated” By David Lundquist,CHS/Land O’ Lakes. Judges’ Comments:

“Triangular composition is strong. Caption is perfect.”


“very busy”—meaning there are too many graphic elementscompeting for the reader’s attention.

“I also saw periodicals that don’t know what to do withgood photographs when they have them— that don’t usethem well,” Moeller said. “We’ve all worked in newsprint,and know the limitations of low budgets—there are con-straints. But you can still get more creative than we are see-ing here in terms of playing what you’ve got.”

“Overall, I was surprised at seeing so much good work,”Stutski says. “Some of these photographers work with lightvery well and have a great eye for composition, good feelingfor different perspectives. Not always the straight on shot ofsomeone looking at camera and grinning.”

Benefitting from riskSometimes the best photos arise from taking chances—

trying for something unusual. “I’d be hard pressed to nameany image we saw today that struck me as a risky image—where the photographer really was pushing themself and thesubject,” Moeller said. “I’d also be hard pressed to come upwith more than a couple of emotions that I saw depicted. Forthe most part, these are upbeat magazines, speaking to theconverted and they may not want to show the dark side orsomething extreme. But you can still get beyond thePollyAnna-ish images of people.

“Every photo contest judge always says this, but it is worthrepeating: editors need to be looking at other periodicals andphotos. Get in their heads and see what they do. And some-times it might mean taking photo spreads that they loved inother periodicals and mimicking them. Learn why somethingworks. Why was this a great spread in Vanity Fair, or inSmithsonian or National Geographic? What doesn’t work? ■

2nd Place, Best Cover, “Cardinals in Winter”Robin Conover, Tennessee Association of Electric Cooperatives.Judges’ comments:

“Would have like to see the cover headline in a script font, because the photo is so lyrical. Could all be much more sophisticated. Photographer must have shivered to get thisshot. A dialogue in red. Might have placed cardinals in winter first on basis of just photo, butwhen look at all elements, it gets knocked down a notch. “Life’s Simple Pleasure” is a cleanercover, more striking.”

Best Cover—

1st Place, Best Cover—“Life’s Simple Pleasures”David Lundquist (photog.), Steve Richter, (editor)CHS/ Land O’ Lakes. Judges’ comments:

“Would have like to see the cover headline in a hand script,because photo is lyrical. On all three of these (finalists), the drop-inheadlines die. Could all be much more sophisticated. A very strikingphoto and clean layout.”

By Patrick Duffey, Writer-EditorUSDA Rural [email protected]

ressed against the barnwall by some of the lowestmilk prices in a quartercentury, the nation’s dairyindustry has approved a

scaled-back version of the CooperativesWorking Together (CWT) program, anattempt to boost milk prices by reducingproduction to better meet demand. Thefirst CWT proposal, drafted by theNational Milk Producers Federation,failed to garner the needed 80 percentsupport level, so NMPF scaled back theprogram, lowering the level of supportneeded to 70 percent, which it got.

“We’re thrilled to be able to moveforward with CWT,” said NMPF Presi-dent and CEO Jerry Kozak. “Thisgroundbreaking program is tremen-dously important for the dairy-producercommunity.”

The original CWT proposal calledfor producers to pay an 18-cent-per-hun-dredweight assessment to fund the pro-gram. The revised CWT program wouldreduce the assessment to five-cents perhundredweight for participating dairyproducers. The goal would be to reducemilk supplies by 1.2 billion pounds dur-ing the next year. The money raisedwould be used to pay some farmers to“retire” their herds, cut back productionand for an export assistance program.

“The revised CWT program will stilloffer a 400-percent return on invest-ment,” NMPF President and CEO Jer-ry Kozak said. The five-cent-per-hun-dredweight CWT assessment would

raise all milk prices an average of23 cents per hundredweight,even when factoring in the costof the CWT assessment andlower government program pay-ments, Kozak said. Some dairyco-ops not affiliated withNMPF, as well as many produc-ers who do not belong to a co-op, are still supporting CWT, he noted.

NMPF, which represents more than30 of the major dairy marketing cooper-atives and 60,000 dairy farmers who pro-duce 70 percent of the nation’s milk, alsoproposed the original CWT program asa three-pronged effort to boost de-pressed on-farm prices by better balanc-ing supply with demand. To succeed,NMPF needed to get individual produc-ers to collectively commit 80 percent ofthe nation’s milk supply to the originalCWT program by June 30, but it failedto do so. According to press reports, theplan faced considerable oppositionamong small farmers in the Upper Mid-west, particularly in Wisconsin.

In its May newsletter, Prairie FarmsDairy Inc., a co-op based in Carlinville,Ill., said the original CWT was a boldand well-intentioned proposal, but saidit could not urge a “yes” vote for a num-ber of reasons. These included the con-cern that the 70 percent of producerswho belong to NMPF would have tocarry the burden for the other 30 per-cent. It also noted that the program“does not sell one more quart of milk orslice of cheese” and the co-op ques-tioned whether the export incentiveswould work more than briefly, as therest of the world would most likely“soon adjust to lower prices in order tomaintain market share.”

The three major components of theoriginal CWT program included:

■ A $60 million export assistance program (aimed at Central and SouthAmerica and Asian countries) to stimu-late exports and clear inventory fromthe U.S. market place by paying manu-facturers and exporters a bonus, on abid basis, for cheese and butterfats des-tined for foreign commercial markets.The target was to remove 1.6 billionpounds of milk.

■ An $18 million reduced milk mar-keting program that would have pro-vided incentives for producers todecrease the amount of milk they shipby at least 10 percent. Producers wouldsubmit bids stating how much theywould accept for selling their entireherd for slaughter. The goal was toeliminate 460 million pounds of milk ayear from the market, or about 3 per-cent of the national supply.

■ The $112 million herd-reductionplan would have removed 125,300 milkcows (less than 4 percent from thenation’s herd of 9.2 million cows) or theannual equivalent of 2.07 billion pounds.

The herd reduction plan was aimed atretiring farmers, who would be inducedto sell their herds into slaughter ratherthan sell to another producer. But farm-ers could also sell their entire herd andturn around and start new ones. ■


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NMPF sca les back CWT mi lksupply-ba lanc ing p lan

AGP sets volume record; Reagan sees member support

“Our future success lies in thestrength of our members and the abili-ty to meet the ever-changing needs ofcustomers,” Ag Processing (AGP)CEO Marty Reagan told membersattending the Omaha-based coopera-tive’s 19th annual meeting. As a result,the soybean-processing cooperative“continues to be profitable, payingpatronage and revolving equity tomembers,” he said.

For fiscal 2002, AGP produced arecord volume of refined oil and hadsales that topped $1.8 billion;

returned $16.5 million in cash inpatronage, equity redemption and

component premiums; expanded des-tination markets for members’ grain,including beginning construction on anew West Coast vessel-loading facili-ty, and exported 20 percent of its soy-bean meal production, mostly toCanada and the Pacific Rim. Mem-bers’ equity in AGP stands at nearly$403 million.

“Every business unit we operated lastyear had capital dollars invested in them,with most of the money earmarked for


N E W S L I N ECompiled by Patrick Duffey

By Leslie Shuler

Editor’s note: Shuler is a marketing communicationsintern at CHS Cooperatives.

Nearly 25 years ago, William Nelson, then a profes-sor at the University of Minnesota-Waseca, had an ideato create a valuable cooperative educational experi-ence for his students. He wanted to organize a tour ofagricultural cooperatives in the Minneapolis-St. Paularea. However, like many educators, he had little moneyin his department budget.

He worked with the Minnesota Farmers Union (MFU)to see if it would support this venture. With a history ofproviding cooperative education to both its membersand the public, MFU proved to be the “right fit” to helpNelson create the cooperative learning experience.

“Over time, MFU, various college professors andother cooperative education leaders recognized thevalue of providing students with a structured opportu-

nity to learn more about cooperatives and relatedcareers,” said Cathy Statz, conference co-coordina-tor and Wisconsin Farmers Union (WFU) educationdirector.

By the late-1990s, the program evolved into a three-day conference, closely resembling what it is today: theCollege Conference on Cooperatives.

“Participants had an opportunity not only to observecooperatives on location, but to hear from those partici-pating in all levels of the cooperative movement, fromemployees, management, boards and members, as wellas from those involved in cooperative support,” Statzsaid. “Today, the conference features cooperativespeakers, panels and tours from across the cooperativespectrum.”

This year session panelists discussed local coopera-tive management, co-op careers, consumer coopera-tives and challenges facing rural areas. More than 90students and educators gathered in Minneapolis for the

Professor’s idea blossoms into major co-op conference for college students

An AGP tanker truck loads up with refined soyoil. Photo courtesy AGP Inc.

improved efficiencies, increased capacityand marketing opportunities,” Reagansaid. Mike Knobbe, group vice presidentfor grain, said the future for AGP Grainwill be enhanced by a pair of develop-ments in fiscal 2002: creation of a newpartnership with Farmers CooperativeCo. at Hinton, Iowa, and expanded des-tination markets made possible by thepurchase of 14 grain elevators in theTexas panhandle.

SSC, Farm Plan forge credit pactA credit alliance has been formed by

Southern States Cooperative (SSC) ofRichmond, Va., and Farm Plan, a divi-sion of John Deere Credit. The pactwill allow SSC to concentrate on itscore farm supply businesses. Respond-ing to a poll, members said they want-ed a credit plan that offered more flexi-bility, better rates and more simplicitythan was available from SSC. After apilot test in several stores, the programwas so well received that SSC convert-ed nearly 200 company-owned andindependent retailers to the new plan,affecting 170,000 customers. The

cooperative, marking its 80th anniver-sary, operates a network of 1,200 farmproduction supply retail stores stretch-ing from Maine to the Gulf Coast.

Wool Growers pick EtcheverryThe Idaho Wool Growers Associa-

tion has chosen Henry Etcheverry, arange sheep herder from southern Ida-ho, as its new president. Etcheverry, ofRupert, markets his lambs through thenew Mountain States Lamb Coopera-tive. He says he hopes entities such asthis co-op will “stabilize the lamb mar-ket and make us more competitive inthe marketplace.”

PCP sells canning operationto focus on food processing

In a move to reduce its overall debt,California’s Pacific Coast Producers(PCP) will concentrate its attention onfood processing now that it has sold itscan-making operation for $15 millionto Silgan Holdings Inc., a major NorthAmerican can manufacturer. The 140employees at the cooperative’s Lodi,Calif., can plant will be retained by the

new owner. PCP, with annual sales of$350 million, will buy about $35 mil-lion in cans a year from Silgan under a10-year contract.

The cooperative is California’s No.2 fruit processor, primarily handlingpeaches, fruit cocktail and tomatoesand has $100 million invested in facili-ties, including the 1 million square-foot distribution center at Lodi. PCPemploys 4,000 workers during the peaksummer season and maintains 750 yearround. The sale of the can plant fitsinto the cooperative’s long-term strate-gy, said Dick Ehrler, vice president ofhuman resources.

Wyoming Sugar entersalliance with Cargill

Wyoming Sugar Co., of Worland,has formed a marketing alliance, effec-tive this summer, with Cargill Sweeten-ers North America to sell and distrib-ute products to food and beveragemanufacturers. Cargill reached a simi-lar agreement last fall with SouthernMinnesota Beet Sugar Cooperative.Wyoming Sugar, which manufacturers


2003 conference, whichwas coordinated by MFUand WFU, in mid-February.Delegates represented 13colleges and universitiesin Colorado, Iowa, Min-nesota, Nebraska, SouthDakota and Wisconsin.

“It made me moreaware of intern opportuni-ties and careers withcooperatives,” said NickEinc, a sophomore fromRidgewater College inWillmar, Minn., who plansto transfer to South Dako-ta State University tomajor in agronomy. Delegates toured a variety of coop-eratives in the Minneapolis-St. Paul area.

“As a cooperative educator and program planner,the conference provided information, contacts and cur-riculum that is essential in planning the programs Ioversee,” said Amy Meyer, Rocky Mountain Farmers

Union education director,Aurora, Colo.

William Nelson, nowpresident of the CHS Coop-eratives Foundation, con-tinues to work with andsupport cooperative edu-cation in this role andembraces the opportunityto assist with the confer-ence. A second confer-ence was added in 2003for students from NorthDakota and Montana,which is led by Jill Inabnitof Montana Farmers Union and Amber Hill of

North Dakota Farmers Union.Next year’s Midwest conference will be Feb. 20-

22, 2004, in Minneapolis. For more information, contactStatz, WFU education director, (715) 723-5561,[email protected]; or Jim Tunheim, MFU educationdirector, (651) 639-1223, [email protected]. ■

Mike Alme, Agriliance recruiter, was one of several presenterswho discussed career opportunities within the cooperative sys-tem. Photo courtesy CHS


products for fruit juices and other bev-erages, was formed last June when pro-ducers ands investors from Wyoming’sBig Horn Basin and Fremont Countybought Holly Sugar’s Worland factory.

Dakota Hay Co-op findssuccess in horse market

South Dakota Ag Producer Ventures(SDAPV), near Meckling, S.D., a val-ue-added cooperative formed by SouthDakota farmers and ranchers two yearsago, is showing early signs of success.South Dakota is the largest forage-pro-ducing state in the nation, so the coop-erative is working to expand marketsfor its hay. The cooperative’s upperplains production territory is well suit-ed to growing Dakota Premium Hay,which it is selling as feed for horses inareas of Texas, Florida, Missouri andColorado. Small bales of alfalfa andother grasses are sold for $5 each andare proving popular with horse nutri-tionists who want an orchard- or timo-thy-grass mixture. Both grasses areplentiful in the eastern part of the state.Major horse breeders are expressinginterest. SDAPV is eyeing a nationalmarket of 7 million horses.

Kentucky’s catfish co-opreels in supermarket order

When it comes to fishing, PurchaseArea Aquaculture Cooperative inGraves County, Ky., has reeled in a bigone. It started last fall when marketingspecialists from the Kentucky Depart-ment of Agriculture introduced repre-sentatives of the co-op, which sellsfarm-raised catfish, to buyers for gro-cery store giant Kroger Co. Krogerordered 84,000 pounds in the form offillets, nuggets and whole fish for itsstores in Kentucky, Tennessee andsouthern Illinois. State AgricultureCommissioner Billy Ray Smith said thecooperative’s success was attributable togrowers “working together to helpthemselves and each other,” as well astheir “hard work, persistence andfinancial commitment.”

The co-op has 43 employees whoprocesses 15,000 pounds of live weightfish per day, 40 percent of which is

actual product, said Manager BobZumwalt. It has the capacity to process25,000 pounds a day, with room forfuture expansion. The 7,200-square-foot processing plant and adjacentponds were built in part with grantsfrom the state.

Montana educator developsco-op business lesson plans

A set of cooperative business lessonplans have been developed by, and areavailable from, Martin Frick, a Univer-sity of Montana educator. The topicsare based on a cooperative director’sneeds assessment that was conducted inNorth Dakota and Minnesota.Lesson plans cover a wide rangeof subjects, including: Preparinga Vision and Mission Statementfor Your Cooperative; The Eco-nomic Justification of Coopera-tives; What the Director Does; LegalFoundations of a Cooperative; Cooper-ative Mergers and Consolidations; Ser-vicing Cooperative Debt; WorkingCapital Needs of a Cooperative, andAssessing the Effectiveness of theCooperative Director.

A PowerPoint presentation is avail-able for each lesson plan from whicheducators can make transparencies.“Lessons have been pilot tested on aregional basis,” Frick says. The plansare available on the Internet at no cost:http://aginterrnational.msu.montana.edu. Then click on the “Co-op Lessons”link.

Meadow Farms Hog Co-opopens modern Illinois plant

After five years on the project, JimBurke, president and chief executiveofficer of Meadow Farms Cooperative,is smiling this summer. Constructionon the cooperative’s new, $25 millionhog processing plant at Rantoul, Ill.,has been completed and it is now oper-ating. Although the bulk of the 200farmer members are from Illinois, thecommunity’s close proximity to inter-state highways draws others from Indi-ana, Wisconsin and Iowa. For now, theplant will operate on a single shiftwith a staff of about 200, including

administrators and plant workers.Burke, an attorney, became involved

when his farmer-clients started goingout of business because of falling hogprices. So, partly to salvage his clientbase, he began looking at the situationfrom a marketing approach. Initially,separate groups in northern and south-ern Illinois were looking to form coop-eratives, but financial considerationsbrought them together. Planning beganin 1998, and University of Illinois ani-mal sciences professor Floyd McKeithand other faculty members becameinvolved. The choice of Rantoul over34 other communities was welcomed by

City Manager Gary Adams for bringingjobs to the community and expandingthe local tax base.

The state’s Capital DevelopmentBoard granted the village $1.7 millionto construct a pretreatment facility toserve the cooperative’s new plant,which will slaughter 3,000 hogs perday. The facility will treat wastewaterat the site before it enters Rantoul’smunicipal sewage system. Either thevillage or the cooperative will operatethe facility. The Rantoul operation isconsidered the first mid-sized, pro-ducer-owned packing and processingplant in the nation. The cooperativewill sell meat under its Meadow Brooklabel and also serve hotels, restaurants,institutions and grocery stores. Thecorporate headquarters will be inBelleville, Ill.

Texas catfish co-op opens Fresher fish will be the selling point

for the new Texas Aquaculture Cooper-ative (TAC) in Clemville. It willprocess fish in the morning and havethem on dinner plates in Houston,Austin or San Antonia later that day.Manager Jeff Boswell said the nearly$17-million plant being constructedwill provide 35 new jobs and processup to 150,000 pounds of catfish per

week. The 31 members raise fish onabout 2,000 acres in a six-county area.Future plans call for adding another10,000 acres in 10 years.

Boswell credited the co-op’s rapidprogress to the tenacity, ingenuity andhard work of the original memberswho began the project just over a yearago. All had marketed their fish indi-vidually and are achieving “extremelysuccessful” results as a group, Boswellsays. The Matagorda County Econom-ic Development Corporation provideda $25,000 grant to the cooperative forconstruction and equipment. Technicalassistance was provided by the LowerColorado River Authority’s economicdevelopment department, the TexasCooperative Extension Service, Whar-ton County Electric Co-op and theTexas Department of Agriculture.

NMPF adds three associatesThe National Milk Producers Fed-

eration (NMPF) has gained two associ-ate members from California and athird from Missouri. The not-for-prof-it California Dairy Research Founda-tion at Davis was formed in 1988 topromote research and developmentactivities that benefit the state’s dairyproducers in the consumer market-place. Also joining was California MilkProducers Council at Chino. It advo-cates the interests of its member dairyproducers to enhance the state’s dairyindustry. The third newcomer is Dairy-men’s Marketing Cooperative ofMountain Grove, Mo. Managed byDon Allen, it has 65 producer-mem-bers and markets 81 million pounds ofmilk annually. NMPF’s membershipnow stands at 33.

Farmers sue chairman, otherswho promoted co-op sale to ADM

A group of farmer-investors of theformer Minnesota Corn Processors(MCP) have filed a lawsuit against eightformer cooperative executives and theformer chairman of the board who ledthe sale of MCP last year to ArcherDaniels Midland (ADM), the nation’sleading ethanol producer from Decatur,Ill., for $175 million. The former share-

holders allege members were told ofdismal profit expectations and notinformed of how those executives wouldbenefit from the sale at the time of thelandslide proxy vote last September.The group is seeking class-action statuson behalf of the 5,500 shareholders.

The cooperative was formed in1980 and originally produced cornsyrup and later ethanol. It ownedplants at Marshall and Columbus,Neb., and 17 regional storage, blend-ing and distribution stations. In 2000,it became a Colorado limited liabilitycorporation. The conflict of interestsuit alleges the executives receivedsubstantial payments and bonusesafter the sale was completed. In 1997,ADM invested $120 million in MCPwhen it was on the verge of bankrupt-cy and gained a 30- percent non-vot-ing interest in the company.

Sidney Sugars in supply dealThe first contract to supply sugar to

Sidney Sugars Inc., the Montana sub-sidiary of American Crystal Sugar Co.,has been signed with Montana-DakotaBeet Growers Association for 43,000acres. The two-year contract involves175 growers. The acreage is similar tothe 46,000 acres contracted last year byformer owner Imperial Sugar. Ameri-can Crystal Sugar of Moorhead, Minn.,bought the Sidney plant last fall andmade it a subsidiary. That deal alsoincluded a plant at Torrington, Wyo.,which is being leased to Colorado-based Great Western Sugar Co.

Nebraska North Star Neighbors direct market co-op’s meat

It took a neighborhood of frustrat-ed family farms west of Fullerton,Neb., to find an answer to their col-lective desire to stay on the landdespite depressed prices for their grainand livestock. They found the answerabout four years ago, forming theNorth Star Neighbors NaturallyRaised Meats cooperative. By directmarketing their beef, pork, lamb andpoultry products, they not only addedvalue but also put profits in theirpockets. They were featured on a rural

economic development workshop pro-gram sponsored by the NebraskaFarmers Union.

By turning to chickens rather thanlosing money raising corn, they againfound profits from their farm opera-tions. Their initial investment was low.They raised 4,000 chicks the first year,followed up with 6,000 the next andthen cut back to 3,500 last year. Butnow the focus is on beef and hogs,their real specialty. During the growingseason, members sold meat at weekendfarmers’ markets in Omaha, GrandIsland and Lincoln and have sinceexpanded marketing year-round withdoor-to-door deliveries.

They retained existing customersand gained new ones. To meet cus-tomer demand, the co-op offered one-pound packages of meat, specialtyboxes with a combination of meat cutsand a family package plan. Lookingahead, North Star plans to begin marketing beef abroad and expand itsmembership base to meet customerdemands while maintaining its qualityreputation.

Foremost restructures in faceof declining Midwest supply

Caught in the midst of decliningmilk supply volumes in the UpperMidwest and drooping milk prices fordairy farmers, Foremost Farms, thedairy cooperative based at Baraboo,Wis., plans to restructure operationsby closing five outlying facilities and centralizing purchasing and trans-portation functions at Baraboo. Fourmanufacturing facilities in Iowa andWisconsin will be closed by the end ofthe year and operations consolidatedelsewhere within the cooperative’s system. A dry-products warehouse willbe closed in 2004.

President David Fuhrman said theclosings affects 187 salaried and hourlyemployees. Severance and other transi-tion assistance were developed forthem. “The decision,” Fuhrman said,“was driven by economics. Whilenational milk production increased lastyear, milk volumes in Wisconsin, Min-nesota and Iowa declined causing



excess plant capacity in the region aswell as our production network.” Weakdemand and large supplies of cheese,butter and whey ingredients have keptproduct levels at unprofitable levels forthe past 20 months. He said UpperMidwest processors were increasinglypressured to reduce costs and opera-tions to remain competitive with therapidly growing dairy industry in thewestern United States. Up to thispoint, Foremost had operated 24 man-ufacturing facilities and two milk trans-fer stations in serving its 4,300 dairy-farmer members.

Ozark Mountain Pork Co-opsource of Missouri Farm Pride

It’s small, localized and relativelynew, but a source of pride nonethelessto the 34 Missouri pork farmers whoorganized and own it. The OzarkMountain Pork Cooperative raised$790,000 to buy the Mountain Viewprocessing plant. Earlier this year, itintroduced the new label, “Heritage

Acres,” and began supplying Polishsausage, bacon and bratwurst to inde-pendent grocers in southern Missouri.The cooperative, the first of its kind inthe state, inspired the Missouri Gro-cers Association to introduce a newmarketing stamp called “MissouriPride” and tested the notification ofquality standards on the “HeritageAcres” products. The cooperative wasformed under the auspices of the Mis-souri Farmers Union.

Zwald AMPI’s treasurer The board of AMPI has selected

Greg Zwald, a dairy producer fromHammond, Wis., as its new treasurerreplacing Bob Dysthe of Slayton,Minn., who retired from the board.Dave Vander Kooi, Worthington,Minn., has been elected as a new direc-tor to serve a 3-year term.

LOL closes research facilityAfter an extensive study of its seed

system, Land O’Lakes (LOL) decided toclose its seed research facility at St.Joseph, Minn., which processed , pack-aged and distributed forages, turfs andalfalfa. The plant closing sidelined 27employees who were offered relocationwithin the LOL system or severancepackages and outplacement assistance.Customers previously served from St.Joseph will be served by LOL operationsin Madison, Wis., Hastings, Minn., andDenver, Colo. In another seed develop-ment, LOL and Novartis Seeds, GoldenValley, Minn., have formed a joint ven-ture to develop and market specialtycorn products for animal feed and con-sumer-food markets. Novartis purchaseda half interest in Wilson Seeds Inc. ofHarlan, Iowa. It had been a whollyowned subsidiary of LOL.

NCBA fetes Kaptur, Oxley A pair of U.S. representatives from

Ohio have been honored with coopera-tor awards from the National Coopera-tive Business Association (NCBA) fortheir efforts in supporting cooperativesin Congress and in their state. Rep.Marcy Kaptur was cited for her ongo-ing support for funding 17 cooperativedevelopment centers across the nation.The center developers have been lead-ers in finding innovative cooperativesolutions to the challenges facing farm-ers and others in rural America. Kapturserves on the House AgriculturalAppropriations Subcommittee whichhas increased funding for the centersfrom $700,000 10 years ago to $6.5million for fiscal 2003. Rep. MikeOxley was recognized for supportingcredit unions both state and nationwideand promoting a bill which provided

regulatory relief and enabled creditunions to better serve their members.Oxley is chairman of the House Finan-cial Services Committee. Chuck Sny-der, chairman of NCBA’s board, also ispresident of the National CooperativeBank which provides financial servicesto rural and urban member-owned-and-governed credit unions. DuringNCBA’s business session, all officerswere renamed and two new and threeincumbent directors were seated. Ini-tially joining the board were WilsonBeebe, president of Thanexus, a NewJersey-based management cooperativefor independent funeral homes, andSherman Hardesty, director of theCenter for Cooperatives at the Univer-sity of California. All the elected direc-tors serve three-year terms.

Meanwhile, People’s Food Coopera-tive at Ann Arbor, Mich., has beenhonored with NCBA’s Best.Coop WebSite award. The small cooperativedeveloped a volunteer-designed Website that is attractive and easy to navi-gate and educates visitors about coop-eratives (www.peoplesfood.coop). Theco-op prominently features informa-tion about its values, vision, commit-ment to community as well as fre-quently asked questions and answers oncooperatives and co-op ownership.

GROWMARK creates seed,agronomy subsidiaries in NE

A pair of wholly owned subsidiarieshave been created to serve farm supplyassets in the Northeast recentlyacquired by GROWMARK Inc. fromAgway Inc. The retail agronomy andseed operations in six Northeast statesrepresent $150 million in sales to about20,000 customers. GROWMARK FSInc. serves about 40 retail agronomyoperations in Delaware, Maryland,New Jersey, New York, Pennsylvaniaand Virginia. The Seedway subsidiaryis headquartered at Hall, N.Y. It mar-kets an extensive and diverse commer-cial vegetable seed product line alongwith forage, turf and farm seeds.

Ed Rodenburg, vice president ofeastern retail operations, conducted aseries of winter introductory meetings

with nearly 500 new employees. BobWeller, one of four regional managers,compared GROWMARK’s Midwestoperations with those in the Northeast.“Having metropolitan neighbors canapply pressure on farming operations,but the upside is access to a huge con-sumer market. We have the same chal-lenges that Midwest agriculture does: a tough economy and the impact ofconsolidation.”

NFU fetes cooperator Swenson Leland Swenson, president of the

National Farmers Union (NFU) from1988 to 2002, has been recognized withits cooperative service award for leader-ship and service to agricultural coopera-tives and rural economic development.The honor was bestowed at NFU’srecent 101st annual meeting. Swensonwas instrumental in helping FarmersUnion develop a new economic learningcenter for farmer cooperatives. Presi-dent Dave Frederickson cited Swensonfor his “service to family farmers andranchers by assisting in the developmentand advancement of farmer-ownedcooperatives and helping FarmersUnion members develop innovativestrategies for processing and marketingthe specialty crops of cooperatives.”

Co-op community fetes heroesas four join Hall of Fame

In was dubbed as “the entire co-opcommunity coming together to honorour heroes,” by Pete Creer, executivevice president of the Credit UnionNational Association. The occasionwas the induction of four honoreesincluding a congressman into theCooperative Hall of Fame in Washing-ton, D.C. Cited were Rep. DougBereuter of Nebraska, Rod Nilsestuen,J.K. Smith and Herb Wegner.

Bereuter has supported domesticand international cooperative activitiesover the years, including help inlaunching the Farmer-to-Farmer pro-gram in 1985 and sponsoring the Over-seas Cooperative Development Act.Nilsestuen was honored for his stead-fast dedication to cooperatives in 24years of leading the Wisconsin Federa-

tion of Cooperatives. Smith, a ruralelectric cooperative pioneer of 41years, was the founder and first gover-nor of the National Rural UtilitiesCooperative Finance Co. The lateHerb Wegner was acknowledged as acredit union pioneer whose efforts helpshape the finance industry today. Theaward was accepted by his son, Steve,who thanked the many people whoworked alongside his father in thecredit union community.

Rhode Island dairy co-oplaunches own milk brand

The Rhode Island Dairy Farmscooperative, formed twoyears ago, is introducingits own brand ofhomegrown brand-ed milk “ProudCow of RhodeIsland” on groceryshelves this sum-mer. Its initial pro-duction of 3,000pounds of milk hasnow more than doubled.Local dairies will buy backtheir milk from a processor after ithas been pasteurized and homoge-nized. The cooperative will handlemarketing and distribution.

The state has only 22 dairy farmsleft, including some large ones thathave formed in recent years, so thebulk of the state’s supply comes fromneighboring states. Like many dairyfarmers across the nation, the RhodeIslanders are faced with the lowestprices in 25 years, a frenzied rate ofdevelopment, much higher productioncosts and intense competition furtheraggravated by better herds producingmore milk. The cooperative hopes tosell its milk to schools, parades, fairsand farmers markets.

UW offers co-op educationalsite for youth, young members

The University of Wisconsin Cen-ter for Cooperatives has launched aninteractive Web site on cooperativesfor high school students and youngadult co-op members. Cooperatives

have consistently identified improvedunderstanding of cooperative basics,particularly among young people andyoung adults as a critical need, saidAnne Reynolds, assistant director ofthe center. The Web site addressesthat need. It can be found at: http://www.wis.edu/coops . This one-of-a-kind site offers learning modules on anumber of cooperative issues as wellas resources on scholarships foryoung cooperators. Adding to thisrepository of information are links togames and other co-op Web sites,Reynolds says.

The program was made possiblethrough funding from CHS

Cooperatives Foundation.The site is part of a

larger campaign toincrease understand-ing of fundamentalprinciples of coop-eratives. “Targetedprimarily toward

high school studentsand young adults, the

site has three learningmodules exploring issues of

corporate governance, member rela-tions and types of cooperatives that existtoday. These learning modules use sim-ple, easy-to-understand language andcontain a wealth of information gleanedfrom various sources. Making the learn-ing experience all the more fun are tid-bits of knowledge, scenarios andquizzes,” Reynolds explained.

“For a long time now, we had beenthinking of a site catering to a youngeraudience,” says Reynolds, the architectbehind the Web site. “Our aim was toprovide information in an accessibleformat, and the Web seemed to be themost logical place to start.” Furtheradditions to the site will include morelearning modules, case studies, shortarticles and additional games. Printedcopies of the learning modules, activi-ties and other resources will also bedeveloped and distributed to schools,state councils and cooperative organi-zations. “These materials should benefit the cooperative education field tremendously,” she says.



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