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COOPERATIVESCOOPERATIVESUSDA / Rural Development November/December 2006

How bike co-op went off track

page 16

Renewable energyis the oldest newidea to come alongin a long, long time.The dream of har-nessing the powerof the wind and theenergy of the sun isas old as mankind.

A hundred years ago, Rudolf Diesel was running engines onpeanut oil. About 80 years ago, Henry Ford predicted thatethanol was the fuel of the future.

For many years, cheap and abundant fossil fuels pricedthese and most other alternatives off the market. Today, how-ever, the potential of renewable energy is finally ready to beharvested.

On Oct. 12 in St. Louis, Mo., I had the privilege of listen-ing as President Bush addressed 1,500 leaders from agricul-ture, the renewable energy, automobile and oil industries, therailroads, state and local governments and investment bankerson the urgency of diversifying America’s energy supply (seepage 8).

The occasion was the “Advancing Renewable Energy: AnAmerican Rural Renaissance” conference. Sponsored jointlyby USDA and the Department of Energy, the conferencemarked a new era. The old phrase “alternative energy” needsto be retired. Why? Consider this:• Ethanol production is at 5 billion gallons per year and ris-

ing fast;• More than 10,000 megawatts of wind energy is being gen-

erated;• The biodiesel-production curve is headed almost straight

up, from 2 million gallons in 2000 to a projected 254 mil-lion gallons in 2006.

Yesterday’s niche “alternatives” are going mainstream.Across the spectrum — ethanol, biodiesel, wind, solar and

cellulosic ethanol — technological advances are reducingcosts and improving production efficiencies. While fossilfuels will continue to provide the bulk of the nation’s fuelsupply for decades to come, the outlines of a new energyeconomy are taking shape. For rural America, this is a his-toric opportunity.

It’s not always possible to put a price tag on opportunity,

but this time we can. Americans this year will spend more onimported oil than on every ear of corn, bushel of wheat, baleof hay, cow, hog, tomato, apple and orange combined. USDAcurrently projects the total value of U.S. agricultural produc-tion in 2006 at $273 billion, while U.S. oil imports for theyear will exceed $300 billion.

If we can replace 1 billion barrels — about 20 percent oftotal oil imports — with biofuels, that is a new market forAmerica’s farmers greater than this year’s projected net farmincome of $54 billion. Wind and solar power add even morepotential.

USDA is committed to helping rural America realize thispotential. Since 2001, USDA Rural Development has invest-ed in excess of $482 million in more than 1,000 ethanol,biodiesel, wind, solar, geothermal and other energy and ener-gy-efficiency projects. USDA as a whole has committed morethan $1.7 billion to renewable energy, bio-based products andenergy-efficiency investments.

The best news is that private investment is soaring, mar-kets are taking over and the renewable fuels industry isbeginning to move under its own power. America is blessedwith abundant energy resources. Once the price is right,these will find their way to the market. That is beginning tohappen now.

The transition to a new energy economy will take decades.But as President Bush has said on many occasions, Americacan beat its addiction to imported oil. We have, in fact, mademore progress on renewable energy in the last six years thanin the previous 30.

That’s no accident. It directly reflects the incentives provid-ed in the 2002 Farm Bill and the Energy Policy Act of 2005, aswell as the continuing commitment outlined in the President’sAdvanced Energy Initiative announced early this year.

This is important for our national security. It’s good forthe economy and the environment. For rural America, it isthe greatest opportunity for new markets, new investment,new jobs and wealth creation in our lifetimes.

It is exciting to be a part of it, and at USDA RuralDevelopment we look forward to working with you to turnrenewable energy into economic opportunity and an improvedquality of life in rural communities across America.

— Thomas Dorr,USDA Under Secretary for Rural Development n

2 November/December 2006 / Rural Cooperatives

C O M M E N T A R Y

New Energy Sources: Big Deal for Rural America

Thomas Dorr at the opening of a biodieselplant in Delaware. USDA photo by KathyBeisner

Rural Cooperatives / November/December 2006 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 $23 per year. Postmaster: send addresschange to: Rural Cooperatives, USDA/RBS, Stop3255, Wash., DC 20250-3255.

Mention in Rural COOPERATIVES of company andbrand names does not signify endorsement overother companies’ products and services.

Unless otherwise stated, contents of this publicationare not copyrighted and may be reprinted freely. Fornoncopyrighted articles, mention of source will beappreciated but is not required.

The U.S. Department of Agriculture (USDA) prohibitsdiscrimination in all its programs and activities onthe basis of race, color, national origin, age, disabili-ty, and where applicable, sex, marital status, familialstatus, parental status, religion, sexual orientation,genetic information, political beliefs, reprisal, orbecause all or part of an individual’s income isderived from any public assistance program. (Not all prohibited bases apply to all programs.) Personswith disabilities who require alternative means forcommunication of program information (Braille,large print, audiotape, etc.) should contact USDA’sTARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA,Director, Office of Civil Rights, 1400 IndependenceAvenue, S.W., Washington, D.C. 20250-9410, or call(800) 795-3272 (voice), or (202) 720-6382 (TDD). USDAis an equal opportunity provider and employer.

Mike Johanns, Secretary of Agriculture

Thomas C. Dorr, Under Secretary,USDA Rural Development,

Jack Gleason, Administrator, Rural Business-Cooperative Programs

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?Call (202) 720-6483, orFax (202) 720-4641, Information Director,This publication was printed with vegetable oil-based ink.

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COOPERATIVESCOOPERATIVESNovember/December 2006 Volume 73 Number 6

p. 4

p. 8

p. 16

p. 20

O n t h e C o v e r :

Workers didn’t just produce bicycles and accessories at the BurleyDesign Cooperative in Oregon, they also owned it until late last summer.A number of problems led to its demise and recent sale. See page 16. USDA photo by Stephen Thompson

F E A T U R E S

4 Dairy DilemmaBan on rBGH use by Tillamook sparks conflictby Thomas W. Gray

8 Promise of renewable energyfocus of St. Louis conferenceBy Stephen Thompson

12 Outside Interests Put Money on TableEthanol was built on cash from farmers and their neighbors;But the boom is pushing them aside in favor of deeper pockets

15 All co-ops must use new tax form

16 Bike Co-op Goes Flat Difficulties faced by worker-owned bike co-opoffer lessons for others of potential business pitfalls By Stephen Thompson

20 Magnifying the Message Co-op Month efforts spread the word about benefits of producer- and user-owned businesses By James Wadsworth

25 Fading FortuneInvestor-owned growth spurt pushes co-ops off Fortune 500 Bruce J. Reynolds & David S. Chesnick

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

11 MANAGEMENT TIP23 VALUE-ADDED CORNER26 SPOTLIGHT27 CO-OP DEVELOPMENT ACTION29 NEWSLINE41 2006 ANNUAL INDEX

http://www.rurdev.usda.gov/rbs/pub/nov06/nov06sec2.pdf





Dai ry D i lemmaBan on rBGH use by Tillamook sparks conflict

Thomas W. Gray, Ph.D.Rural SociologistUSDA Rural Development, Cooperative Programs

Editor’s note: The author welcomes feedback from readers on thisarticle and the general topic of the countervailing power of coopera-tives in the market place. Their thoughts may be used in futurearticles, and can be e-mailed to: [email protected]. Citationsof reference material are listed by author name and title of article,as available on the Internet. Later references to the same work giveonly the author’s name and year of publication. Readers may find amore extensive version of this article in the forthcomingCooperative Accountant, Winter 2007.

hen Tillamook County Creamery Associationvoted in 2004 to ban use of synthetic bovine

growth hormone (rBGH) by its pro-ducer-members, it triggered a

conflict within its mem-bership and with

Monsanto Corp., the sole manufacturer of the hormone. Theoften-heated dispute lasted about 18 months, from May 2004until February 2005, during which time the co-op vigorouslyresisted efforts by Monsanto and pro-rBGH members toconvince it to reverse course and allow members to use thegrowth hormone.

Tillamook, based in Tillamook County, Ore., is a relative-ly small dairy cooperative of 147 dairy farmer-members, withan established worldwide reputation for excellence for a widevariety of dairy foods. It is especially renowned for its ched-dar cheeses. Total sales in 2004 were $260 million.

Monsanto is a multinational corporation, headquartered inSt. Louis, Mo., with offices in nearly 50 countries. It pro-duces a wide number of chemical and agriculture-relatedproducts. It had sales of $6.3 billion in 2005. (Hoovers On-line, September 2005)

The conflict is, in part, a result of differences in organiza-tional philosophies, structure and powerbetween different types of econom-ic organizations.

W

In this case, the conflict is between a farmer-owned cooper-ative and a multinational, investor-driven corporation. Thisarticle suggests how these differences in corporate philosophyand goals may have influenced the conflict, and comments onthe continuing relevance of cooperatives in furthering demo-cratic business processes in civil society.

Synthetic rBGH: pros and consThe FDA approved the use of synthetic growth hormone,

rBGH (recombinant bovine growth hormone) also referredto as rBST (recombinantbovine somatotropin) in1994. It is a geneticallyengineered growth hor-mone that can stimulatecows to give more milk.Advocates suggest it canincrease milk yields by10–25 percent via injectionsevery 14 days. (AlexPulaski, Hormone Fuels aFight in Tillamook, 2005) Inan era of high feed and fer-tilizer costs, with relativelylow milk prices, manyfarmers have been temptedto draw upon the produc-tion-increasing abilities ofrBGH.

John Fetrow (Economics of Recombinant BovineSomatotropin, 1999) has estimated that in adequatelymanaged dairy herds, farmers can earn at least a 50-percent profit over the expenses of using the product,given typical prices for milk and feed. “By increasingproduction in existing cows, the technology spreadsfixed costs over more production, increasing the mar-gin and profits for the farm.”

It is estimated Monsanto, along with Upjohn, EliLilly and American Cyanamid spent as much as $1billion in research and development of rBGH.Monsanto Corporation, currently the sole producer,sells rBGH under the brand-name Posilac. Bank OneSecurities estimates that Monsanto earns upwards of$270 million a year on rBGH sales. (Vince Patton2005, Tillamook Bans Artificial Growth Hormone.)

In June 1997, the Tillamook board approvedmember use of the product. In April of 2003 and in2004 the board held strategic planning discussions onrBGH use. In May 2004, it voted to require produc-ers to phase out its use in order for members to berBGH-free by April 1, 2005. The May 2004 vote was,in-part, a response to consumer complaints concern-ing its safety. The vote was especially triggered byconsumer concerns about possible antibiotic residuesleft in milk after cows had been treated for rBGH-

related infections. In the intervening period, from prior to June 1997 to May

2004, there were numerous press reports concerning the safe-ty of rBGH, ranging from concerns about animal welfare(mastitis and hoof splitting), consumer health (cancer risksand antibiotic traces in milk), the natural environment (dis-posal of used syringes), to its socio-economic impacts (pro-ducing more milk for an already glutted milk market). (1997TED Studies, Bovine Growth Hormone and Dairy Trade)

Furthermore, Barham, Jackson-Smith and Moon(University of Wisconsin, 2000) argue that use ofrBGH has not been nearly as profitable for farmers asfirst promised, and adoption rates have been muchlower than anticipated. Advocates have countered that no research has con-

firmed higher cancer rates. Mastitis has been found tooccur at higher rates. However, “appropriate” man-agement of a herd can minimize these problems,thereby eliminating antibiotic milk residues. Fetrow(1999) has argued the environmental risks may actual-ly decline, since similar volumes of milk can be pro-duced with fewer cows, reducing manure and methanelevels.


Tillamook Country Creamery has established an international reputation fordairy products such as these. Protecting its brand and reputation led theboard to ban use of rBGH. Facing page: a co-op member’s farm in scenicnorthwest Oregon. Photos courtesy Tillamook

Customer marketresearch had clearly indicatedthat consumerswere concerned andwanted a change.

Consumer concerns lead to ban; Monsanto reacts

Tillamook cheese sales are, in part,driven by a highly visible brand name,and a well-known reputation for pro-ducing a quality product. MostTillamook cheeses have won nationaland international awards.

James McMullen, CEO ofTillamook, says the ban on rBGH wasprimarily driven both by direct com-plaints to the company and by con-sumer market research. “In 2002…3percent of phone calls and e-mailsreceived by the association were relatedto bovine growth hormones. That num-ber rose to 4 percent the next year, andhit 8 percent by 2004.” (Pulaski)

Steve Neahring, a board memberduring the period when rBGH wasbeing contested, said protecting thebrand was the primary objective. “Themost valuable asset the creamery ownsis that brand.”

Mark Wustenberg, vice president ofmember relations at Tillamook, saidletters and e-mails were important inmaking the decision, but that customermarket research had clearly indicatedthat consumers were concerned andwanted a change.

Tillamook has also taken severalactions to protect the environment inecology-conscious Oregon. Such meas-ures have included: 1) fencing 91 milesof stream-banks to protect riparianareas from dairy cow damage; 2) creat-ing more than 1,000 alternate waterfacilities for cattle; 3) planting over400,000 trees along local rivers andstreams; 4) encouraging use of manuresas an alternative to commercial fertiliz-er; 5) building manure storage facilitiesand 6) working with local and state gov-ernments on various other environmen-tal enhancement projects. (TillamookCounty Creamery Association website,2006)

As reported by Pulaski (2005),“Fearing consumer questions concern-ing the quality of the brand contributedto banning the product.” Farmer-mem-bers need cooperative sales to stay inbusiness. They need to be able to usethe cooperative to process their milkand market their farm products. Theirelected board, after two years of carefuldeliberation — acting in its role asstrategic planner for the organization —voted to ban use of rBGH.

Monsanto reacted to Tillamook’s banwith a letter to their rBGH customers

in the area. It said that restricting thehormone’s use, “seems ill advisedbecause it would cut into dairyfarmer…choices, particularly their prof-its.” The letter said Monsanto wouldwork to ensure farmers have continuingchoices in how they run their dairies.To do so, it may be necessary for aMonsanto representative to call onthem and seek their advice.”

Conflict in structure and goalsStructured as an investment firm,

Monsanto obviously needs sales to max-imize returns on investment for itsstockholders. Management is evaluatedon its ability to do so. Tillamook, thecooperative, needs sales to guarantee amarket for the milk production of itsmember-users.

Co-op management performance issimilarly measured based on its abilityto successfully market its members’products. Monsanto’s need for rBGHsales came into direct conflict withTillamook’s concerns over providing acontinuing outlet for its members’ milk.The co-op’s ability to market is closelytied to brand quality, consumer interestsand environmental image and actions.

In January 2005, the cooperative


Voting power in Tillamook is on a one-member, one-vote basis. This provision creates a more horizontal busi-ness organization in that — regardless of the amount ofmilk any individual member sends or how much coopera-tive equity is owned — each member has only one vote.This reduces tendencies within the cooperative for votingpower to concentrate with any single member or group ofmembers.

Members who dislike cooperative policies maydissent in various ways, among them:

• Voicing their dissent to their elected representativesat member meetings (as well as during interim peri-ods);

• Electing different cooperative decision-makers, i.e.,boards of directors and other elected officials;

• Seeking and running for a cooperative office them-selves;

• Choosing to leave (or threaten to leave) the coopera-tive and marketing their milk elsewhere, althoughthis option can be limited by actual marketing alter-natives. In the Tillamook case, members have sever-al choices in the larger Willamette Valley of Oregonto market their milk, including other cooperatives;

• Writing letters, filing petitions, talking to the press,hiring attorneys and seeking assistance from com-petitive organizations if they so desire. Ideally, how-ever, members will remain loyal to the co-op as longas they have sufficient opportunities within theorganization to voice their opinions. For the mostpart, this has been the case. Chandra Allen,spokesperson for Tillamook, reports that while therBGH vote of a year ago was contentious, there hasbeen no change in the membership. Members nei-ther joined nor left due to the vote. n

Protection for dissenting voices

received a petition from 80 membersasking that the board reconsider theban. The Tillamook board did recon-sider, and on Jan. 31, 2005, announcedit would uphold the restriction.

Eight days later, a letter was hand-delivered to the Tillamook corporateoffices by a District of Columbia-based attorney. The letter calledfor a general vote by all coopera-tive members to consider a changein its bylaws. The proposed changewas written so that it would man-date that “the Board shall...not inany way restrict the right of anymember to use any pharmaceuticalproduct approved by the …[FDA]…for use in dairy cattle.” Thepetitioning letter had been signedby 16 Tillamook members, andhad the effect of precipitating anoverall member vote on Feb. 28,2005.

Tillamook charged thatMonsanto was meddling in theinternal affairs of the organization.Monsanto responded that it hadnot instigated the vote, nor had itprovided legal assistance to theTillamook members seeking thevote.

Individual vs. collective rightsTillamook members who

opposed the ban saw the issue asone both of economics and indi-vidual rights. They also questionedreports of ill effects on human healthand animal welfare. Bob Northrop, acooperative member, said he “stands tolose thousands of dollars in incomebecause [his] cows will produce lessmilk…and [argued] that the hormonehas no ill effects on humans or cattle.”

Jim Wilson opposed the ban basedon individual rights concerns, askingwhether there would be further restric-tions on products farmers were allowedto use. “What’s the next thing we won’tbe able to use?”

Carol Leuthold, another member,argued for the “democratic voice” issue:“We want the freedom to dairy the waywe feel is best.” This sentiment wasechoed in the comment: “This is about

members of the co-op having a voiceand [our] voice is not being heard.” (Asreported by Pulaski, 2005.)

Monsanto took a position consistentwith the Tillamook members whoopposed the ban. It was a matter of freechoice, economics and business sense as

well as health. “Monsanto director ofpublic affairs, Jennifer Garrett, empha-sized the findings of the Food and DrugAdministration that there is no impacton human health and that milk is exact-ly the same form as [that from] naturalcows and cows on Posilac.” (Patton,2005, Tillamook Creamery bans use ofartificial growth hormones)

While FDA studies in the UnitedStates did draw such conclusions, sup-porters of rBGH restrictions counteredthat countries such as Canada,Australia, New Zealand, Japan and theEU have banned its use. These coun-tries have taken such action based onconcerns about animal health and“unanswered questions about humanimpacts.” (Patton, 2005)

Those against its use also point tofaults and conflicts of interest in thehormone approval process at the FDAitself. These charges were investigated,however, and found to be without meritby the General Accounting Office.

Ban upheldBetween Feb. 8 and Feb. 28,

2005, more than 6,500 consumerscontacted the cooperative to com-ment on the vote. Nearly 98 per-cent requested that Tillamook gorBGH-free. Member sentimentswere similar on voting day, thoughnot with such overwhelming per-centages. The vote was 87-43 infavor of retaining the ban.

In response to the vote, aMonsanto spokesperson said: “Weare pleased that the producer own-ers of Tillamook had the opportu-nity to decide this for themselvesand respect the choices of themajority of the producer own-ers…For individual producers, it isunfortunate that their choice touse a product that could have pro-vided a significant economic bene-fit to many Tillamook familyfarms had been limited…We hopethat in time Tillamook producerswill reconsider this policy.”(Pulaski 2005)

Christie Lincoln, then aspokesperson for Tillamook, said:

“We are a consumer-driven companyand we’re keeping consumers in mind. Ithink this is a confirmation that ourmembers believe in us.” (WilliamMcCall, 2005, Dairy Co-op RejectsMonsanto Proposal to Reject Hormone Ban,The Oregonian)

Collective interestsIn joining a cooperative, members

give up some individual rights (in thiscase, concerning a milk-productionpractice) in exchange for greater collec-tive market presence and all the advan-tages that brings. Individual membersdelegate certain decision-making rightsto their elected board of directors tomake strategic planning (and opera-


Tillamook’s visitor center provides tourists a view of itscheese-making operation. USDA photo by Dan Campbell

continued on page 36


By Stephen Thompson, Assistant [email protected]

Editor’s note: For more conference highlights, including the complete text of many of the major speeches, visit:www.rurdev.usda.gov/rd/energy/#are.

orn ethanol and biodiesel may dominate therenewable energyarena now, but newtechnologies mayexpand and change

the picture dramatically in comingyears. Cellulosic ethanol may holdthe greatest potential of all for thenation’s energy future, and wind,solar, methane and hydrogen willalso likely play a role in helping thenation move toward energy inde-pendence. These were amongprime messages participants tookhome from “Advancing RenewableEnergy: An American RuralRenaissance,” a conference in St.Louis, Mo., Oct. 10–12, sponsoredby the U.S. Departments ofAgriculture and Energy.

The event attracted about 1,500participants, who heard from prob-ably the greatest gathering ever ofhigh-ranking government andindustry leaders and researchers forthe purpose of addressing the state of the renewable energyindustry. Speakers included President George W. Bush,Agriculture Secretary Mike Johanns and Energy SecretarySamuel W. Bodman, among many others.

America is at a “confluence of national security concernsand environmental concerns that have come together, proba-bly unlike any other time in our history,” President Bush said,necessitating development of new energy sources not only foreconomic reasons, but for national security as well. “We’retoo dependent on oil,” he stressed.

Alluding to the rapid drop in gasoline prices this fall, the

President said, “I welcome the lower gasoline prices. Myworry is that a low price of gasoline will make us complacentabout our future when it comes to energy, because I fullyunderstand that energy is going to help determine whether ornot this nation remains the economic leader in the world.”

President Bush said one way Washington is helpingchange the energy picture is by rewarding people for invest-ing in research and development. The fact that the federal

research and development tax credit expires every year andhas to be annually renewed by Congress is problematic, hesaid. “It means there’s unpredictability in the tax code, andthat’s not wise if you’re trying to encourage people to investdollars in the long-term,” he said, adding that the tax creditshould be made a permanent part of the tax code.

Regarding ethanol, Bush said, “I like the idea of promot-ing a fuel that relies upon our farmers. For those of you whoare in the ethanol business, you’re on the leading edge ofchange. It’s coming, and government can help.” More feed-stocks are needed to help boost ethanol production, he said,


Promise of renewable energyfocus o f St . Lou is conference

U.S. Energy Secretary Samuel Bodman, left, and Agriculture Secretary Mike Johanns announce theawarding of $17 million for biomass energy research. USDA photos by Ken Hammond

C

citing sugar, wood chips and switch-grass.

The President also expressed strongsupport for federal expenditures onrenewable energy research and “newways to conserve and new ways to pro-tect the environment through new tech-nologies.” He referred to hydrogenpower as a promising, long-term energyresource. “We’re spending $1.2 billionto encourage hydrogen fuel cells. It’scoming. It’s an interesting industry evo-lution, to think about your automobiles

being powered by hydrogen, and theonly emission is water vapor.”

The President said that with ongoingresearch into new battery technologies,he could “envision a day in which lightand powerful batteries will becomeavailable in the marketplace so that youcan drive the first 40 miles on electrici-ty — and your car won’t have to looklike a golf cart.”

USDA funds biomass developmentSecretary Johanns used his welcom-

ing speech to announce the awardingof $17 million in USDA and

Department of Energy (DOE) assis-tance to 17 biomass research facilities.“Our challenge is to increase the pro-duction and use of alternative energyacross this great nation, to maximizeits potential so that renewable fuelsare an economically viable and sus-tainable alternative,” Johanns said.Both he and Secretary Bodmanextolled the potential of ethanol pro-duction from cellulose.

It was also announced that an addi-tional $4 million will be awarded forbio-based fuels research to acceleratethe development of alternative fuels.The goal of the research is to lead tobreakthroughs that further the goal ofreplacing 30 percent of transportationfuels with biofuels by 2030.

Secretary Johanns noted that in thepast six years, the number of ethanolplants in operation increased from 54to more than 100 producing 5 billiongallons per year. An additional 44 areunder construction, representing a fur-ther 3 billion gallons of annual produc-tion.

The number of biodiesel plants hasmultiplied by more than eight times inthe past six years, from 10 to 86 plants,with another 78 plants either underconstruction or being expanded, whichwill boost biodiesel production to about2 billion gallons per year.

Johanns counteredarguments that withoutgovernment subsidies,ethanol is not competi-tive with oil. It costs anaverage of about $1.10to produce a gallon ofethanol, he noted, andthe average wholesaleprice of gasoline wasmore than $2 per gal-lon in 2006. “Ethanolwill continue to becompetitive with gaso-line as long as oil pricesdon’t drop below $30per barrel,” Johannssaid, noting that DOEhas forecast oil priceswill “even out, in thelong run, at more than

$50 per barrel.” Energy Secretary Bodman said the

secret to success with cellulosic ethanolis engineering the microbes used tobreak down both plant cell walls andthe plants themselves. Department ofEnergy-sponsored research is makinggains in this area, he said.

“Our goal, as the Presidentannounced in his State of the UnionAddress, is to make cellulosic ethanol


“Energy is going tohelp determinewhether or not thisnation remains theeconomic leader inthe world.” — President George W. Bush

President Bush said more feedstocks, in addition to corn, must be developed to offset oil imports. USDA Under Secretaryfor Rural Development Thomas Dorr (above, left) noted that Rural Development has invested $460 million to developnew energy sources. Next page, Agriculture Secretary Mike Johanns addresses the conference.

cost-competitive by 2012,” Bodmanstressed.

Renewable Energy CenturyUSDA Chief Economist Keith

Collins said, “The potential costs to oursociety of failing to develop new energysources, and the potential benefits toagriculture and rural America of devel-oping them, leave only one conclusion:we must work vigorously to make the21st century the renewable energy cen-tury.” U.S. energy consumption is likelyto rise 30 percent by 2030, adding tothe urgency to develop new energysources, he said.

Biodiesel production is soaring rightalong with ethanol. Only 5 percent ofthe nation’s soybean oil was used tomake biodiesel in 2005, he said. “Butonly one year later, 2006, we expectbiodiesel to consume 13 percent of totalsoybean oil.”

“As more corn moves to moreethanol plants, corn prices will rise,corn acreage is likely to rise and therewill be ripple effects on agriculturalcommodity markets broadly,” Collinssaid. That may mean more acres beingpulled out of the Conservation ReserveProgram, which could have environ-mental impacts.

Corn ethanol alone is insufficient tomeet much of the demand for motorfuel, Collins noted. “Other sources of

renewable and alternative energy mustbe developed if the U.S. is to make adent in oil imports,” he said.

Patricia Woertz, president of ArcherDaniels Midland — and a former vicepresident of Chevron — told the con-ference that while ethanol and biodieselwill continue to be important, newproducts still in the laboratory will sup-plement them, and possibly supplantthem in time. “We do know that thefuture of energy is not in a single feed-stock or product, but it is in diversity ofsupply,” she noted.

Woertz also urged for an end to the“food or fuel” debate. The answer isboth, she said. “Put simply, in the bigpicture, we will not meet the growingdemand for food in this world unless wealso supply the growing demand forenergy.”

The world is now using petroleumfaster than new sources are developed,Woertz pointed out. Refining capacityis also falling behind. New energysources, she said, will be needed to fill agap in global supply that will probablydevelop by mid-century. “So the ques-tion is not whether a sustainable marketfor biofuels exists,” she said, “but rather,‘how big can — or should — that mar-ket become?’”

Woertz indicated that ADM isinvesting heavily in biofuels in theUnited States and abroad, including

biodiesel and research on cellulosicethanol. ADM’s approach to cellulosicethanol centers on using corn hulls,thus potentially boosting corn ethanolproduction by 15 percent for the sameinput, she said.

Petroleum industry and biofuel Red Cavaney, CEO of the American

Petroleum Institute, said that, far frombeing opponents of ethanol, the U.S.petroleum industry sees it as a valuablesource of fuel. “In our view, ethanol ishere to stay, and it is a very importantpart of our nation’s gasoline pool,”Cavaney stressed. “It is absolutelyessential that ethanol and the entirebiofuels industry become strong, vitaland self-sufficient.”

Cavaney expressed his opposition tocurrent ethanol policies, however, say-ing that the ethanol industry is capableof competing in a free market withoutsubsidies and government incentives.He cautioned that states mandatingethanol use would encourage “bou-tique fuels,” raising costs and leadingto price volatility. He advocated allow-ing the market to determine the way inwhich alternative fuels are introduced.

Cavaney was followed by VinodKhosla, the billionaire former co-founder of Sun Microsystems and nowan ethanol booster and venture capi-




Bruce J. Reynolds, Ag Economist USDA Rural Development

Editor’s note: Made a move at the manage-rial or director level at your co-op that youthink would be of interest to other co-opmanagers and directors? If so, please contactthe editor at: [email protected].

here is no shortage of“how-to” books and arti-cles about improvingorganizations and leader-ship. This genre typically

provides fairly similar sets of recom-mended best-practices to follow. Ofcourse, learning to recite best-practicedisciplines is one thing, but a genuineunderstanding needed for their effectiveapplication is another matter entirely.

A context for visualizing how this orthat discipline would work helps buildgenuine understanding. Short of directexperience applying management disci-plines, the closest approximation is toread situational scenarios and case stud-ies. Jim Brown — a founding partner ofStrive!, a leadership development firmspecializing in governance issues — haswritten The Imperfect Board Member:Discovering the Seven Disciplines ofGovernance Excellence, which provides anilluminating look at his subject andgives vitality to his set of best-practicesfor board members and management.

While using a story to demonstratebest-practices, the author also providessummary tables of key points and dia-grams to illustrate interactive processes.But if a reader were to skip the scenar-ios and just read through the lists ofsummary points and glance at the dia-grams, the lack of context would greatlyreduce the likelihood that the book will

make a real impact. Furthermore, the situational scenar-

ios contain insights that are not listed insummary tables. A few of these insightsare discussed below, particularly somepoints with special relevance for coop-eratives. The complete list of key pointsand the seven disciplines is not re-statedhere, but should prove of interest forco-op leaders and others who read thebook.

The Imperfect CEO ought to beadded to the title, because the CEO isalso part of these stories and is involvedin much of the book’s wisdom aboutsuperior governance. Even an excellentboard can perform poorly if its interac-tions with the CEO are strained.

The book provides insightful paral-lels between the boards of a for-profitcorporation and a citizen group thatdirects the work of a community parksand recreation department.

Surprisingly, the lessons learned aredrawn from the latter and are appliedfor the benefit and improvement of theformer. In this sequence, the CEO isthe source of some of the friction in thecorporate board room. As a communityboard member, he introduces a fewwrinkles that have to be ironed-out.

The fact that the CEO gains best-practice insights from his service on thecommunity board offers a lesson inhumility. The term “imperfect” in thebook’s title also suggests the author’simplicit belief that a little humility canmake a positive contribution to goodgovernance. The need for humility isespecially relevant when boards arerightly composed of individuals withdiverse backgrounds and have disagree-ments to work-out.

Another useful insight that Browndemonstrates from the workings of thecommunity board is that directors mustrefrain from “talking as a customer andexpecting to be heard as an owner.” Inthis case the board members are usersof their community’s parks and recre-ation services, yet, as directors, theyhave to stay focused on benefits for thewhole community and not specific onesfor themselves. Likewise, directors of acooperative are users of the services andalso must adopt a long-term and totalmembership perspective.

Brown recommends that organiza-tions draw bright lines to demarcate theboundaries of responsibility betweenprincipals and agents. The directors arerepresentatives of the principals whoare responsible for overall direction,planning and fiduciary duties. Theagents are the hired management andstaff who are responsible for operations


M A N A G E M E N T T I P

Imper fec t D i rec to rs & CEOsNew book focuses on seven disciplines of business governance excellence


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By Minneapolis Star Tribune Staff

Editor’s note: this article was the fourth ina five-part series on the ethanol boom inMinnesota and the Midwest that appearedin the Minneapolis Star Tribune inOctober. It is reprinted by permission of theStar Tribune, www.startribune.com.

orris, Minn. — BobbyJohnson is still not usedto the snide commentsand envious glances. Johnson, who owns the

grain elevator in this western Minnesotacity, dates the resentment to a Nov. 14,2005, meeting at the Old No. 1 Bar &

Grill. There, amid impassionedspeeches and accusations ofselling out, Johnson and othershareholders voted to sell thecity’s ethanol plant to anAustralian company.

The sale generated windfalls,some in excess of $2 million,for some investors. Johnson,54, made half-a-million dollars— enough to pay off fourdecades of debt. But it alsoturned some farmers againstone another, creating divisionin a community once unitedbehind the ideal of a locallyowned ethanol plant.

“You couldn’t pry their farmsaway from them, but they soldthis one [ethanol plant] realquick,” said Gerald Rust, aGlenwood farmer and formerchairman of the plant’s boardwho voted against the sale.

Midwest farmers may havebuilt the U.S. ethanol industry,but two decades later they areincreasingly worried aboutbeing elbowed aside asWashington politicians, Detroitautomakers and Wall Streetinvestment bankers finallyembrace it.

Just one in eight ethanolplants under construction this


Outs ide Interests Put Money on TableEthanol was built on cash from farmers and their neighbors; But the boom is pushing them aside in favor of deeper pockets

Corn flows into Bobby Johnson’s grain elevator in Morris, Minn. Johnson made about $500,000 on thesale of ethanol stocks when an Australian company bought out the mostly farmer-owned plant. Photosby David Joles, Minneapolis Star Tribune

“No one from a bigcity can comprehendwhat an ethanolplant means to afarming communityof this size.”

M

summer were farmer-owned, comparedwith eight in 10 just two years ago,according to the Renewable FuelsAssociation, a trade group. And withforeign and U.S. investors combing thecountryside for sites to build or plantsto buy, a number of farmers are optingto sell rather than risk competingagainst the much larger privately ownedplants.

This spring, Global Ethanol, anAustralian investment group created bya large South African bankand other investors, bought a60-percent stake in an ethanolplant in Lakota, Iowa, for$100 million. About a third ofthe plant’s nearly 1,300 farmermembers voted against thedeal.

About 125 miles west, inSioux Center, Iowa, a farmer-owned ethanol cooperative isweighing a merger offer froma public company that it won’tidentify. The plant’s generalmanager, Bernie Punt, said heexpects the board of directorsto vote on the proposal within the nextmonth.

A cooperative effort To some farmers and politicians, the

notion of sending profits from anethanol plant to far-flung investorsundermines the rationale behind theindustry — that farmers reap the profitsfrom value-added processing. It’s a sen-sitive issue in Minnesota, where most ofthe ethanol plants are still owned byfarmer groups.

In Winnebago, a southwesternMinnesota city with fewer than 1,500people, the Corn Plus ethanol plantemploys the mayor, three firefightersand two members of the city’s rescueand ambulance squad, according to gen-eral manager Keith Kor. Each spring,the plant sponsors the after-prom partyat the local high school, with refresh-ments and prizes paid for by ethanolmoney.

Last year, the farmer-owned plantpaid $16 million in profits back to its750 shareholders.

David O’Brien, owner of the NapaAuto and Farm Parts store inWinnebago, said he makes up to twodeliveries a day to the plant. “No onefrom a big city can comprehend whatan ethanol plant means to a farmingcommunity of this size,” he said.

In June, VeraSun Energy raised morethan $400 million through an initialstock offering. Before the ethanolboom, however, plant backers wouldspend months on the road, meeting in

American Legion halls, coffee shopsand church basements, where theywould try to sell the concept to hun-dreds of individual investors.

“They were like evangelical meet-ings,” recalled Loris VanHooserofFoley, Minn., who owns shares in theCentral MN Ethanol Co-op, a plant inLittle Falls, Minn. “Only people whotruly believed in the promise of ethanolwould commit themselves to that muchwork.”

Lenders usually needed more con-vincing. Directors of the Corn Plusplant, desperate for a loan in 1993,resorted to sending a batch of strawber-ry pies to a local bank.

“In the old days, you generally hadto sweeten people up before they’d talkto you about ethanol,” said Bob Weerts,former chairman of Corn Plus. “Nowthey’re bringing us the pies.”

Today, nearly one out of three farm-ers in Minnesota who grow at least 100acres of corn owns shares in ethanolplants, according to the Institute forAgriculture and Trade Policy in

Minneapolis. “If a farmer in the Midwest hasn’t

been given a chance to invest in anethanol plant by now, then you gottawonder what rock he was sleepingunder,” said Greg Lepper, a corn andsoybean farmer from Ashland, Ill.

Some, such as Randy Buboltz ofHector, Minn., have bet heavily on theindustry. The corn and soybean farmerowns more than 100,000 shares in theHeartland Corn Products ethanol plant

in Winthrop, a stake worthabout $500,000. He delivers athird of his corn crop eachyear to the farmer-ownedplant, and twice each day hecalls up the website of theChicago Board of Trade tocheck the price of ethanolfutures.

Buboltz said he invest-ed in the Winthrop plantbecause he saw it as an attrac-tive hedge: if corn prices fell,the local ethanol plant gotmore profitable and he wouldreceive fatter dividend checks.

“It was all focused on this littledream of adding a small premium toour corn value,” he said. “But fromWall Street’s perspective, it’s got noth-ing to do with that. And that’s whatscares me.”

Indeed, with demand for ethanolsurging, plants such as the ones inWinthrop and Winnebago have becomeprime takeover targets for large corpo-rations, Silicon Valley-based investorsand foreign syndicates looking for quickentry into a new source of energy.

In the 1990s, before ethanol reallytook off, Corn Plus got one or two buy-out inquiries a year. The plant now getsone or two a month. Twice this springthe plant had to scuttle expansion plansafter discovering that two out-of-statecorporations had already snatched upthe sites it wanted.

Rick Lunz, president of the CornPlus board, said the ethanol plantlearned the hard way that being localdidn’t give it an inside edge over outsidecompetitors. “The ethanol industry isexpanding so quickly that the first per-


Bobby Johnson, with daughter Christine, says he occasionally getssnide comments and envious glances from others in the town, dueto the big pay day he got when the local ethanol plant was sold .

son that looks at a site and has all therequirements gets to build it,” he said.“It’s just a different world.”

The issue of local control is onWashington’s agenda. MinnesotaSenator Norm Coleman said federalpolicymakers are pondering how to tielocal ownership to federal ethanol sub-sidies.

“Who is going to reap the benefit of this ethanol explosion?” Colemanasked. “Is it going to be folks at thelocal level, is it going to be farmers, is it going to be through co-ops ... or is it going to be Wall Street?”

Pride, then a divide Built in 1990, the Morris ethanol

plant was one of the city’s most conspic-uous landmarks and rivaled the localbranch of the University of Minnesotaas a source of pride.

Known locally as DENCO —Diversified Energy Co. — the facilityproved so profitable that area storeowners said they timed their salesaround its twice-annual dividendchecks. Those who bought shares in2000 earned back almost their entireinvestment in dividends within twoyears, plant officials say.

State subsidies helped. Like mostethanol plants in Minnesota, DENCOreceived state payments for every gallonof ethanol it produced — more than$20 million so far. The plant is entitledto receive producer payments through2009.

Yet the plant’s profitability surprisedsome of its initial investors. At the timeof DENCO’s initial share offering, localfarmers worried whether the plantcould survive a calamity, like the 1996drought that drained profits from alarge ethanol plant in nearby Marshall.

Doug Ehlers, president of FirstFederal Savings Bank in Morris,remembers a grueling information session at the Best Western hotel inMorris. There weren’t enough seats, sohe spent five hours sitting on the floorwhile a group of farmers tried to per-suade their friends and neighbors toinvest.

“At that time, there were some peo-

ple who thought they’d never sell thoseshares,” Ehlers said.

Last year, Babcock & BrownEnvironmental Investments offered$8.40 in cash for every DENCO share,a 740-percent return for the company’soriginal investors.

In Morris, some viewed the $50 mil-lion buyout as a godsend for a smallplant that faced an uncertain futurecompeting against new plants three tofour times its size. More than 90 per-cent of the plant’s 363 shareholdersvoted in favor of the transaction.

Yet some farmers viewed the sale asan act of betrayal — akin to selling alocal baseball team. They resented thata handful of large shareholders stood towalk away with million-dollar windfalls,while future profits would flow to a for-eign company.

When shareholders arrived at theOld No. 1 that November night tovote, each received a booklet describingthe offer and the amount of sharesowned by the plant’s largest sharehold-ers. Farmers who owned only a fewthousand shares could compare theirmodest payday to those who owned100,000 shares or more.

The information fueled the percep-tion among some investors that thedecision to sell was already made beforethey stepped into the restaurant thatnight. “The big boys made up theirminds, and there was no stoppingthem,” said Dean Monson, a city coun-cilman in nearby Chokio, Minn., andowner of a trucking company.

Erv Krosch, owner of the DairyQueen in Morris, said he knew next tonothing about ethanol when he bor-rowed about half the $25,000 he neededto invest in DENCO in 2000. Helearned about the plant from membersof DENCO’s board, who would oftenstop in his restaurant at night to discussstrategy over a burger and coffee, hesaid.

Krosch was among a small minorityof investors who voted against the sale.“My biggest concern was that futureprofits would leave the area,” he said.“Small rural areas like this need toretain as much as we possibly can.”

Johnson, despite making enoughmoney to pay off four decades worth ofdebt, resisted the urge to celebrate thatnight. Instead, he had a few drinks,shook a few hands and went home.

“You could tell by the way peoplewere looking at you that they wereenvious,” he said.

Life after the sale Today, someone passing through

Morris would have no idea thatinvestors here reaped millions in profitsnearly a year ago. Flouting one’s wealthis frowned upon in this city of 5,200.

“Around here, if you drive a fancysports car ... there’s a good chance thatno one will do business with you,”Johnson said.

For Johnson, life hasn’t changedmuch since the DENCO sale. He stillworks in a tiny office about the size of amoving van, scattered with buckets ofgrain and cigarette butts. He can stilldrive a nail with one measured blowand lift 100-pound sacks of feed with asingle arm. And he still sticks his handin the corn as it drops from the graintrucks, because he doesn’t trust theelectronic moisture testers that biggergrain elevators use.

“The only way to know if the grainis good and dry is to touch it, feel it,smell it,” he said, as he let the grainpour over his arms like a warm shower.

Yet the resentment that Johnson feltthat November night at the Old No. 1still lingers. It slips out in a passingremark from old friends or acquaintanc-es. “They’ll say something like, ‘Youdon’t have to worry, Bobby, with allyour money,’ or ‘If I had your money,I’d burn mine,” he said. “It’s not somuch what they say, but the way theysay it.”

The irony is that Johnson isn’t nearlyas wealthy as some people in Morrismake him out to be. He used nearly allhis proceeds from the DENCO sale topay off business loans, including about$400,000 in debts on three new grainbins he built along the railroad tracks inthe center of Morris.

For the first time since he took over




David Chatfield, Jack Gherty,Charles Gill and Jean Jantzen have been selected for induction into theCooperative Hall of Fame. The fourcooperative business leaders will be rec-ognized at the annual Hall of FameDinner and Induction Ceremony atWashington’s National Press Club onMay 2. The Hall of Fame, the coopera-tive community’s highest honor, recog-nizes those who have made “heroic”contributions to cooperative enterprise.• Chatfield is the retired president &

CEO of California and NevadaCredit Union Leagues. Chatfieldadvanced the cause of credit unionshere and around the globe in variouspositions over four decades. He iscredited with devising the first nation-al political action system for creditunions and with helping to found andlead the Filene Research Institute, thecredit union community’s think tank.

• Gherty retired last year after 35 yearswith Land O’Lakes, 16 of them as itspresident and CEO. During histenure, Minnesota-based Land

O’Lakes was transformed from aregional into a national farmer-ownedbusiness, giving producers a powerfulpresence in the marketplace and avoice in the policy arena. UnderGherty, the co-op’s membershipexpanded from 15 to 39 states andannual sales tripled. In 1987, Ghertyspearheaded a precedent-setting jointventure between Land O’Lakes andCenex that established a new modelfor cooperative business activity.

• Gill is the retired governor and CEOof the National Rural UtilitiesCooperative Finance Corporation(CFC). He helped shape CFC duringits formative years and served as itsgovernor from 1979 to 1995. Whileworking at USDA in the late 1960s,he helped create CFC as an alterna-tive source of capital for electric co-ops. He joined the CFC staff in 1972and was tapped to be its second gov-ernor seven years later. Under hisleadership, CFC grew seven-fold as alending cooperative and created anumber of institutions that improved

the quality of life in rural America. • Jantzen is a life-long champion of co-

op communications and education.She began her career in 1963 as a sec-retary for a predecessor co-op of CHSInc., now a $12 billion Minnesota-based food and energy cooperative. Arole model for women in coopera-tives, she rose through the ranks andwas a key player in the 1998 mergerbetween Cenex and Harvest Statesthat created today’s CHS. She retiredin 1999 as CHS’ vice president forpublic relations. Jantzen was a long-time trustee of the CooperativeFoundation and was instrumental inthe growth of the CHS Foundation,which today provides more than $1.3million a year for cooperative educa-tion and other purposes.

Nominations for the Hall of Fame,established in 1974, are screened by twocommittees of national co-op leaders.The NCBA board makes the finalselections. The Hall can be visited onthe Internet at: www.heroes.coop. n


he Internal RevenueService (IRS) released adraft version of new Form1120-C on Oct. 12. Thisform is the new common

federal income tax reporting form for allcooperatives, including farmer coopera-tives (which previously filed Form 990-C) and all other subchapter T coopera-tives (which previously filed Form 1120).Interested parties were given 30 days tocomment on the draft.

The new form must be used by coop-eratives for tax years ending on or afterDec. 31, 2006. So, cooperatives on a cal-endar year tax year will be using Form1120-C to report their 2006 income.

Cooperatives with total assets of $10million or more will need to attachSchedule M-3 to their Form 1120-C.Schedule M-3 asks questions about thetaxpayer’s financial statements and rec-onciles any differences between bookincome and reported income for tax

purposes.By the time this magazine is mailed,

IRS will likely have released both thefinal version of Form 1120-C and theInstructions. Cooperatives that have notalready done so are encouraged to meetwith their tax preparer to discuss Form1120-C and any related electronic filingrequirements so the transition to thenew form does not disrupt other opera-tions or lead to avoidable disputes withthe IRS. n

Al l cooperat ives must use newfedera l income tax fo rm 1120-C

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‘Heroic’ leaders named to Cooperative Hall of Fame

By Stephen Thompson,Assistant Editor

n the fitness-oriented town of Eugene, Ore., a different kind of cooperative struggled withmany of the problems familiar to modern agri-cultural, value-added co-ops. In the end, thedifficulties inherent in the worker-owned coop-

erative model forced Burley Design Cooperative, a manufac-turer of much-sought-after premium bicycles and bike acces-sories for 28 years, to sell out to a private investor.

Burley built high-end bicycles, including tandems andrecumbent bikes, on which the rider reclines as if in a chair.It originated the child-carrying bicycle trailer and produced aline of outdoor clothing and rain gear. The new owner hasannounced that the bicycles and clothing will be dropped;only the trailers, Burley’s strongest product line, will continuein production.

The products had a reputation both in the United Statesand overseas for high quality, durability and affordability. Thebike co-op competed in a market in which competition isfierce from China and other countries with much lower pro-duction costs. Burley child trailers, which can be converted toathletic strollers, retail from about $240 to more than $400.Its tandem bicycles ranged in price from about $1,000 tomore than $5,000.

Burley had no problem selling its wares — in fact, its maindilemma was the opposite: it couldn’t make enough productto meet demand. Further, as the new millennium began, inef-ficiencies ate away at its bottom line and it began havingtrouble meeting its delivery obligations. After more than twoprofitable decades, the cooperative began losing money in theearly 2000s. By 2005, it was losing $1.5 million a year.

Production limitation hurt co-opCary Lieberman was the marketing manager for the co-

op, and has been retained by the new owner. He says the co-op’s inability to expand production was rooted in the cooper-ative structure itself.

Part of the problem is one with which many co-ops arefamiliar. When members can’t provide enough capital ontheir own, the only alternative is to borrow. However, saysLieberman, “Raising capital is a nightmare. Banks don’t

under-stand theco-op model.”

Another part ofBurley’s struggle was the tension between its tradition as anegalitarian worker cooperative, in which all members origi-nally had equal authority, and the need for employees whospecialize in management and have the knowledge, experi-ence and authority to make decisions. Throughout its exis-tence, the co-op’s structure evolved as it attempted to be trueto its roots and competitive at the same time.

The production problem was complicated by the fact thatBurley products, while not cheap, were priced lower thancompeting products of the same quality. Lieberman names acompetitor that sells “virtually identical bikes” for $2,000more. The easy solution might seem to be to increase pricesuntil demand and supply even out.

But Burley was wary about raising prices: “We don’t wantto alienate our loyal customer base, and we don’t want tohurt our reputation for great quality at reasonable prices,”Lieberman told Rural Cooperatives.

Reluctance to charge more when turning customers awaymight seem odd to some, but Burley was not a typical manu-facturer. It was founded as a private business in 1969 by AlanScholz, who owned a bicycle shop in Fargo, N.D., when he


Bike Co-op Goes F la t Difficulties faced by worker-owned bike co-opoffer lessons for others of potential business pitfalls

I

started selling bike bags sewn by his girlfriend, BeverlyAnderson, to other bike shops. In 1974, Scholz and Andersonmoved to the small Oregon town of Cottage Grove, and theirproduct line expanded to include bike shorts, backpacks, rain-wear and ski clothing. The sewing was done by a small groupof people working in their homes and paid by the piece.

Employees form co-opIn 1978, Scholz and Anderson decided they didn’t want to

be bosses. They sold their business to their employees, afterhaving cooperative bylaws drawn up by a local attorney,remaining on as co-op members.

In the beginning, all members received the same wages, a practice that was to continue until only a few years ago.Production of trailers began at about the same time. After adifficult period during the recession of 1982 — during whicha number of members, including the founders, left the coop-erative — business expanded dramatically as the fitness crazetook hold of newly affluent baby boomers.

Burley moved to the larger town of Eugene to take advan-tage of a bigger labor force and better logistics.

Eugene is an out-doorsman’s delight,

with mild weatheryear-round and

easy access tothe spectac-ularOregon

coast,year-round skiing and breathtak-ing rock-climbing, hiking andmountain-biking venues nearby.“Very few places in the country wouldcompare,” says Lieberman.

In the 1980s, it was also a good place to get a bikebusiness off the ground. A Sony manufacturing plant pro-vided good income to a relatively young and athletic pop-ulation, a good local market for the co-op.

Eugene, a university town, is known for a strong senseof community, which fit well with the public-spiritednature of the co-op and also contributed to the firm’s contin-uing commitment to quality. “If you’re going to see the peo-ple you sell to on the street, you want to be sure that your

products don’t disappoint them,” says Lieberman.By December 1985, the cooperative had 15 members.

They were paid an hourly wage that varied by the month, asdetermined by expected profits. The co-op restructured itsbylaws and established a regular payroll. All the memberswere made employees and were paid consistent wages. A por-tion of the profits was set aside to fund capital improve-ments and meet other expenses.

While the changes improved the firm’s efficiency, otherways of doing business left over from the early days of the co-op remained. All members, regardless of their position,received the same wage. Governing the co-op remained sim-ple in concept: all members were directors. Acquiring newskills and training was left up to individual members.

Business expertise neededElliot Gehr, the last president of the co-op, was with

Burley for 18 years. “We’d always been amateurs,” he says,“But we needed the expertise of business professionals.” Asthe cooperative began a move to expand into the nationalmarketplace, its egalitarian informality became more of ahandicap.

Having all members on the board is democratic, but as acooperative grows, decision-making becomes more cumber-some and conflicts can cause delays. The U.S. market forbicycles is subject to fads and rapidly changing styles andtrends, making such a management model a serious liability.

In 1987, founder Alan Scholz, by then no longer a mem-ber, proposed a partnership to build tandem bicycles. At the

time, the only high-performance tandems available werevery expensive. Scholz saw an opportunity in a

growing trend of couples engaging in fitnessactivities together.

In a joint venture with Scholz’scompany, Advanced Training Products,Burley began manufacturing tandems, fur-ther contributing to business growth.Burley and Scholz later ended the jointventure, and the co-op began producingbicycles entirely in-house.

By 1989, membership had grown to39, and it was clear that things had

to change. Management of thefirm was still by consensus.

The workforce was divid-ed into teams, each witha leader. However, theteam leaders were onlyfirst among equals; theywere not given effective

authority over theirteam members.

Management wasbecoming increasingly

unwieldy, and decision-making


USDA photos and graphic by Stephen Thompson

was handicapped by the necessity to geta large number of people to agree onthe smallest details. “People wouldwaste time arguing where to put the hotplate,” one member told me. “They’dwaste $300 worth of time arguing overthe color to paint a bike.”

Restructuring improves productivity The co-op appointed a committee to

study restructuring. After much debateand controversy, it was decided to electan eight-member board of directors andto give team leaders the status of man-agers with the ultimate responsibilityfor the performance of the people theysupervised.

Gehr saw the elected board as amixed blessing. While it streamlineddecision-making, it also made many ofthe workers feel insulated from runningof the co-op. “Some people choose notto participate in our outer democracy(government),” he says. “And now,some chose not to participate here.”

The new structure made for much-improved efficiency. Production andsales continued to grow. By 1992, it wasclear that top-level management expert-ise had to come from outside. “We real-ized we had to import talent,” saysGehr. For the first time, a new generalmanager was brought in from outside asan employee.

Also in 1992, the cooperative founditself caught short, swamped by a waveof unanticipated orders. In response, ithired about 20 seasonal non-member

workers. After that, many more workerswere hired as non-members. The quickexpansion of employment resulted insome problems, including what Gehrsays were some mistakes in hiring.

In 2003, membership in the coopera-tive was closed, with all further hiresbeing employees only. In retrospect,Gehr thinks that was a bad idea. “Wegot bad advice,” he says. “Instead, weshould have hired more members.”Gehr believes that membership encour-ages badly needed responsibility andcreativity. By the time the co-op con-verted, only 55 percent of the workerswere members.

Differential pay introducedAnother innovation made at the

same time showed more promise. Forthe first time, differential pay was intro-duced. While pay levels were still lowerthan average in most areas, paying morefor greater expertise or productivityallowed Burley much greater flexibilityin hiring and retaining needed talent.

Lieberman says that the shift to dif-ferential pay “shook things up.” As withany innovation, it had its bad effects aswell as good. “Some people lost enthu-siasm because they felt it was a betrayalof cooperative principles.”

Gehr maintains that other bad advicehampered the co-op’s efforts to grow.“The trouble is, most accountants justaren’t familiar with the cooperativemodel,” he says. “As a result, we didn’ttake advantage of opportunities to plow

profits back into the business, as weshould have.”

Gehr is especially troubled by theco-op’s past ignorance of the use ofnon-qualified dividends. “If you’regrowing, qualified dividends are theeasy answer. But in a less profitableyear, if you give out all of your profitsas dividend payments to members, youhave to borrow. The use of non-quali-fied dividends allows you to build up afinancial cushion.”

Lieberman says that in the past, thecooperative was “property-focused” atthe expense of investing in machinery.It moved into its present facility in1996, a spacious, modern “green” build-ing constructed with the help of themembers. But while the facility hadample room, the use of the space avail-able was not as efficient as it could be.

After taking advantage of a stategrant for training in manufacturing effi-ciency, co-op managers and boardmembers realized that the variousstages of production were scatteredhaphazardly. Machines and work sta-tions had remained where they wereoriginally put, and new elements werestuck wherever they would fit.

Using what they had learned, theywere able to rationalize the set-up sothat each workstation required the sameamount of time. The trailer shopshowed an 18-percent improvement inproductivity, Gehr says, and nobodyhad to work any harder.

The changes ran into resistance from


Lots of hand labor, such as proper alignment of bike frames (as seen here in the Burley plant), is required in production of high-quality bicycles.

some members, however. Once themachines were put into their new, moreefficient positions, workers returningafter the weekend found everythingmoved back to its original place.

Parts standardizedOther measures were put into the

works to improve efficiency. The co-opbegan working to standardize the partsthat make up its various bicycle trailermodels, which are now the largest sell-ing brand in Germany (they meet strin-gent German safety codes) and continueto expand sales in North America.

Burley saved not only time andmoney, but cut back on greenhouse-gasemissions through the use of powdercoating for bike finishes. Powder coat-ing is more environmentally friendlythan “wet spray” paint, because it does-n’t use volatile solvents. It also takesless skill and less time to apply. Wetspraying demands care and skill toapply the coat properly — applying ittoo wet results in runs and sags; notwet enough results in a dull or“orange-peeled” finish.

Powder coating works by spraying adry, electrically charged polymer pow-der onto the metal surface. The bikeframe is then placed in a large oven andheated. The powder melts and forms ahard, glossy protective finish. Besidesbeing more efficient to apply, powderalso gives a much tougher and moredurable coat. The disadvantage of pow-der coating is the sizeable capital expen-diture required for the large oven toheat the painted items.

Other upgrades included automationof various tasks, including wheel build-ing and truing and the production ofsmall parts. According to Gehr, the

automation reduced risk in comparisonto using outside suppliers: “By produc-ing parts in-house, we’re not beholdento others for delivery.”

In any case, the bike shop worked, asGehr put it, like a “cottage industry,”with a huge number of different partsfor the various models and a great dealof hand work. This doubtless con-tributed to a decision by the new ownerto close down production of all bicycles.

When interviewed last summer(prior to the conversion), Liebermanand Gehr both said that the Burleyboard and management were well awareof these and other stumbling blocks togreater efficiency. “We’re makinginvestments now that we should havemade 5 years ago,” said Lieberman.

Need for credit heralds changeThe need for credit for upgrades led

to the cooperative’s conversion. Thefirm’s CEO, Char Ellingsworth, hadbeen brought in from outside as thechief financial officer. She was promot-ed when her predecessor left to useexperience he gained at the coopera-

tive to engage in “lean manufacturing”training.

One of Ellingsworth’s recommenda-tions was a change in status to a work-er-owned corporation. At the time, themove was seen as solution to remainingtrue to the cooperative spirit. Theintent was not to issue stock to raisemoney, but to make the firm moreattractive to lenders.

Cooperative shares were to be con-verted proportionately to stock shares.Current workers were to be issued com-mon stock, and former workers whostill held membership were given pre-ferred stock. There was to be no con-trolling interest.

The board voted unanimously infavor of the move. When the vote wasput to the membership, a significantminority opposed it, seeing it as abetrayal of the cooperative tradition.“There were definitely a lot of unhappypeople,” says Lieberman. Nevertheless,on June 23, 2006, the co-op voted toconvert.

The change apparently came too lateto save worker ownership of the firm.By September, Burley had a huge back-log of orders — including more than3,000 trailer orders — which it wasunable to fill because of a lack of cashto pay suppliers. A search for emer-gency funding resulted in an offer by alocal businessman, Michael Coughlin,to purchase the company’s assets andliabilities. The purchase went throughon Sept. 8.

Coughlin says he wants to keepBurley production in Eugene, unlikeother producers in the market that haveswitched production overseas. However,while 53 jobs were retained, the rest of


“Some people lostenthusiasm becausethey felt it was abetrayal of cooperativeprinciples.”



By James WadsworthEducation & Outreach Program LeaderUSDA Rural Development

high-voltage racing team, harvest festival dis-plays, an on-line auction of co-op crafts and thecreation of an Internet co-op tutorial were someof the many ways the nation’s co-ops observedNational Cooperative Month in October.

“Owned by our Members, Committed to OurCommunities” was the theme of this year’s event, and co-opsof every size and type drove that message home in numerousways. Newspaper, radio and magazine ads were probably themost popular method of spreading the word, but there werealso classroom visits, press releases, public service announce-ments and speeches before civic organizations, amongmany other efforts.

The annual observance is intended to teach peopleabout the cooperative form of business, and to remindmembers and non-members alike about what cooper-atives do and the vital role they play in the life andeconomy of their communities and the nation.

Co-op Month is a time for cooperatives and co-op-relatedorganizations to stand tall and promote how cooperativesbenefit their members, their communities and their employ-ees — and how co-ops work to provide such benefits everyday, year in and year out.

Following is a small sampling of the ways co-ops acrossthe country observed Co-op Month:

• Perhaps the crownjewel of Co-opMonth activities isthe NCB (NationalCooperative Bank)list of America’sTop 100 Coop-eratives, releasedeach year at thestart ofCooperativeMonth. The co-op distributes an attractive color bulletinthat not only includes a fold-out list of the entire Top 100with details about each co-op, but also a wealth of related

information and charts. It provides a concise, revealinglook at the nation’s various co-op sectors. The co-opbank also issues a press release to get the word out.

This year’s report shows that the Top 100 co-opsgenerated more than $140 billion in revenues, anincrease of nearly 10 percent from the previous year.Ag co-ops remain the largest co-op sector, accounting

for $62.2 billion of the total, followed by grocery co-ops at$32.2 billion, energy and electric co-ops at $14.3 billion,finance co-ops at $13 billion, hardware and lumber co-opsat $10.8 billion and all others at $8.4 billion. To view thelist, visit: www.ncb.coop.

• A related effort was launched this year during Co-opMonth by the International Co-operative Alliance whenit released the first ever Global 300 Cooperatives in Lyon,France. The list of the Top 300 co-ops in the world showsthat Zen-Noh, a Japanese food and beverage co-op, is theworld’s biggest co-op, with $55.5 billion in annual sales.The Global 300 shows that Switzerland’s largest employeris a co-op, as are Europe’s largest dairy business, thelargest bank in France, New Zealand’s largest company


Magni fy ing the Message Co-op Month efforts spread the word about benefits of producer- and user-owned businesses

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Frontier Farm Credit in Kansas ran this Co-op Month ad (left) in farmpublications. Above, a poster that Foremost Farms used to promote aCo-op Month booth at a harvest festival.

and the world’s largest marketer of rice.Co-ops in 28 nations comprise the Global300 list.

The United States has the most coopera-tives on the list with 62. Agricultureaccounts for about a third of the co-ops onthe list (virtually every one of the 28 nations representedhave at least one ag co-op on it). Financial institutions(insurance, bank, credit unions and diversified financialorganizations) account for about 25 percent of the Global300. Retail and wholesale co-ops comprise another 25 per-cent of the list. Other areas represented include energy,health and manufacturing. See thelist at: www.global300.coop.

• The Race for CooperativeDevelopment in Washington,D.C., sponsored by theCooperative DevelopmentFoundation, raised more than$50,000 to support cooperativedevelopment efforts around theglobe. In addition to sponsoringthe race, the Foundation also host-ed an on-line auction of coopera-tive art and craft items, which ranfrom Oct. 6 through 31. Goodsauctioned included photos andprints, quilts, clothing, rugs, jewel-ry, pottery, carvings, vacations andother household items. Valuesranged from $14 to $7,700. Theauction proved to be more than a

fund-raiser. CDF Executive Director Elizabeth Bailey saysit also led to discussions with art and craft co-ops aboutdealing with demutalization issues and the need for morenetworking and idea sharing among art and craft co-ops.

• Many cooperatives and co-op related associations ran spe-cial feature articles in their member publications and ontheir websites during Cooperative Month. To cite just acouple of examples: Georgia Magazine, published by theGeorgia Electric Membership Corporation, the tradeassociation for Georgia’s 42 customer-owned electric utili-ties, ran articles about the impact that rural electric cooper-

atives have on Georgia’s economy; the October issue ofWashington State Grange News contained a five-pageCooperative Month supplement that highlighted manycooperatives in the Northwest and their activities. Thenewspaper is distributed widely to producers in theNorthwest region and to cooperative leaders around thenation.

• Rural electric cooperatives and associations promoteCooperative Month in a host of creative ways, from adsand radio spots to magazine articles and prize drawings.The National Rural Electric Cooperative Associationwebsite includes a Co-op Month banner and links toinformation about cooperatives, as well as an interviewwith National Cooperative Business Association PresidentPaul Hazen about the importance of cooperatives.


Team “High Voltage” represented the National Rural ElectricCooperative Association (NRECA) at the Cooperative Develop-ment5K Race in Washington, D.C. NRECA raised about $2,000 for theCooperative Development Foundation.

This quilt was one of dozens of items auctioned over the Internetto raise funds for international co-op development. Next page, oneof a series of Co-op Month ads posted for downloading at:www.co-opmonth.coop.

• The greater cooperative family has along history of supporting cooperativeeducation and funding scholarshipopportunities as part of their commit-ment to their communities. InKansas, for example, the ArthurCapper Cooperative Center andKansas State University Departmentof Agricultural Economics awarded11 cooperative scholarships toCollege of Agriculture students forthe 2006–2007 academic year.

• Adams Electric Cooperative,Gettysburg, Pa., produced a radio adthat describes how the co-op’s linecrews drove bucket trucks and sup-plies to Mississippi and Louisiana tohelp restore power to members ofelectric cooperatives hit by hurri-canes Katrina and Rita.Cooperatives helping cooperativesfor the ultimate benefit of memberswas the underlying theme.

• Boone REMC, Lebanon, Ind., arural utility cooperative that servesmore than 10,000 customers inIndiana, held a Co-op Monthdrawing for a $150-credit on amembers’ electric bill and a $100gift card to an electronics store. Toregister for the drawing, customershad to complete a short survey. Thecooperative has found that its Co-opMonth drawing is a simple way toengage members and to remindthem that the co-op works for them.The three survey questions are: Didyou know that Boone REMC is acustomer-owned cooperative? What isthe best way to communicate withyou? How can your cooperativeimprove customer service?

• CHS/Land O’Lakes MemberServices sent a news release to itsstate and national associations to usein their newsletters for CooperativeMonth. The release describes theavailability of free on-line coopera-tive educational tutorials for anyoneto use, at: mbrservices.com. Tutorialtopics include cooperative principalsand practices, financial understandingand commodity risk management.

• The Virginia Council of FarmerCooperatives, in association withFriends of Industry of Agriculture,held its annual Cooperative MonthKick-off Breakfast, drawing morethan 125 leaders from cooperativesand agricultural associations, govern-ment officials and representativesfrom Virginia Tech and Virginia Stateuniversities. The keynote speech wasby Ed Scott, the vice president ofCulpeper Farmers Cooperative,Culpeper, Va. Virginia Governor TimKaine signed a gubernatorial procla-mation declaring October asCooperative Month in the common-wealth, and three annual cooperativeawards were presented to exceptionalcooperative members at the breakfast.

• The Wisconsin Farmers Unionpublished a special Co-op Monthissue of it newsletter, which featuredads from co-ops and credit unionsaround the state. A record 68 co-opsand credit unions were featured thisyear. A portion ofthe ad fees collect-ed go to supportWFU’s education-al co-op camp atKamp Kenwood.

• Frontier Farm Credit, Manhattan,Kan., placed an advertisement aboutits business and its status as a cooper-ative in various regional agriculturepublications. It alsoconverted the ad intoa poster which waswidely displayed.

• Foremost Farms anda number of other cooperatives inWisconsin (including AcceleratedGenetics, Badgerland Farm Credit,Co-op Country Partners, OakdaleElectric Cooperative, Wisconsin MilkMarketing Board and Westby Co-opCredit Union) jointly promotedCooperative Month at the HarvestDays Festival in Reedsville, Wis.The co-ops used displays, exhibitsand demonstrations that highlightedthe many benefits cooperatives pro-vide to members and their communi-ties. The co-op booth offered doorprizes and free food.

Plan now!The examples reviewed here are just

a small sampling of CooperativeMonth efforts. While cooperative edu-cation and outreach is a full-timeendeavor, Cooperative Month is onetime when the combined efforts for allco-ops can greatly magnify the mes-sage and spread it further.

The National Cooperative MonthCommittee, made up of representa-tives from cooperative organizations inWashington, D.C., has created a web-site — www.co-opmonth.coop — with

ready-to-use ads and many otherresources co-ops can use to plan for thenext Cooperative Month. The NationalCooperative Business Association isthe coordinator of NationalCooperative Month.

Remember: the right time to startplanning for Cooperative Month 2007is now! If your co-op does not haveone, form a Co-op Month Committeethat meets at least monthly for the nextsix months, and then more frequently asnext October nears. Also, check to see ifyour statewide co-op associations areplanning any special efforts you canjoin. n


By Dan Schofer,Co-op Development SpecialistUSDA Rural Development

ew Jersey farmers andfood processors are facingincreasing pressures fromurban sprawl and stricterland-use regulations.

These trends are forcing them torethink historic production practices.Many producers and co-ops need pro-fessional guidance to meet changingregulations and to maximize food safety.

Access to new food technologies isessential to preserving New Jersey’sfarms, increasing farmers’ market shareand boosting their profitability.

To help meet these needs, USDARural Development’s New Jersey StateOffice has partnered with the RutgersUniversity Food Innovation Center(FIC) and other stakeholders to expanddelivery of technical assistance to farm-ers, cooperatives, food processors andrural communities. This assistance canrange from the formation of a co-opsteering committee to the implementa-tion of a business plan.

Rutgers sought a one-timeAgricultural Innovation Center grant in2003 from USDA Rural Development(RD) to get the center started. Since itslaunch, FIC has helped 500 businesses,with its primary focus being on NewJersey’s agricultural sector.

The partnership between USDA/RDand FIC has provided grassroots techni-cal assistance to farmers and rural busi-nesses. USDA/RD funding, in combi-nation with local FIC expertise, hasopened an avenue for product and busi-

ness development not previously avail-able in New Jersey.

FIC has assembled a multi-disciplineteam with various areas of expertise —including business development, prod-uct development, food manufacturingand retail marketing/sales — to helpstrengthen the state’s farm and foodindustry.

Business incubator FIC is currently building a 23,000-

square-foot business incubator inBridgeton, N. J. This facility will enableFIC to fully realize the contribution itcan make to the New Jersey economy.It will house food-processing and labo-ratory space, analytical laboratories anddistance-learning and teleconferencingequipment. It will also provide adminis-trative office space for staff and clients.

The business incubator will helpwith the formation of new cooperatives

and food companies while also provid-ing a wide array of resources and tech-nologies for existing producer groupsand food businesses. It is designed foruse by farmers and cooperatives, start-up food companies, existing small- andmid-sized food companies, and retailand food-service establishments. Theincubator will provide assistance fromconcept to commercialization.

“We want to develop an economicmodel for other states looking to pre-serve farms and increase the quality oflife in rural communities,” explains FICDirector Lou Cooperhouse.

Co-op Development CenterIn 2004, FIC received a Rural

Cooperative Development Grant fromUSDA Rural Development to establisha program to support the developmentof cooperatives throughout New Jersey.


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

From Concept to Commerc ia l i za t ionNew Jersey business incubator to assist producers, co-ops & food processors

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An artist’s depiction of the new Rutgers Food Innovation Center.




By William Harms,University of Chicago

Editor’s note: “In the Spotlight” recognizesthe accomplishments of cooperative leadersand members. To suggest someone to be featured, send e-mail to: [email protected], or call (202) 720-6483.

fter a long and fruitfulcareer as leader of one ofthe nation’s leading berryco-ops, 79-year-oldHerbert Baum earned a

Ph.D. from the University of Chicagoin August, making him the oldest per-son ever to be awarded a doctorate bythe university. Baum, who also workedas a federal government ag economistearly in his career, clearly knows straw-berries from the inside out.

Early in his career, Baum worked atBlue Goose Inc., based in Anaheim,Calif., a nationwide grower and shipperof fruits and vegetables. He helpeddevelop the relatively new strawberryindustry there, which Blue Goose waspioneering. Baum joined NaturipeBerry Growers in San Jose, Calif., in1958, where he became vice presidentof sales for the strawberry grower-ship-per cooperative. He became presidentof the cooperative, retiring in 1991 afterbeing twice-elected chairman of theCalifornia Strawberry Commission.

Baum’s ability to understand the freemarket was particularly crucial to thesuccess of the berry industry, becausethe federal government does not sup-port the price of strawberries and otherfresh fruit by buying excess production.Baum also was a firm backer of market-ing and advertising, which increased thenation’s demand for strawberries and

compensated for the problem of overproduction.

When he left the University ofChicago in 1951 to become an agricul-tural economist in Washington, D.C.,Baum had a master’s degree and was justshort of writing his dissertation to earn adoctorate. His dissertation contributes toagricultural economics by examininghow to measure the impact of feescharged producers for commodity pro-motion and research.

The thesis, based on a case study ofthe strawberry industry in California,developed a model for researchers tounderstand the long-term value of thefees assessed growers. The model showshow the policies of the state strawberrycommission, which supported researchinto improved varieties, improved pro-duction per acre and aided grower prof-itability.

James Heckman, winner of theNobel Prize in Economic Sciences in

2000, said of Baum’s work, “HerbBaum’s Ph. D. thesis is a well-executedstudy of an industry partially monopo-lized by government authority. Hisapplication of basic price theory tounderstand the consequences of thispolicy is in the best tradition of empiri-cal price theory at Chicago. He com-bines theory with evidence in a convinc-ing way in a serious piece of research ona major agricultural industry.”

Baum’s work with strawberriesbegan in California in 1953 after work-ing for the federal government uponcompleting is master’s degree. Inspiredby former professor and free-marketeconomist Milton Friedman, who wenton to receive a Nobel Prize, Baumdecided to find work in private indus-try.

“I went into the produce businessbecause, as a boy growing up in FortWayne, Ind., that was the business myfamily was in,” explains Baum.

The strawberry business was in itsinfancy when Baum went to California.Fresh strawberries at the time were onlyavailable from local producers and theseason was short. Most strawberriesgrown in California were frozen andshipped while the fresh ones were con-sumed in the state. New varieties,improved growing techniques, and bet-ter marketing and transportation revo-lutionized the industry.

By the 1990s, strawberries weregrown up and down the coastal valleysof California and shipped around thecountry nearly year-around. The indus-try also developed a thriving exportmarket in Japan. Fresh strawberry con-sumption in the United States grew percapita from 1.6 pounds in 1962 to 5.23pounds in 2005. n

I N T H E S P O T L I G H T

Fru i t co-op leader Baum o ldest everto earn Univers i ty o f Ch icago Ph.D.

Herbert Baum, Ph.D., on graduation day.Photo by Lloyd DeGrane, Univ. of Chicago

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To second section of Rural Cooperatives

November/December 2006


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