1032165 Rur Coop-May/June PDF - USDA Rural … Dr.V. Kurien, chairman of India’s National...

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L i v e s t o c k c o - o p s :

M e e t t h e n e wk i d s o n t h e b l o c k

L i v e s t o c k c o - o p s :

M e e t t h e n e wk i d s o n t h e b l o c k

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

2 May/June 2003 / Rural Cooperatives

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

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

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

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

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

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

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

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

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

C O M M E N T A R Y

Why Cooperatives?

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

Rural Cooperatives / May/June 2003 3

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

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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,

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.Rural

COOPERATIVESCOOPERATIVESMay/June 2003 Volume 70 Number 3

O n t h e C o v e r :

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

F E A T U R E S

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

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

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

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

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

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

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

15 VALUE-ADDED CORNER28 NEWSLINE


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

By Dan Campbell, [email protected]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

W

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

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

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

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

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

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

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

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

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

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

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

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


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

continued top of page 6


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

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

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

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

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

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

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

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

■ Raised on local, family-sized farmoperations

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

continued on page 31

By Margaret Bau andDianne Harrington

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

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

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

cializing in providing in-home care.

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

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

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

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

Demand growing for in-home care

Besides maintaining aperson’s dignity and inde-

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

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

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


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

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

“Cooperative”comes first

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


Critical shortage of in-home care workers

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

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

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

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

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

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

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

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

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

Potential-member survey—Careproviders were surveyed to determine

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

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

evolved.

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

Co-op development stages & timeline

Cooperative care logo loaded with symbolism

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

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

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

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

Meeting care needsin Waushara County

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

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

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

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

This arrangement posed a potentialliability to Waushara County. Another

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

Patronage checks thrill worker-members

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

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

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

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

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

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

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

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

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

Harvard’s John F. Kennedy School

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



By Kristine Rose

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

M

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


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

Farm Bureau experience whetsappetite for run

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

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

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

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

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

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

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

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

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

Male director reactionSome of the women encountered individual board mem-

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

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

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

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

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

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

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

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

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

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

ConclusionsDirector interviews with these six board members demon-

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

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

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

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


By Christa Hartsook

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

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

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

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

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

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

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

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

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

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

Governing AgMRCAn advisory board, comprised of

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

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

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

T

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

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

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


By Sandra Clarke

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Web site contentInitially, staff conferred with indi-

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

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

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

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

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

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

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

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

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

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

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

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

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

Research focusSeveral of the AgMRC partners are

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

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

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


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

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

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

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

Two edible beans were selected for compatibility with

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

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

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

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

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

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


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

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

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

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

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

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

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

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

Other projectsRecognizing that many farmers are

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

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

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

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

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

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

Contact AgMRCProducers, extension personnel and

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

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

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

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


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

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

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

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

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

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

Milk sales top $20.5 billion Farmer cooperatives paid producers

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

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

F

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

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

35

30

25

20

15

10

5

01992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Farm Marketings1

Major Farm Production Expenditures2

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

feed, and seed used for farm production.

Perc

ent


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

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

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

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

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

Cooperatives’ share of “all other”

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

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

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

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

Total U.S. farm cash expenditures

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

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

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

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

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

3 All farm commodities weighted by value.

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

100

80

40

20

01997 1998 1999 2000 2001

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

Perc

ent o

f U.S

. cas

h re

cept

s


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2 The five major farm supply items weighted by value.

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

60

50

40

30

20

10

01997 1998 1999 2000 2001

Fertilizer PetroleumCrop protectants FeedSeed

Perc

ent o

f U.S

. cas

h ex

pend

iture

s

By Steve Thompson, Writer-EditorUSDA Rural Development

heva is a healthy, happy three-

year-old boy, a joy to his parents

and grandparents. But soon after birth he

was a very sick baby, with a potentially fatal

heart defect.

To make matters worse, he was born in a

rural hospital hours from the nearest

neonatal cardiologist, a specialist who

could treat his illness. He is alive today

because new technology made it possible

for the specialist to diagnose and treat the

child from over 90 miles away.

Telemedicine, made possible by broadband

telecommunications, saved Dheva’s life.

D

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


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

“Broadband technology isgoing to be incredibly

important for us to stayon the cutting edge of

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

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

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

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

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

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

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

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

Dr. Rheuban quickly prescribed a drug that would keepthe passage open and recommended that the baby be imme-diately transported to UVa for open-heart surgery. Gettingthe baby to UVa Medical Center, including sending a van toWinchester, took about seven hours. “If we hadn’t been ableto do the long-range diagnosis, the baby probably wouldhave been dead or on the verge of death by the time hearrived,” Dr. Rheuban says.


Telemedicine makes UVa Hospital’s highly rated medical staff avail-able to people in rural areas across Virginia. Photo courtesy ofUniversity of Virginia Hospital

During a live teleconference, a videoimage of Dheva Muthuramalingam, hismother and Winchester Medical Centerphysician Teresa Clawson is beamed intoUSDA headquarters in Washington. Theydiscussed their “telemedicine experi-ence” and how it saved Dheva’s life. USDA photo

Dr. Rheuban has been a strong advo-cate of telemedicine for more than 12years. She is medical director of the UVatelemedicine program and was instru-mental in getting a telemedicine systemup and running in rural Virginia.

Conference sparks interestin wider use of telemedicine

Rheuban says the idea for the systemwas born when she and a number ofother UVa doctors attended a confer-ence on continuing medical education.One of the speakers was Dr. Jay H.

Sanders, a professor of medicine atJohns Hopkins University MedicalSchool and, at the time, president ofthe American Telemedicine Associa-tion. Rheuban and a number of otherUVa physicians were galvanized bySanders’ lecture detailing the advan-

USDA Rural Development’s Broadband Pilot Programhas been expanded into a full-fledged program offeringmore than $1.4 billion in loans and loan guarantees to ruraltelecommunications utilities. The funding is available forthe construction, acquisition and improvement of broad-band communications facilities and equipment in eligiblerural communities. Program rules define a broadband sys-tem as one that can transmit at least 200 kilobits per sec-ond both upstream and downstream from a customer.

Regulations for the new Broadband Loan programwere published in the Federal Register Jan. 30, 2003.

Funding for fiscal year 2003 includes nearly $1.3 billionfor direct “cost-of-money” loans, in which the interestrate is derived from a formula reflecting current interestrates, $80 million in direct loans at 4 percent interest andthe authority to guarantee another $80 million in loansfrom conventional lenders. Applications made under thepilot program will be given priority for approval.

Broadband communications open up a wide array ofpossibilities to rural communities, from improved health-care services and education opportunities, to accelerat-ed economic development (see “Closing the Gap,” RuralCooperatives July/August 2002, and “Legg Sees Vital

Role for Utility Co-ops,” September/October 2002). TheBush administration is emphasizing the promotion ofrural broadband in its domestic policy. President GeorgeW. Bush recently said, “In order to make sure the econ-omy grows, we must bring the promise of broadbandtechnology to millions of Americans . . . broadband tech-nology is going to be incredibly important for us to stayon the cutting edge of innovation here in America.”

USDA Rural Development has been making loans forbroadband through its regular telecommunicationsassistance as well as the Broadband Pilot Program.With the new fully-funded Broadband Program, it ishoped that many telecom cooperatives and others thatup to now have held back from adopting high-speedtransmission will move to bring the advantages of thenew technologies to their members.

Hilda Gay Legg, Administrator of the Rural UtilitiesService, which administers the new program, believesthat broadband will play a key role in rural economicgrowth. “We’ve only scratched the surface of what thistechnology can do,” she says “And we intend to be inthe forefront of developing it to bring its benefits andadvantages to rural America.” ■

USDA providing $1.4 bil l ion to expand rural broadband


UVa Hospital is the hub of a telemedicine network connecting 35 hospitals, clinics, schools, prisons and college campuses. USDA graphic by Steve Thompson


USDA and the Bush Administration are proposing toincrease spending by $44 million to develop geographicinformation systems (GIS). The technology is based onthe Global Positioning System (GPS), which uses signalsfrom special satellites to determine where a smallreceiver is located (within yards) on the face of theearth. GIS would provide both government and its cus-tomers with new tools to accomplish tasks as diverse asdetermining eligibility for single-family housing loans, toevaluating prospective project sites in regard to nearbyenvironmental hazards.

The new technology will make it possible to do sometasks in seconds which might otherwise take hours. Itbrings together GPS, which can tell you where you areat the push of a button, with the latest in computer soft-ware technology. Experts say that as the new technolo-

gy matures, it will prove highly useful to cooperativesand other rural businesses.

GIS combines GPS with computer databases andother software to build specialized maps and developtables and graphs pertaining to a wide variety of issues.One piece of software, called PIX, is a Web-based appli-cation developed specifically for USDA multi-familyhousing programs. It enables USDA to immediately iden-tify the location of a multi-family housing project whenthe owner has decided to pay off a Rural Housing Ser-vice loan. This allows quick notification of nonprofitsand government agencies, as required by federal law.Another GIS function spatially locates all data in a newRural Development data “warehouse,” making it possi-ble to retrieve information based on selected geograph-ic criteria, or through a map. ■

$44-mill ion push for new geographic technology

tages telemedicine could bring to ruralphysicians, clinics and hospitals in serv-ing the needs of their far-flungpatients. Back home in Charlottesville,they formed an ad-hoc group to pro-mote a system that would tie the manyrural hospitals and clinics in Virginia.

Their activities quickly led to a smallstudy group, which paved the way forlaunching the program in 1995. Thesystem began formally seeing patientsin 1997. “We started slowly,” she says.“We weren’t looking to compete in

areas that havecomprehensivehealth services. We wanted toreach patients thatdidn’t have thoseservices.”

That meantlooking for inde-pendent rural hos-pitals and clinicsthat needed theadvantages theyhad to offer. It alsomeant findingfinancing: UVaraised the funds tobuild their centraltelemedicine facili-ties, but coming up

with the money to hook up and equipfar-flung clinics and hospitals was theresponsibility of the participating insti-tutions. The funds have come from awide variety of sources, includingUSDA Rural Development’s Commu-nity Facilities and Rural Utilities pro-grams. Through its Distance Learningand Telemedicine Program, a RuralUtilities Service program, Rural Devel-opment has made two grants totalingover $300,000 to expand the UVa sys-tem, as well as a Community Facilities

loan of $324,500 to enlarge an existingtelemedicine facility.

Currently, the UVa telemedicinesystem has 35 participating facilitiesacross the Commonwealth of Virginia.These sites include community clinicsand hospitals, schools, prisons and oth-er campuses in the state’s universitysystem. This spring, UVa plans to addanother eight sites in remote andmountainous western Virginia, wherethe population density is less than 10persons per square mile.

Quality health carePatients who take advantage of the

system have access to some of the bestcare available. UVa Hospital is rankedamong the top 100 hospitals in thecountry by one study, and 42 doctors atthe facility were ranked among Ameri-ca’s best in a survey of their peers.They include the current president ofthe American College of Cardiologyand a former president of the AmericanCollege of Surgeons.

According the Dr. Rheuban, the sys-tem has so far made possible more than5,200 remote medical consultations.And telemedicine is not used just fordiagnosis and treatment, but also forproviding continuing education for


The control room of Winchester Medical Center’s telemedicinefacility. Telemedicine hook-ups are used not only for remote diag-nosis and treatment, but also for continuing education of health-care professionals. Photo courtesy of Winchester Medical Center


Jim Wadsworth, Program LeaderEducation and Member RelationsUSDA Rural Development

Editor’s note: For more on this and relat-ed topics, see Cooperative Information Report58, “Assessing Performance and Needs ofCooperative Boards of Directors,” on-line at:www.rurdev.usda.gov/rd/pubs/#rbs , or e-mail [email protected] to request ahard copy or with questions.

hallenging business timesalways place boards ofdirectors under increasedpressure to perform well,but the current operating

environment is especially tough. Morethan ever, cooperative directors musthave a solid grasp on their fiduciaryand other major responsibilities. Thesewere outlined well by USDA’s JamesBaarda in a recent series of articles inthis magazine (see July/August 2002and subsequent issues), in which hedescribes the circle of responsibilitiesof directors, the high standards theyare held to and the unique challengesthey face given today’s circumstances.

It is vitally important for membersand directors to read these kinds ofarticles or attend workshops that coversuch material. Equally important ishow directors work together as a groupin board meetings. It is critical thatboard meetings be conducted correctly.To do so, directors need to take a col-lective look at how well the boardoperates during its meetings—its effi-ciency, effectiveness and productivity.

Well-planned and conducted meet-ings make the most efficient use of time

in accomplishing necessary tasks. Mostdirectors of cooperatives can ill affordto waste time in board meetings whenthey also have other important respon-sibilities on their own operations.

Assessing board meeting productivi-ty from time to time is an imperative.One way to assess the productivity ofboard meetings is through an assess-ment exercise. To do this correctly, eachdirector should complete a board meet-ing assessment by answering a numberof questions about the board’s meetings.

The idea is to gain a consensusabout weak areas that need improve-ment. The manager may also partici-pate in such an exercise. The managerplays an active part during board meet-ings and may identify problem areasoverlooked by directors.

Areas to assessA number of important areas should

be assessed, including: use of an agen-da, procedural conduct, use of reviewmaterials, committee reporting, use ofboard meeting minutes and discussionparticipation. To gain a clear picture onhow well the board performs in theseareas, directors (and possibly the man-ager) should examine a number offunctions. This article provides a list of21 statements that could be included ina review. A board may decide toinclude other statements as well.

Each item should be carefully consid-ered by directors, who should make oneof three responses: 1) no improvementis needed; 2) uncertain, could be better;or 3) improvement is a must. Evaluatingthe statements on an individual basis isthe first part of assessment.

Following evaluation, directors

should discuss the statements that got aresponse of “uncertain” or “improve-ment is a must” by one or more direc-tors. The discussion should center onways to improve that area if it isdeclared to be a significant problem.Another option is for the board to use aspecial committee to consolidate theassessments and provide a report to thefull board prior to the discussion. Somefunctions to assess:

1. The meeting agenda andrequired review materials (managementreports, committee reports, financialreports, other materials, etc.) are sentto directors prior to the meeting toprovide ample time for review (at leastseven days ahead of the meeting).

2. Major topics, items for discus-sion and timing of such issues are orga-nized and identified on the agenda.

3. Meeting conditions are adequate(comfortable seating and room temper-ature and adequate lighting so all direc-tors can make eye contact with eachother).

4. All directors are prepared for themeeting (they review the required pre-pared materials ahead of time).

5. The chairperson opens andadjourns the meeting promptly at thescheduled times.

6. The chairperson keeps the meet-ing moving according to the agenda andin accordance with correct parliamentaryprocedure, given cooperative policies.

7. Agenda changes are discussedand approved by the board.

8. Enough time is allowed for dis-cussion and action of each agenda item.

9. The chairman guides the dis-cussion, encourages comment from all directors and keeps the

C

Tune-up your meet ingsPeriodic analysis is necessary to ensure that cooperativeboard meetings are efficient, effective and productive


discussion focused on the topic.10. Just before adjournment, a sum-

mary of the business conducted isreviewed.

11. Clear and concise board meetingminutes of each meeting are prepared,presented and accepted or modifiedaccording to board policy.

12. Cooperative employees and staffare occasionally invited to the meetingby the general manager to providetechnical support.

13. Committees report to theboard at appropriate times.

14. Chairperson allows for ques-tions from committee members.

15. The board has an “opendoor” policy for regular meetings.Any member may attend (exceptwhen the board is in executivesession).

16. Attendance is taken atmeetings (every director shouldattend at least 90 percent ofscheduled board meetings).

17. Chairperson is informed inadvance when directors plan to beabsent from a regularly scheduledmeeting.

18. Each director participates andcontributes to discussions during boardmeetings; a minority of directors doesnot control most discussion.

19. Directors are courteous towardeach other, management and guests.

20. During long meetings, breaks areused to avoid disruptions in procedure.

21. Time is scheduled for a boardexecutive session, if required.

For the most part, these statementswill provide a fairly good assessmentof how well the board operates as agroup and help to identify problemareas needing improvement. Such anassessment needs to be conducted ona specific schedule because boardmembership and officer makeup peri-odically changes. What worked wellwith one board might not fit another.Evaluation should be conducted atleast annually and results compared toprevious assessments to measureprogress.

This same process could be fol-lowed for board committees.

Other important areas to examine Other aspects of board meetings can

be measured. At a time when member-ship in many cooperatives is decreasingalong with the drop in the number ofproducers, cooperative boards musttake extreme care to ensure that theirmember constituents are being ade-quately and properly represented atboard meetings.

Directors, at times, tend to become

absorbed with the interrelationships ofthe board itself and with day-to-daymanagement issues. If not checked, thiscan result in a loss of member repre-sentation at board meetings.

Directors need to take a step backonce in a while and ask themselves:how well are they representing theirconstituent members? Are theywrestling with difficult issues and mak-ing tough decisions?

Some functions to assess includemaking sure that:

■ directors adequately voice theconcerns of their constituents on dis-tinct issues or problems;

■ full and open discussions takeplace about how constituents’ views maydiffer from the board’s, or about howthe needs and views of one group ofmembers may vary from another group;

■ constituents have trust in the waythe board is representing them andproperly conducts board meetings.

Some cooperative boards follow par-liamentary procedures, such as Robert’s

Rules of Order. If so, the board shouldassess how well the individual steps of theprocedures are carried out by the boardchair and followed by members. Thismeans going beyond the assessment offunction 6 and getting more into thedetails of the procedural methodology.

A board that attempts to follow astandard procedure, but deviates from iton a regular basis may be less productivethan it would be if it didn’t try to follow

the procedure. Boards followingspecific procedures should periodi-cally assess the steps of the methodit’s using to conduct its affairs.

Excessive debate over someissues can bog down board meet-ings. Sometimes a director cannotlet an issue go even after it seems tohave been settled or, at least, tabled.Such action can severely interferewith conducting the rest of theboard meeting. If this happens on aregular basis, the cooperative willultimately suffer from the board’sslower decision-making on otherissues. If this occurs regularly, assesswhy and take steps to alleviate theadverse behavior.

Tailor topics to your co-opThe suggestions in this article will

not provide assessment tools needed byeach and every cooperative board. Theintent is to remind cooperative direc-tors of the importance of having pro-ductive and effective meetings.

Directors should devise a listing offunctions that address the specificneeds of their cooperative and theirboard meeting practices. Then, period-ically assess how well the board is oper-ating as a unit.

Not only must today’s cooperativedirectors be well trained and extremelyknowledgeable about their coopera-tive’s industry and a multitude of busi-ness practices, but they must also beable to meet and work together tojointly conduct the cooperative’s busi-ness as efficiently as possible. In anincreasingly competitive operatingenvironment, correct and quick coop-erative board decisions must be theorder of the day. ■

For an effective board meeting, the chairperson shouldguide the discussion, encourage comment from all direc-tors and strive to keep discussion focused on the topic. USDA Photo by Ken Hammond

Organic co-op plans new HQ as sales soar

Despite growing success, thenation’s largest organic farmerscooperative will stick to its homebase at LaFarge, a community of 780residents in western Wisconsin.Organic Valley Family of Farms,which now has more than 500 members in 17 states, from Maine toCalifornia, plans to build a $4 mil-lion headquarters at LaFarge thisyear. “It’s proof of our dedication tothe rural community,” said CEOGeorge Simeon. “Part of our missionis to be true to rural development

and rural towns.” The cooperativewas created 15 years ago by a halfdozen family farms.

Sales for 2002 jumped more than$25 million, to $125 million. By 2005,sales are projected to hit $215 million.Co-op leaders credit its success to itsability to provide a stable, equitableand sustainable level of pay for farmer-members. Organic Valley farmers pro-duce more than 130 organic foods,such as milk, butter, cheese, creams,eggs, produce, juice and meats sold infood cooperatives, natural food storesand supermarkets.

“They’ve done a great job,” saidBob Cropp, retired dairy economistwith the University of Wisconsin.“It’s a great success story achievedthrough unorthodox methods underthe leadership of an unorthodox executive.”

NORPAC buying Simplot’svegetable processing plant

Consolidation in the vegetablepacking industry has resulted in few-er and larger customers, promptingNORPAC Foods, Oregon’s largestfruit and vegetable processor to lookto expanding its production capacity

and marketing muscle.This spring, the Stayton,Ore.-based cooperativeexpects to close on a pur-chase of a vegetable pro-cessing plant and severalbrand names owned byJ.R. Simplot Co. atQuincy, Wash. The Simplot plant packsfrozen vegetables thatare sold primarily to

food service and ingredient markets.The plant, built in 1990, employs

450 full-time and 350 seasonal work-ers. In an alliance with Simplot,NORPAC plans to buy the license tomarket several vegetable brands thatwould also be sold and distributed toother customers through Simplot’smarketing network. NORPAC’s lastexpansion was in the 1980s, when itbuilt a plant at Hemiston, Ore. At itsfour plants, NORPAC has a work-force of 1,000 year-round employeesand adds another 3,500 seasonalworkers at peak processing season.

DFA boosts net margins;Camerlo succeeds Brubaker

Just as its dairy-farmer membershave cut production costs, so too hastheir marketing arm, Dairy Farmers ofAmerica (DFA), trimmed its operating

costs, resulting ingreater returns tothe membershipin 2002. Long-term, interest-bearing debt wascut $78 million,and memberequity jumped $8million, to $631million. DFA paid

$49 million in patronage and equityretirement, in 2002.

The nation’s largest dairy coopera-tive marketed a record 47.8 billionpounds of milk, up nearly 5 percent.Although declining milk prices cutDFA’s revenues to $6.4 billion, it stillgenerated $85.9 million in earningsfrom its joint ventures, $27.5 millionmore than in 2001. The AmericanDairy Brands division, which manufac-tures Borden brand cheese products,exceeded budgeted earnings (beforeinterest and taxes) by 41 percent.

The recent annual meeting markeda historic change of the 51-memberboard, with the election of TomCamerlo, a veteran dairy cooperatorfrom Florence, Colo., as chairman. Hesucceeds Herman Brubaker of WestAlexandria, Ohio, who had spent fiveyears at the helm. Brubaker commend-ed DFA’s members and staff for their“courage and dedication in unifyingthe dairy industry though cooperativeprinciples. We have built a new co-op


N E W S L I N ECompiled by Patrick Duffey

Tom Camerlo

model that is member driven and aleading food company. The greatestchallenge ahead will be for us to keeppace and take the risks required by ademanding and competitive market-place.” While many things havechanged, he said, “the right of farmersto cooperatively market their milk isthe same as it was in 1922 when Cap-per-Volstead was enacted. ” He urgedmembers to never loose sight of their“cooperative vision.” Brubaker hadearlier been chairman of Milk Marketing Inc. in Ohio, one of DFA’spredecessor cooperatives.

Meanwhile, a pair of efforts toexpand its markets in the Northeast arecoming under state and federal scruti-ny. The proposed merger between H.P.Hood, New England’s largest indepen-dent dairy, and National Dairy Hold-ings (half owned by DFA) would createthe nation’s second largest dairyprocessor. DFA would become theexclusive supplier to Hood under along-term contract. The merger wouldcreate a new entity that would haveannual sales of about $3 billion, controlabout 90 percent of New England’smilk and market Hood’s popularbrand-name products.

In another regional development,Vermont’s St.Albans Coopera-tive Creamery hasbecome DFA’ssecond membercooperative fol-lowing a similaragreement withDairylea Cooper-ative of Syracuse.St. Albans will

invest in DFA’s equity program andgain one seat on the board of DFA,two on its Northeast council and threewith Dairy Marketing Services (DMS).DMS was formed two years ago byDFA and Dairylea to handle dailyactivities associated with milk assemblyand transportation for the coopera-tives. St. Albans will retain its corpo-rate identity and key customers. Lastyear, it marketed more than 1.5 billionpounds of milk for its 518 dairy farmer

members in Vermont, New York andNew Hampshire.

Chairman Brubaker said the agree-ment “strikes at the very heart of theage-old concept of cooperation. Cap-per-Volstead allows dairy farmers towork together for mutual benefit andthat’s exactly what this co-op to co-opmembership with St. Albans will do.”

GROWMARK, TruServ formlocal retail pact in Ontario

In a cross-border alliance, TruServCanada Cooperative of Winnipeg,which operates a chain of 600 memberhardware stores, will now provide con-sumer supplies to GROWMARK’s 29FS member companies and their 150stores, including the Country Depotfranchises in Ontario. Agricultural pro-duction supplies, such as fuel and fertil-izer, for the local co-ops will still comefrom GROWMARK. Jim Hoyt,GROWMARK’s executive director forCanadian operations, will join theTruServ board.

In the deal, TruServ also acquires theCountry Depot trademark associatedwith GROWMARK’s retail business nOntario. Retail products range fromwork wear and lawn and garden suppliesto hardware and pet foods. Hoyt saidthe pact would “form a strong retailpresence in the Canadian marketplace.”The pact is similar to GROWMARK’salliance with Land O’Lakes (LOL),which gives the FS member companiesaccess to LOL livestock feeds.

Agway eyes sale of remaining assets

Efforts to emerge from Chapter11 bankruptcy continue to challengeAgway, New England’s regional farmsupply and food marketing coopera-tive based at Syracuse, N.Y. Anationally known investment bankhas been hired to evaluate whether toreorganize or sell Agway’s threeremaining divisions: Country Prod-ucts, Feed and Nutrition and AgwayEnergy. The energy division was notpart of the Chapter 11 filing.

While Agway officials say they neither have plans to shut down the

businesses nor liquidate them under aChapter 7 bankruptcy, a controlled ororderly liquidation may be in the off-ing. Jeff Love, an attorney for thecooperative, said its goal was to derivethe most value from the businesses forcreditors. To strengthen that idea,Agway has asked the court to approve acomplex plan of bonuses, capped at$6.4 million, for 50 to 80 key employ-ees so they won’t bolt the companyduring this transition period.

Donald Cardarelli, Agway’s retiringchief executive officer, earlier received$1.6 million in severance pay plus extracompensation for his executive careertransition service under a planapproved by the board, unsecuredcreditors’ committee and the bankrupt-cy court. Seven Agway employees whoearlier shared bonuses totaling$546,000 for helping the cooperativeprepare chapter 11 bankruptcy paperslast fall, will have to repay them fromfuture bonuses.

Alto Dairy trims 90 JobsCiting continued weak market con-

ditions and shifting production fromthe traditional American cheeses tomore Italian mozzarella to meet mar-ket demands, the 800-member AltoDairy Cooperative at Waupun, Wis., istrimming about 16 percent, or 90 jobs,from its workforce of 550. Dean Som-mer, vice president of operations, saidprices paid to members have beendown since the fall of 2001 and thecooperative is experiencing losses forthe first half of fiscal 2003. Sales forfiscal 2002 reached $432 million. Thecooperative produces 550,000 poundsof cheese a day and hopes the switch tomozzarella will better prepare it forthe future.

Mtn. Lamb Co-op, Rosen forge pact

Lamb marketing in the UnitedStates is being boosted through apact between Mountain State LambCooperative and B. Rosen & SonsInc., a major fabricator and lamb andveal processor and distributor. Thenew venture will operate as Mountain


Herman Brubaker

States/Rosen LLC (MSR). The coop-erative is owned by and serves pro-ducers in 11 western States. The ven-ture will oversee all phases of thesupply chain, from farm to fabrica-tion and on to the retailer and otherdistribution channels, includingrestaurants and cruise lines. Themanagement team will come fromboth businesses.

NMPF seeks voluntary planto balance supply, demand

The board of directors of NationalMilk Producers Federation (NMPF)has endorsed development of a three-part, voluntary program aimed atbringing U.S. milk production morein line with demand to stabilize andstrengthen producer prices. Detailsare being developed by NMPF’s eco-nomic policy staff, subcommittees andrepresentatives of member coopera-tives. The plan features an assistanceprogram to stimulate exports and clearinventory from the U.S. marketplace,a market reduction program withincentives to producers to reduce theirmilk marketings, and a herd/cow purchasing program aimed at reducingthe number of dairy cows nationally.The plan is dubbed “CooperativesWorking Together.” Jerry Kozak,NMPF president and CEO, says “Ourtask is to construct a producer-ledeffort that pays dividends for manyyears to come.”

ND co-op plans DC restaurant

The Ultimate Value-Added Cooper-ative, under the aegis of the NorthDakota Farmers Union, is planning toopen the “Agraria” restaurant in Wash-ington, D.C., this summer. It will fea-ture foods from family farms through-out the country, but mostly pasta, beefand breads from North Dakota. Bisonwill be featured as a specialty item. Therestaurant’s menu will be used to edu-cate urbanites about family farm prod-ucts and a different farm family will befeatured each month. Investors must bemembers of both the Farmers Unionand the cooperative.

NC growers market biodiesel

A grant from the Golden LEAFFoundation has enabled the North Car-olina Grain Growers Cooperative atRocky Mount, N.C., to launch abiodiesel fuel business. Valeria Lee,foundation president, said the openingshipment of 20,000 gallons of soy oilfrom West Central Soy Cooperative inIowa was enough to produce almost 1million gallons of biodiesel fuel whenblended with petroleum. Sam Lee, thecooperative’s CEO, said the supplywould allow the cooperative to test themarket and build a $40 million process-ing plant, which will include a soybeanextraction facility. The eastern NorthCarolina plant will be similar to WestCentral’s facility, which has a 15-mil-lion-gallon capacity. The foundation hasagreed to invest $10 million in thecooperative’s $40 million facility.Although slightly more costly thandiesel, proponents say biodiesel is a better lubricant, extends machinery lifeand reduces maintenance costs.

Olsen to leadTree-Top co-op

Dick Olsen has been elected chair-man of Tree Top Inc., an apple-process-ing cooperative at Selah, Wash., ownedby 1,200 member-growers. He and hisbrother operate Olsen Brothers Ranch-es Inc. near Processor. Fred Valentinehas been elected vice chairman andBruce Allen secretary-treasurer.

Mid-Missouri Energy raises $17 million

Producers have agreed to investnearly $17 million during the initialequity drive by the Mid- MissouriEnergy (MME) ethanol cooperative.“We are ecstatic over these results,”said Ryland Utlaut, MME president.“We are told that $15.3 million is themost any ethanol project in the nationhas raised in its initial equity drive. Forus to have surpassed that record isnothing short of amazing.”

The co-op needed $12 million inproducer equity to be 51 percentfarmer-owned, a state requirement to

qualify for ethanol-production incen-tives. MME Treasurer Ron Linnemansaid producer response “speaks to thepotential out there.” Utlaut said thissuccess has lead the board to believethe ethanol project can be a 100 per-cent farmer-owned cooperative.

The initial equity drive, which endedMarch 31, was extended for another 60days to allow new investors to enlist, orexisting ones to increase their invest-ment . “We must comply with the BlueSky Law in other states regarding thesale of equity,” said Patty Kinder, secre-tary and project coordinator. “Extend-ing the offer also allowed time to meetrequirements in various states fromwhich we received producer interest.”

David Kolsrud, equity drive manag-er, said the effort “disproves the notionthat farmers don’t have the money toinvest. This says otherwise!”

Although several sites were underconsideration, Carrollton was the preferred site for the 40-million-gal-lon-per-year plant, said Vice PresidentDon Arth. The facility would tap theabundant supply of corn grown in theregion. It would use nearly 15 millionbushels of the approximately 70-plus-million bushels grown in the area.

For more information on theethanol project planned for west-cen-tral Missouri, contact the MME Website at www.midmissouirenergy.com.

Wilson headsco-op foundation

The board of trustees for the Coop-erative Foundation at St. Paul, Minn.,has chosen Patricia Keough-Wilson,director of communications for Minn-Dak Farmers Cooperative at Wah-peton, N.D., as its chair. Jean Jantzen,retired from CHS Cooperatives andformer chair, continues as vice chair ofthe board. The foundation supportsunique and innovative cooperativedevelopment and education projectsthroughout the Upper Midwest.


Farmland turns $29 millionprofit for second quarter

Farmland Industries, seeking toemerge from Chapter 11 bankruptcy,reported $29 million in second quarterearnings, which compares to a loss ofmore than $49 million for the sameperiod a year ago. It also reported salesof $1.6 billion for the first quarter, up 5percent from a year earlier. FarmlandCEO Bob Terry says the reorganizationis on course, and that cash flow now“significantly exceeds” what is requiredin its borrowing agreement. Since filingfor reorganization under the bankrupt-cy court, Farmland has reduced debt by$130 million, to $270 million. Accord-ing to recent press reports, the co-opwill soon offer a plan to reorganizeFarmland around its pork processingoperation—Farmland Foods—whichearned $8.7 million in the second quar-ter. Farmland National Beef—which isnot part of the bankruptcy filing—earned $5.8 million in the quarter.

In other Farmland news, it has soldthe bulk of its fertilizer assets in acourt-approved auction to Wichita-based Koch Nitrogen Co., a subsidiaryof Koch Industries Inc., for $293 mil-lion. Farmland anticipates the sale willbe formalized later this spring. Farm-land’s $1 billion fertilizer business oncemade it one of the largest manufactur-ers in the United States.

The deal included assets in Kansas,Iowa, Oklahoma and Nebraska. It alsocovers a dozen Midwest terminals plusFarmland’s half share in Farmland MissChem Ltd., which owns an ammonia

plant in the Republic of Trinidad andTobago. Koch also has a one-yearoption to buy Farmland’s fertilizeroperation at Lawrence, Kan.

AMPI sales top$1 billion for ‘02

Despite dairy markets hovering at25-year lows, Associated Milk Produc-ers Inc.’s (AMPI) fiscal 2002 sales hitthe $1 billion mark, milk volume wasup 3 percent, to 5.2 billion pounds, andthe co-op returned $13.3 million inequity payments to members in 2002.The 4,600-member cooperative record-ed $1 million in earnings from its 14manufacturing plants in the UpperMidwest. “Our members must succeedin order for our business to succeed,”said President Paul Toft from RiceLake, Wis. “Our strong commitmentindicates we are a solidly built farm-to-market business that is here to stay.”

New board, CEO make changes at Ocean Spray

Saddled with four years of below-cost industry returns and a gluttedcranberry market, major changes havebeen made at Ocean Spray, thenation’s major cranberry marketingcooperative. First, a majority of grow-ers voted to cut the board from 15 to12 directors and to seat nine newdirectors and 3 incumbents.

Then, the new board chose RandyPapadellis, Ocean Spray’s Presidentand Chief Operating Officer, as interimchief executive officer. He has begun arestructuring of the management team

by laying off four of 14 vice presidents,eight other executive level managersand another 46 employees. Papadellisreplaces Barbara Thomas, who wasdoubling as an outside director andinterim CEO until she lost her seat onthe board at the annual meeting. Shehad replaced Robert Hawthorne, CEOfor three years before he resigned inNovember.

Due to the crop surplus, member-ship, which stands at 800 cranberryand 125 grapefruit growers, has beenclosed for the past two years. Thecooperative’s sales have slipped, from$1.5 billion in 1997 to just over $1billion in 2002, in part because Pepsiended its agreement to distribute thecooperative’s single-serve bottles ofjuice. The cooperative has sinceimplemented its own new distributionsystem. Earlier, the former boardrejected an $800 million takeover bidfrom a Wisconsin competitor. Thenew board has announced it willexplore several options for the futureof the company.

Dividend allocationrule focus of legislation

Legislation to clarify the dividendallocation rule is being supported byseveral cooperative trade associations,including the National Council ofFarmer Cooperatives (NCFC). Sena-tors Charles Grassley (Iowa), chair-man of the Senate Finance Commit-tee, and Max Baucus (Mont.), rankingminority member, are part of a bi-partisan group of senators and con-


which is 75 percent owned by the co-op and 25 percent byAmerican Foods Group.

The co-op will make sure cattle get to the plant and isresponsible for overall marketing and brand development. Theannual, ongoing capital need for the operation is $30 million.The business should produce $350 million in annual sales.

The business has been structured so that “if it does notmake money, the producers don’t make money, but neitherdoes American Foods Group,” says Brinkmeyer. “They havemade a commitment of equity and management expertise tomanage the plant and sell the product. If it does not work,they aren’t rewarded.

“On the flip side, the more money they make, the moremoney the co-op makes. We think it is a sound businessarrangement that provides risk and reward to both parties.Reward will go to 875 cattlemen who have put their moneyon the line and to members of Iowa Cattlemen’s Associa-tion,” whose 10,000 members will benefit fro m a more bal-anced beef supply created by the co-op’s operation.

Further, the overall beef industry in and around Iowa willhave a more competitive edge thanks to the co-op. Mostimportant, he said, “consumers will benefit from a newsource of a high-quality, consistent product, backed by thecommitment and integrity of our co-op.” ■

New Kid continued from page 8


gressmen who favor eliminating the"triple tax" now imposed on stockdividends paid by cooperatives. Thistax treatment penalizes cooperativescompared to other businesses andlimits the ability of cooperatives toraise equity capital needed to modernize their operations, takeadvantage of value-added marketopportunities and compete globally,says NCFC President David Graves.

"Eliminating the tax wouldstrengthen the ability of farmers tojoin in cooperative self-help efforts toimprove their income from the mar-ketplace, better manage risk, takeadvantage of potential new marketopportunities, maintain their inde-

pendence and compete more effec-tively in a changing global economy,"says Graves.

Foremost salesreflect dairy ills

Low dairy commodity and milkprices for its 4,300 dairy-farmer mem-bers was reflected in Foremost Farms’sales for fiscal 2002, which declinedfrom $1.33 billion in 2001 to $1.16billion for 2002. The Wisconsin coop-erative, based at Baraboo, showed anoperating loss of $3.7 million, but thatwas offset by tax credits, resulting in anet income of $2.2 million vs. $10million in 2001. The cooperativeoperates 24 manufacturing facilities

and serves dairy farmers in sevenUpper Midwest states.

Iowa hog co-op set toopen processing plants

A two-year-old value-added coop-erative formed by 1,400 Iowa hogproducers hopes to begin operatingthree processing plants and a truckingbusiness this summer. It is hopedthese businesses will help shore upsliding prices members have beenreceiving. Majestic Food Group LLC,a wholly owned subsidiary of IowaPremium Pork, will purchase Pinna-cle Food Group’s two Iowa PackingCo. pork processing plants in DesMoines, the Rosewood Farms pro-

of Government named WausharaCounty and Cooperative Care as oneof 99 semi-finalists (out of a pool of800 applicants) in the prestigious 2002Innovations in American GovernmentAwards. Recently, Wisconsin RuralPartners named Cooperative Care asWisconsin’s Top Rural DevelopmentInitiative for 2003.

Challenges on the road aheadAll this attention may seem rather

heady, but there is more work to bedone. As a new business, CooperativeCare has experienced its fair share ofgrowing pains, including the resigna-tion of its initial executive director torun a family business and the removalof a board member for work-relatedperformance issues.

Cooperative Care’s contract withthe county enables its member-ownersto earn a living wage and receive bene-fits. Initially, this cost the county 40percent more than the previous sys-tem. “This system is not for publicbodies looking to save on costs,” saysLucy Rowley of DHS. However, if anagency is interested in developing asustainable pool of committed careproviders, then this might be anoption. Not only should public agen-cies assure quality care for clients, we

must create a better standard of livingfor low-income people.”

Currently, the county contract com-prises 90 percent of the co-op’s revenuestream. Due to a state budget crisis anda resulting budget crunch for WausharaCounty, DHS has twice renegotiateddownward the reimbursement rates toCooperative Care. The board and exec-utive director are keenly aware of theneed to increase the number of privatepay clients to sustain revenue and maintain member benefits and wages.

The rapidly rising cost of healthinsurance is another major concern.Prior to forming the co-op, 31 per centof care providers said they had nohealth insurance. On the advice of alocal insurance agent, the business planallotted $2,000 per year, per person for

basic coverage. This quickly provedinadequate, with a 25-percent rateincrease in 2001 and 16-percent rateincrease in 2002. Presently, only 14members out of an anticipated 35 carryinsurance through the co-op due to ahigh out-of-pocket expense.

Board Treasurer Karen Taylor isproud of the accomplishments ofCooperative Care. “For so long, I haveworked hard to help people to stay athome,” she says. “It is nice to finallyhave health insurance and benefits likea paid vacation and mileage reimburse-ment. But what I really like is that wecare providers are also taking care ofeach other.”

Board President Donna Tompkinsechoes Taylor’s sense of accomplish-ment. “When my brothers, who are inbusiness, heard that I was elected boardpresident, they couldn’t believe it.They wanted to see the business planand the financial statement to makesure this was for real. After all, I raisedseven children. What did I know aboutbusiness?”

“I have enjoyed getting to know myfellow care providers over the past fewyears as we worked together to developCooperative Care,” Tompkin contin-ues. “It has been an exciting experienceforming our home care business.” ■

House Calls continued from page 12

Cooperative Caremission statement

The mission of CooperativeCare: “To provide high-qualityhome-based care to the elderlyand people with disabilities, whileproviding fair wages and benefitsto the people caring for them.”

cessing facility at St. Joseph, Mo., andthe ForSure Transport trucking oper-ation in Des Moines. Roger Coon,cooperative president from Lohrville,said the plants will suit the needs ofthe members in their attempts tobring their pork products closer toconsumers. The facilities can butcherabout 3,600 market hogs and 1,400breeding hogs a day.

Calcot makesprogress payment

Calcot sent an encouraging earlyspring message to its 1,700 Californiaand Arizona cotton growers in theform of progress payments for the2002 crop. The checks totaling $20.5million were in sharp contrast to twoyears ago, when the Bakersfield coop-erative’s board had to ask members toreturn season-opening advance pay-ments. President David Farley said theboard unanimously approved the pay-ment because of the cooperative’simproved market.

MMPA members get$1.9 million patronage

“The essence of our strong cooper-ative is reflected in the ability to makecash payments and maintain a com-

petitive pay price,” President ElwoodKirkpatrick of Michigan Milk Pro-ducers Association told members inannouncing $1.9 million in cashpatronage refunds. This is the eighthconsecutive year for making patron-age payments of at least $1.8 million.The cash represents 28 percent of the$6.8 million allocated taxable netearnings generated by the cooperativein fiscal 2002. The return represents100 percent from farm supply earn-ings and 25 percent of milk marketingearnings.

SW Farm Creditloans climb in ‘02

For the eighth consecutive year, fiscalgross loan volume for the Tenth FarmCredit District, based at Austin, Texas,set a new record in 2002. The bankserves 22 financing cooperatives in fiveSouthwestern states and loaned nearly$6.8 billion, up 13 percent from 2001and nearly 30 percent more than in fis-cal 2000. All of the volume growth wasin the district’s mortgage portfolio andtriggered in part by low interest rates.

David Holm to leadIowa Institute for Co-ops

The Iowa Institute for Coopera-

tives, thestatewide co-opcouncil at Ames,has selectedDavid Holm asits new executivedirector. Hereplaces LarryKallem, whorecently retired.Holm has beenwith the Institute

for the past eight years, having servedmost recently as its cooperative devel-opment director.

CorrectionIn production of the last issue of

“Rural Coopera-tives,” a photo wasmisplaced in aNewsline itemabout John Dillandsucceeding WaltWosje as the newgeneral manager ofMichigan Milkproducers Associa-tion. The correctphoto appears here. Dilland joined theco-op in 1975 and had been the co-op’sdirector of finance.


both physicians and patients. The UVasystem has broadcast thousands ofhours of education programming,ensuring that rural physicians can be asup-to-date about recent medical devel-opments as their urban counterparts.

Funding the infrastructure is not theentire problem, however. There is theissue of how clinical costs are billed andpaid when consulting physicians aremiles away, plus the problem of meetingongoing routine operating expenses inremote rural locations. Some medicalinsurance providers do not provide reim-bursement for telemedicine expenses.

Rheuban says that there are solu-tions, but that a “change in the culture”is necessary before billing proceduresbecome routine. Meanwhile, BlueCross/Blue Shield has made a grant of

$250,000 to UVa over five years to payfor telemedicine services to patientswho don’t have coverage.

Dheva’s experience is anything butunique. In the past six years, hundredsof patients in rural Virginia have bene-fited from the UVa system. Some, likeMarie Sanders, who lives in the south-western part of the state, are saved thebother and expense of being drivenseveral hours to a major city for a consultation, and staying overnight ata hotel. There is also a man who cameto a rural clinic with fever and anemia.He was seen by a blood specialist milesaway in Charlottesville, who foundthat he had a dangerous infection inthe heart caused by an undiagnosedheart defect.

Another patient in the southwest

part of the state was initially diagnosedwith shingles, a painful but not usuallylife-threatening viral disease. A special-ist, consulted through telemedicine,found that the man was actually infect-ed with flesh-eating streptococcus bacteria. Immediate treatment mayhave saved his life.

The Bush administration and Con-gress have recognized the usefulness ofrural broadband telecommunicationsnetworks, such as those that madethese stories possible. A new USDARural Development Rural Broadbandprogram makes $1.4 billion availablethis fiscal year alone for their buildingand expansion (see sidebar). By thetime Dheva becomes an adult, thetechnology that saved his life may be ascommon as cable television. ■

Rural Broadband continued from page 25

John Dilland

David Holm

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1032165 Rur Coop-May/June PDF - USDA Rural … Dr.V. Kurien, chairman of India’s National...

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