Rur Coop-MayJune04 WEB · do sugarbeets love the black-clay soil of this river valley that both...

Rura

lCOOPERATIVESCOOPERATIVESUSDA / Rural Development May/June 2004

Defending Your TurfDefending Your TurfWhy co-op leg is la t ive

ef fo r ts a re so essent ia l

SPECIAL SECTION

Organizationsserving co-ops

page 18

2 May/June 2004 / Rural Cooperatives

No man is an island, nor is anycooperative.

Regardless of what purposes coop-eratives serve, they are all strengthened— and the scope and impact of theiroperations amplified — through a sup-porting network of private sector andgovernmental organizations dedicatedto the belief that, through cooperativebusinesses, there is nothing Americanscannot achieve for themselves.

More than 120 million people aremembers of 48,000 cooperatives inthe United States alone. Worldwide,cooperatives serve some 730 millionmembers. Those are numbers oftentrumpeted each October duringCooperative Month. But they shouldbe cited in speeches and articlesthroughout the year to help commu-nicate just how far-reaching the co-opsystem of business has become.

Whether it is to process and markettheir crops, to gain access to dependableand affordable energy and telecommu-nications services, to secure credit orhousing, or for nearly any other serviceor product under the sun, cooperativesare delivering every minute of every dayfor their members. This wouldn’t bepossible without an infrastructure ofsupporting organizations that do every-thing from giving their member coop-eratives legislative clout to providingdirector training programs and educa-tional materials needed to attract andinspire the next generation of co-opleaders and members.

A special section of this issue, whichbegins on page 18, provides anoverview of some of the major organi-zations supporting cooperatives andhighlights some of their recent accom-plishments. To provide an idea of the

scope of these efforts, here are just afew highlights from the special section:• National Milk Producers Federation

is strengthening the dairy industrythrough the Cooperatives WorkingTogether (CWT) program, a self-help effort to balance milk supplyand demand, and by proposingchanges to the dairy price supportprogram that will prevent farm-levelprices from dropping below $9.90per hundredweight.

• National Council of FarmerCooperatives is striving to improveco-ops’ access to capital and is sup-porting legislation that would elimi-nate the third layer of taxes imposedon farmer cooperative dividends.

• National Cooperative BusinessAssociation has organized oppositionto a ruling that threatens to throwthe balance sheets of thousands ofco-ops into chaos by reclassifyingmember equity as debt, and haslaunched an initiative to expand therole of co-ops in creating economicopportunity in inner cities.

• National Rural Electric CooperativeAssociation’s legislative and regulato-ry efforts are focusing on controllingcosts for consumers, protecting themagainst market power abuse and anti-competitive behavior, and on pre-serving the co-op governance struc-ture of its members.

We’ve also provided an overview ofhow USDA Rural Development ishelping to improve the quality of lifeand create jobs in rural America, and— in particular — the many ways itsCooperatives and Rural UtilitiesPrograms help the nation’s farm andutility co-op sectors. Also check out

the Newsline section of this issue forseveral news items that describe morethan $500 million in USDA loans andgrants recently awarded (or soon to beawarded) for rural electric, broadbandand renewable energy projects.

Space didn’t permit us to list everyorganization that has played a majorrole in helping cooperatives. On theagricultural front alone, the AmericanFarm Bureau Federation, NationalFarmers Union and National Grangehave played key roles in helping estab-lish and promote cooperatives. So donumerous other ag commodity boardsand associations.

Likewise, virtually every arm ofUSDA — the Farm Service Agency,Natural Resources ConservationService’s RC&D committies andCooperative State Research, Educationand Extension Service, to name just afew — in one way or another impactfarmer cooperatives. You can find outmore about these and any other USDAagency or program through thewww.usda.gov website. We’ve alsoincluded websites and other contactinformation for every organizationincluded in the special section, and weurge you to find out more about them.

So, while “user owned, user con-trolled and user benefited” remains themantra of the nation’s family of coop-eratives, let’s never forget that we’d bea pretty dysfunctional family, providingfewer benefits to fewer people, withouta solid infrastructure of supportingorganizations.

Dan CampbellEditor

C O M M E N T A R Y

The extended family

Rural Cooperatives / May/June 2004 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 United States Department of Agriculture (USDA)prohibits discrimination in all its programs and activities on the basis of race, color, national origin,sex, religion, age, disability, political beliefs, sexualorientation, and marital or family status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means forcommunication of program information (braille, largeprint, audiotape, etc.) should contact USDA’s TARGETCenter at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA,Director, Office of Civil Rights, Room 326-W, WhittenBuilding, 14th and Independence Avenue, SW,Washington, D.C. 20250-9410, or call (202) 720-5964(voice or TDD). USDA is an equal opportunityprovider and employer.

Ann Veneman, Secretary of Agriculture

Gilbert Gonzalez, Acting Under Secretary,USDA Rural Development

John Rosso, Administrator, Rural Business-Cooperative Service

Pandor Hadjy, Acting Deputy Administrator,USDA Rural Business-Cooperative Service

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

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

This publication was printed with vegetable oil-based ink.

Rura

l

COOPERATIVESCOOPERATIVESMay/June 2004 Volume 71 Number 3

O n t h e C o v e r :

A field of Red River Valley sugarbeets greet the new morning. AmericanCrystal Sugar Co. members increasingly look to the co-op’s legislative office tohelp “defend their turf” in trade talks. Likewise, many of the co-op organiza-tions featured in the special section of this magazine also tackle critical leg-islative issues for their member co-ops. Photo courtesy American Crystal Sugar Co.

p. 4

p. 11

p. 14

p. 18

F E A T U R E S4 Defending their turf

Growers see co-op’s legislative action as essential to future of nation’s sugar industryBy Dan Campbell

9 Co-op born of growers’ frustration withprocessor’s lack of long-term outlook

11 USDA co-op development efforts support commercial farming in Ghana By John Dunn

14 Election and voting policies of agricultural cooperativesBy Bruce J. Reynolds

18 Special Section: Organization Serving Cooperatives

D E P A R T M E N T S2 COMMENTARY45 NEWSLINE48 NEW USDA CO-OP PUBLICATIONS

Includes: State Co-op Councils (Pg. 18);CoBank (23); National Council of Farmer

Cooperatives (24); National Cooperative Business

Association (25); National Milk Producers

Federation (26); National Association of

Housing Cooperatives (26);National Society of

Accountants for Cooperatives (26);

Farm Credit Council(28);Cooperative Finance Corp. (29);National Rural Electric

Cooperative Association (30);Federation of Southern

Cooperatives (31); Rural Cooperative Development

Centers (32); UW, KSU & NDSU Centers for

Cooperatives (34);

Cooperative Communicators Association (35);

Association of Cooperative Educators (36);

ACDI/VOCA (37); Credit Union National

Association (39); National Telecommunications

Cooperative Association (40);National Cooperative Bank (41); USDA Rural Development (42).


By Dan Campbell, editore-mail: [email protected]

f American farmers weren’t supposed to growsugarbeets, surely there would be no Red RiverValley — quite possibly the world’s most per-fect garden for cultivating the crop. Not onlydo sugarbeets love the black-clay soil of this

river valley that both divides and unites Minnesota andNorth Dakota , but the rainfall is more than adequate inmost years to raise the crop without irrigation. And the coldwinters allow the crop to be piled outdoors and stored for upto 200 days or more, creat-ing a longer processing sea-son that helps maximizefactory utilization.

But the world is a fierce-ly competitive place whenit comes to production ofsugar and other sweeteners.Indeed, some 110 nationsgrow sugarbeets or sugar-cane, and many of themseek to export their surplus,even if it means dumpingsugar at prices below thecost of production in orderto “buy” market share.About 25 percent of theworld’s sugar goes into for-eign trade, and virtuallyevery producing nationuses some kind of trade-distorting sugar subsidies to support their producers.

High fructose corn sweeteners also are taking an increas-ingly large slice of the nation’s sweetener pie (55 percent in2000, up from 16 percent in 1970, according to USDA). Andartificial sweeteners also jockey for their place in the foodingredient trade.

So despite all of the Valley’s natural advantages, growershere have their work cut out for them if they want to main-tain their market share. About 55 to 60 percent of all sugarproduced in the United States, and 90 percent of all of

America’s beet sugar, is processed and marketed throughproducer-owned cooperatives. In the Red River Valley, thenation’s largest sugar co-op, American Crystal Sugar Co.,just celebrated its 30th anniversary.

The roots of the co-op go back to 1935, when area growersbegan organizing the Red River Valley Sugarbeet GrowersAssociation, which ultimately purchased the privately ownedAmerican Crystal in 1973. Today, the company markets about18 percent of the nation’s sugar. It is often looked to as a rolemodel for new-generation co-ops and as a blueprint for howfarmers can buy a major processor (see sidebar).

Other U.S. producer-owned sugarbeet processing co-opsinclude: Minn-Dak FarmersCooperative, SouthernMinnesota Beet SugarCooperative, AmalgamatedSugar, Michigan Sugar andWestern Sugar Cooperative,the latter two having beenformed in 2002 when grow-ers acquired plants thatwere formerly investor-owned.

Legislative actions seenas crucial to industry’sfuture

Sugar producer MarkNyquist spent much of thepast winter in his farm shoprepairing and overhaulingcultivation and harvestingequipment in preparation

for the 2004 growing season. Nyquist — whose father servedas American Crystal’s board chairman and grandfather was afounding member of the board — has spent many anotherlong night in the farm office, preparing for this season bypouring over the farm’s financial books, doing cost analysisand budget projections, filing tax reports and doing all theother paperwork which is now just as necessary as seed andfertilizer to produce a crop.

During the course of this season, Nyquist will consultclosely with an agronomist from the co-op to produce the

Defending the i r tu r fGrowers see co-op’s legislative action as essential to future of nation’s sugar industry

I

“The world market and related political issues increasingly control ourdestiny,” says Mark Nyquist (center), seen here doing maintenance on abeet harvester. USDA photo by Dan Campbell

Rural Cooperatives / May/June 2004

best crop he can — both in terms of tonnage and sugar con-tent. When harvest season rolls around in mid-October, he’llalso coordinate closely with the co-op regarding harvest tim-ing and delivery. Nyquist says he takes pride in knowing theco-op operates five efficient sugar processing plants up anddown the Valley, and that its joint marketing venture —United Sugars — has an expert team of agents selling theco-op’s sugar worldwide.

Just as important as all those co-op functions, Nyquistsays, is American Crystal’s legislative effort. The UnitedStates has been under intense pressure in trade negotiationsto open up the domestic market to more imported sugar.American Crystal and other co-ops and industry trade orga-nizations have had to go to a full-court press to make certainthat their industry’s position is represented in these talks.The North American, Central American and Australian freetrade agreements have all been tracked closely in America’ssugar-producing states.

Although more imported sugar is gradually being allowedinto the nation, the industry’s legislative efforts have beengenerally successful in limiting these increases to manageablelevels. But Nyquist and his fellow growers say their co-opand the industry must continue to make their voices heard.

“One stroke of the pen in Washington, and it couldpotentially eliminate the sugar industry in the Valley,”Nyquist says while walking through one of his fields. “Theworld market and related political issues increasingly control

our destiny,” addsNyquist, who spent sev-eral years after college asa pit trader in the dog-eat-dog world of the ChicagoMercantile Exchange beforereturning to take over thefamily farm in 1996. He stilltrades part time, mostly inthe winter, but sees thefarm and sugarbeets ashis future.

Fast track deals amajor concern

David Kragnes,who grows about1,400 acres of sugar-beets, wheat and bar-ley near Felton,Minn., sharesNyquist’s concerns.“We’re worried thatwe could be sacrificedif we aren’t active leg-islatively,” saysKragnes, a board mem-ber of both AmericanCrystal and UnitedSugars. Fast-track tradedeals are of particular con-cern, he stresses, because ifapproved, they can’t beamended by Congress.

“In this battle, we want theexport subsidies [of foreignnations] reduced before wereduce our border protection,”Kragnes says. Unlike grain, sugarhas a very finite shelf life. “Sugarhas a life-span of one year,” saysKragnes, who, like Nyquist, wasborn and raised on his family farm.“After that, it turns into brick.”

Small countries produce sugarunder labor and environmental con-ditions that would never be toleratedin the United States, Kragnes notes.

The domestic industry currentlysupplies 85 percent of the nation’ssugar, with 15 percent imported. “By rationing up and down the level ofimports, the government has been ableto control the supply and demand andtherefore control market conditions,”

A real slice of Americana: fresh-baked pies and a pitcher of lemon-ade made with American Crystal sugar. The co-op used this photo ina recent annual report to promote the wholesome goodness of realsugar. Photos courtesy American Crystal Sugar Co.


says American Crystal President andCEO James Horvath. “They havedone a pretty good job of doing thatover the years.”

But in 2000, a glut, brought on by anumber of factors, forced the nation toadopt a payment-in-kind (PIK) pro-gram — which American Crystal lob-bied for — to remove excesssupply from the market.

American Crystal employs afull-time lobbyist, Kevin Price,in Washington. Althoughthese days his home is in thecorridors of the Capitol and itsoffice buildings, this native ofthe Red River Valley is equallyat home in the beet fields andknows what’s at stake forgrowers in the trade talks.“We cannot sit back and waitfor things to fall in our lap,”says David Berg, the co-op’svice president for operations.“You have to find out what theissues will be, propose solu-tions and then work like heckto get it done.”

The PIK program is a casein point, Berg says. “Within two weeksof the concept being floated, Kevinand I were in the offices at USDA ofthe people who administer the pro-gram.” With them was Earl Pomeroy,North Dakota’s member of Congress,who worked on the legislative autho-rization. “Our efforts helped make it(the PIK) a reality. When we seeopportunity, we are not shy aboutgoing out and getting it done. Not justthe co-op, but the whole industry ben-efits from our efforts.”

In the Australian Free Trade talksthis past winter, the United States elect-ed to totally exclude sugar, based on adecision that Australia was a developedcountry and therefore didn’t need anyincreased access to the U.S. market.“We were obviously very pleased withthat outcome and we believe that itshould become the template for futuretrade deals,” says Horvath.

One major concern on the interna-tional front is that if Mexico were toswitch from using sugar to high fruc-

tose corn sweeteners in its soft drinks(as does the United States), it wouldresult in a sudden surge of sugarimports — perhaps 2 million tons, or20 percent of total U.S. consumption,which would be allowed underNAFTA, Horvath notes.

“We are working toward a new

agreement that sets a specific amountof sugar that Mexico can bring into theUnited States and a specific amount ofhigh fructose corn syrup that can gofrom the United States to Mexico,”Horvath says. “The industries are rela-tively close to coming up with thatdeal, from my perspective. This, ofcourse, will ultimately need to go toeach of the governments for negotia-tion and implementation.”

Sugar factories: use ‘em or lose ‘emOne major reason for so much gov-

ernment involvement in sugar produc-tion worldwide, Berg explains, is thatonce a sugar factory shuts down, itvery seldom starts up again. The costof retrofitting a plant that has beenidled for even a few years — and thetoll that temperature and humidity cantake on a shuttered operation — makeit very unlikely it will reopen success-fully.

“Therefore, most countries try veryhard to keep the revenue stable to

their growers so that they produceenough to keep the plants operatingover the long term,” Berg says. To dothis, “the 14 largest sugar-producingcountries all intervene, in one way oranother, through interest rate subsi-dies, direct payments, tariffs, exportenhancements, etc.

“Relying on foreign sugarcan work for a time, but whenprices spike upwards, yourconsumers will pay throughthe nose, if they can buysugar at all. Most people heredon’t know what they pay forsugar because the price isaffordable and stable — so it’snot an issue for mostAmericans. That hasn’t alwaysbeen the case,” Berg says.

When the United Statesbecomes dependent on for-eign suppliers, it can becomevulnerable: think oil or coffee.The U.S. imports nearly all ofits coffee, and those pricesperiodically spike and haveclimbed steadily. “When cof-fee prices soar, people are

outraged; ‘How can they do that tous?’ they ask.” But there’s not a lotAmericans can do about it, he notes.

Even though U.S. sugar policy hasmaintained a stable supply at an afford-able price, “the program keeps gettingbeat up, because you look at the worldprice for raw sugar and see it at sixcents a pound. Domestically, it’s around21 cents a pound. How can we justifythat? Well, the average cost to producesugar worldwide is 18 cents a pound;the average selling price for the pastfive years has been 8 cents a pound.You can’t sell a product long-term forless than half the cost of production. Atleast you can’t do it unless there aresubsidies going to the producers.”

U.S. grain industry groups are oftenproponents for free trade deals. SoU.S. trade negotiators have the unen-viable position of making someoneangry regardless of their stance. Othercritics of U.S. sugar policy, includingthe candy and bakery industries, sayAmerican consumers would benefit

How U.S. sugar growers fare in future trade negotiations is a topconcern for American Crystal Sugar board member David Kragnes.USDA photo by Dan Campbell


from lower food prices if the U.S.market was open to more importedsugar.

“But the only way sugar can sell atsuch low prices is if you are getting agovernment subsidy,” Berg maintains.“Once a producing nation meets itsdomestic sugar needs, they put thesurplus on the world market at what-ever they can get for it, becausewhatever they earn is gravy. It’s adump market that doesn’t reflect theeconomics of producing it. If peoplesay they want 6-cent sugar, they mustrealize that were it notfor the domestic sugarsupply, they would like-ly be paying 18 cents to20 cents or possibly alot more.”

“The domestic pricein the United States is,in fact, in the lowestone-third of the world,”Horvath says. “TheUnited States doesn’texport any sugar,” hestresses, and limitsdomestic producers inorder to balance supplyand demand. “Theresult is that every sugarexporting countrywould like nothingmore than to get a big-ger chunk of the UnitedStates market.”

To put the picture into perspective,Horvath says the U.S. sugar market isabout 10 million tons, of which U.S.growers produce 8.5 million tons. Moreimported sugar, he says, would result inlost sugarbeet acreage in America.

“By taking away [sugarbeet]acreage...there will be more cornplanted, more soybeans planted in thisparticular area, creating an oversupplythere as well. It would result in lowerprices and in more deficiency pay-ments. It is a serious problem.”

Co-op buys plants to maintain acreage base

As a result of the market glut in2000 and 2001, the 2002 Farm Bill

reinstituted a marketing allotment sys-tem to better balance supply anddemand. In 2002, USDA set the allot-ment at 7.7 million tons, raising thebar to 8.5 million tons in 2003.

“The [sugar portion] of the 2002Farm Bill was designed to fix the over-supply problem,” Horvath says.“Market allocations were established soeach of the companies in the UnitedStates had the ability to market only acertain amount of sugar.”

For American Crystal, that wouldhave meant cutting back acres by about

10 percent, which Horvath says wouldhave threatened the co-op’s ‘criticalmass.’ “We would have had to cut backfrom 500,000 acres to 450,000 acres.That would have increased our fixedcosts and driven down returns to ourgrower-owners. So we had to look atthat as a serious situation and searchfor ways to solve that.”

In part to help maintain its acreageallotment, American Crystal in 2002and in 2003 acquired four plants inother parts of the nation: Moses Lake,Wash., Sidney, Mont., Torrington,Wyo., and Hereford, Texas. TheTorrington plant has been leased to thenew, Denver-based Western SugarCooperative, while the plant in Sidneyis being operated under a wholly

owned subsidiary of American Crystal,called Sidney Sugars Inc. The Texasand Washington plants are being leftidle, with no plans to put them backinto production.

Nyquist says the plant acquisitionsrepresent a solid business strategy. “Isupport the cooperative’s aggressive-ness in purchasing these other plants.We’re not trying to push anyone out ofthe market — we’re just defending ourturf. To do that, we need to acquirethese plants just to keep the same shareand acreage base.”

When the sugarmarket took a dive in2000, some investorsquickly fled and a num-ber of plants were puton the block. Someother plants werebought by producers(such as Western Sugarand Michigan Sugar).“There isn’t much elseyou can do with a sugarfactory; so some gotsold at fire-sale prices,”Berg says. Since then,the market has beengenerally stable, withproducers earning rea-sonable returns.

Kragnes says farm-ers, with their commit-ment to the long-range

future of their industry, make the idealparty to own the processing and mar-keting operations. But he says he’sworried that talk regarding possiblechanges in the co-op model couldlessen grower control of the industry.

“The bedrock of American farmcooperatives has always been, and mustcontinue to be, the Capper VolsteadAct,” which gives them the power tojointly market their crops and prod-ucts. “If you start messing with thedefinition of a co-op, I fear you couldjeopardize Capper-Volstead,” Kragnescontinues. “I’m not happy with anychanges that allow large investors toget their foot in the door and buy apiece of our co-ops. Control followsthe money.”

CEO James Horvath talks with growers in one of a series of "summer shop meet-ings" held around the Red River Valley each July. Photo courtesy American Crystal Sugar Co.


No option butto remain on guard

Giving up on the trade battle is notan option for the U.S. sugar industry.“It takes a lot of lobbying, and this co-op has been — and will continue to be— a strong advocate for its memberson the legislative front,” Kragnes says.So has the American SugarbeetGrowers Association, the Red RiverValley Sugarbeet Association and anumber of other farm industry groups.With sugarbeets grown in 14 states,Kragnes says the industry can musterconsiderable clout in the halls ofCongress.

But much as farmers might like tothink otherwise, Nyquist says he doesnot believe the average American consumer cares if their sugar is U.S.grown or not. “They want good qual-ity cereal, cake mix or whatever at themost affordable price. If those prod-ucts are made with sugar from Brazilor Cuba, well...I’m not sure there is a

whole lot of loyalty there. I don’tknow that locally grown sugar cancommand a premium.”

Nor do most consumers stop tothink what would be lost if the sugarindustry stopped providing jobs andeconomic synergies that boost thestandard of living throughout theUpper Midwest and other regionswhere it is grown, he says.

The impact of losing sugar wouldripple far beyond the sugar industry ifbeet farmers are forced to shift toother crops, such as grains and pota-toes. The University of Idaho did astudy in 2001 which projected that injust Idaho, if the 200,000-plus acres ofsugarbeets were switched to potatoes,growers of the latter crop would lose$105 million annually.

American Crystal alone has anannual economic impact of over $1.5billion in the communities where itsmembers and employees live andwork.

The multiplier effect of actual dollarsand jobs generated by the nation’s farmeconomy is often estimated at a factorof seven, and some have estimated that20 percent of the nation’s workforce isinvolved in the food and fiber system,ranging from production through pro-cessing, distribution and retailing.

Nyquist says his basic outlookremains “cautiously optimistic.” Thatwas not the case in 2000, when sugar-beet payments fell to $32-$36 per tonand margins were near breakeven lev-els for most producers. “I was not veryoptimistic then at all. There was realcause for concern.

“Despite all of our natural advan-tages, it is not easy to compete againstthird world countries with labor coststhat are a small fraction of ours and noenvironmental standards,” he says.“We can’t go down to their standards,and it’s awfully hard to bring them upto ours. So through their co-ops,growers must remain vigilant.” ■

American Crystal pumps $1.5 billion annually into the economy of the Red River Valley, where it operates five processing plants, includingthis one in Moorhead, Minn. Photo courtesy American Crystal Sugar Co.


Editor’s note: The following article is largely excerpt-ed from “A Heritage of Growth,” which traces the histo-ry of American Crystal Sugar and the Red River ValleySugarbeet Growers Association.

Nothing frustrates a sugarbeet grower more than notbeing able to deliver harvested beets to the processingplant on a cool, dry autumn day. But there were a lot offrustrated growers around the Red River Valley on suchdays in the late 1960s and early 70s. That’s because theValley’s dominant processor – American Crystal Sugar,then an investor-owned company – was not investing inpiling equipment needed to keep up with farmers, whohad made giant leaps in their ability to rapidly dig anddeliver sugarbeets. Virtually no maintenancewas being done on pilers during the offsea-son, which lead to frequent breakdownsduring harvest.

Indeed, it appeared more and morethat “the company was being bled tomaximize short-term profits, withoutmaking the type of critical capitalinvestments needed for the long-termfuture of the industry,” says AmericanCrystal board member Dave Kragnes, whogrows beets and grain on his Felton, Minn., farm.“The growers [including his father] could see that therewas money to be made if the plants were operated moreefficiently; truck drivers needed to be paid to drive, notsit. When the company needed money, it simply cutback on capital expenditures. The trust was milking thecompany dry. The growers felt they could run it better. ”

The Red River Valley Sugarbeet Growers Associationeven offered to pay for some new facilities to help speedthe harvest and stockpiling, but the company refused,fearing that growers might then want a voice in how thefacilities were operated. In 1971, growers became moreworried when the company suddenly shut down its plantin Chaska, Minn., rather than investing several million dol-lars to meet stricter air pollution standards. While earlierplant closings had concerned growers, this one scaredthem. The company was also threatening to cut backacres, along with rumors of a factory closing in the valley.

In the face of these cutbacks, growers concludedthat they could only influence the company’s directionfrom the inside. Al Bloomquist, the association’s execu-tive vice president, learned that food giant Borden was

willing to sell 100,000 shares, or 9 percent, of AmericanCrystal’s common stock, for $2.3 million. Through thepurchase of those shares, they hoped to gain a voice inthe future direction of the company. Bloomquistinformed the company of the association’s intent to buythe shares while simultaneously including a note thatasked whether the company’s board would entertain abuyout offer based on book value for its facilities.

During an industry meeting in Phoenix in March 1972,the company indicated it would be interested in a sale,although most officers and the directors had seriousdoubts that the farmers could pull off such a deal. Atthat time, the company’s book value was 66 percent

higher than its stock was trading for, hence earsperked up when there was mention of a sale

at those terms. Bloomquist was told toinvite the growers’ executive commit-

tee to meet with the American Crys-tal board in Denver in one week.

If the idea of buying a sugarcompany scared the growers, los-

ing such an opportunity wasworse. So the committee unani-

mously decided to pursue the buyout.Bloomquist may not have been universal-

ly loved by the growers, but he was well respect-ed and known as a man of integrity who was not afraidof big ideas. The growers also had faith in their attorney,William Dosland, one of the Valley’s most respectedlegal counsels. He advised the growers’ executive com-mittee that the key to making a good deal was to hire theright legal and financial professionals who could helpthem through mountains of paperwork, includingprospectus and proxy statements, and through potential-ly rancorous negotiations with skilled corporate lawyers.This they did, although the board had to swallow hardbefore agreeing to spend $500,000 for such services.

The law firm they hired quickly concluded that thecompany was not doing as well as indicated by the gen-erous dividends it was paying; they suspected the com-pany was playing tricks to keep stockholders happy.Uncovering the company’s true worth, they advised,would not be easy.

Undaunted, on March 8, the full 40-member associa-tion board voted 37-3 to pursue a deal.

After meeting with the St. Paul Bank for Cooperatives,it was decided the company should be operated as a

Co-op born of growers’ frustration with processor’s lack of long-term outlook


cooperative if a deal could be reached. Not only werecommercial lenders not interested in offering long-termfinancing, but a co-op offered tax advantages and liabil-ity protections that a for-profit business did not. Thecost was calculated at $60 million, plus $26 million moreto retire short and long-term loan obligations. The bankwanted growers to come up with $20 million.

One week after making the initial proposal, thegrowers’ team flew to Denver to meet the company’sboard. American Crystal directors were impressed bywhat the growers brought to the table and gave themone month, until April 15, to raise the money. The grow-ers then hired the Wall Street investment firm of LoebRhodes to polish their offer and, at the bank’s insis-tence, hired a German company, BMA, to more closelyappraise American Crystal’s seven sugar factories.BMA concluded that the factories were in better shapethan the growers thought, and could be operated asthey were. The Bank for Cooperatives issued a letter ofcredit for $66 million for the purchase, and $30 millionmore for seasonal operating loans. It said it was willingto study further loans for capital improvements.

The growers were advised it would be best to form astock corporation to buy American Crystal, which in turnwould immediately be purchased by the co-op. But thatalso necessitated bringing in an intermediate lender,since the Bank for Co-ops could not finance a stock cor-poration. A consortium of four banks was forged tofinance the initial buyout, until the co-op took over.

To finance the growers’ $20 million investment, theassociation developed a plan to expand the Valley’sbeet acreage and required growers to invest $100 foreach acre of beets they raised. Total acreage base wasset at 200,000 – or 40,000 more than contracted for in1972. Most growers supported theplan, although some were unhappyabout having to pay for somethingthey previously got for free –a beetcontract. But Bloomquist counteredthat a beet contract was never guar-anteed as long as someone elseowned the company.

Organized grower opposition circulated flyers say-ing it would be better to let American Crystal go broke,or to ship their beets to processors outside the Valley.The proponents’ education efforts stressed that thebuyout meant growers would own their beet contracts,that they could vote in how the company was operatedand that they would share in any profits. Further, theco-op would increase acreage and invest in plants forthe long term.

In the end, hope of success spoke louder than fearof failure.

On April 10, 1973, 1,500 growers jammed into theGrand Forks Armory to vote. Seventy percent of them(1,065) voted in favor.

The growers’ experts had to make sure there wereno unresolved liabilities or outstanding tax issues. Aftera month of negotiating, during which the growers’ teamhad flown 100,000 miles back and forth to Denver, adeal was approved pending completion of financialarrangements and approval by American Crystal’sshareholders.

Financing for growers’ still hinged on the coopera-tion of small, local banks and production credit associ-ations. In the end, nearly 60 Valley banks and PCAsloaned money to cover the growers’ investment.

Company shareholders overwhelmingly approvedthe sale on Jan. 23, 1973. On Feb. 21, Crystal GrowersCorp. paid $86 million, then merged into American Crys-tal and ceased to exist as a corporate entity.

Later that night, a joint celebration dinner was heldat Denver’s Brown Palace hotel. Bloomquist recallsthat several company directors told him they had nevereven been in the Red River Valley, nor ever seen a sug-arbeet. Most said they had doubted the farmers could

pull off the deal. “You really showed ussomething” one said to Bloomquist.

The transition to a co-op was com-pleted on June 14, 1973, and – after 74years of being headquartered in Den-ver or New York City – American Crys-tal had truly found a home in the RedRiver Valley. ■

In the end, hope of success spoke louder thanfear of failure.


By John R. Dunn, DirectorCo-op Resources Management DivisionUSDA Rural Development

ince 2000, theCooperatives Program ofUSDA RuralDevelopment has beenworking in

Ghana to build western-style cooperatives thathelp Ghanaian farmerssuccessfully market theirfarm products. The vitalwork in this poor, WestAfrican nation is carriedout under the banner ofthe ConsultativeCommittee onAgriculture and RuralDevelopment (CCARD).CCARD is a formal, gov-ernment-to-governmentrelationship betweenUSDA and the GhanaMinistry of Food andAgriculture (MOFA).

The purpose of theGhana Cooperative pro-ject is to extend westerncooperative models into aGhanaian setting to helpfarmers there transition toa more commercial levelof food production. Theproject operates with atwo-pronged strategy ofdirect advisory assistanceand training which targets

existing cooperativesand intervenes withGhanaian institutionsthat can help sustain the adoption ofwestern cooperative models over thelong haul.

CCARD conducts a series of jointactivities that serve the agricultural and

trade interests of both nations. USDAagencies with active involvement inCCARD include: Rural Development;Cooperative Research, Education andExtension Service, Foreign Agricult-ural Service; Natural Resources Con-

servation Service; and theAgricultural MarketingService. Activities conduct-ed by CCARD are fundedprimarily by the U.S.Agency for InternationalDevelopment (USAID).

The Ghana CooperativeAssistance project, managedby the CooperativesProgram of USDA RuralDevelopment, was initiallyfunded under USAID’sAfrican Trade andInvestment Program(ATRIP), but has since beenadopted by USAID’s mis-sion in Ghana. The ATRIP-funded project covered workboth in Senegal (in partner-ship with the Federation ofSouthern Cooperatives) andin Ghana (in partnershipwith OIC International).Current efforts focus exclu-sively in Ghana and parallelRural Development’sNigeria cooperative devel-opment project (see RuralCooperatives, Jan./Feb. 2004issue).

USDA co-op developmentef fo r ts suppor t commerc ia lfa rming in Ghana

S

Pineapples are inspected and packed for the export market at theFarmapine Ghana Ltd. Co-op. Top: Rice is harvested by members ofDawhenya cooperative, which is helping members sell higher value,milled rice. USDA photos by John Dunn and Tracey Kennedy


Capacity building at Ghana Cooperative College

The Ghana Cooperative College isa small institution in Kumasi, theAshanti region capital. It is chargedwith training managers and directorsof Ghana’s cooperative system in basiccooperative principles and businessskills. This college is extremely lackingin resources and was sliding intodecline, a result of diminishing publicfunding and, more significantly, ofreliance on the teaching of outdatedand ineffective top-down models ofcooperative enterprise. Reform andrejuvenation of the CooperativeCollege became one of the centerpieceprojects under CCARD.

As a first step, former USDACooperatives Program staff memberRosemary Mahoney was contracted toconduct a curriculum review andassessment for the college. Thisresulted in a series of recommenda-tions and strategies for improving theoverall conditions of the college.

In February, one of the centerpiecerecommendations was implementedwith the opening of a new computer-training facility at the college. Thenew computer lab will provide students

with basic training in business softwareand IT methods essential to contempo-rary business operations. The openingof the center represents a true public-private partnership. Partially funded byUSAID, with computer donations fromthe National Cooperative Bank,National Rural TelecommunicationsAssociation and the CooperativeDevelopment Foundation, the center ismanaged by volunteers of the U.SPeace Corps.

Future activity will include staffdevelopment, planning, and coopera-tive course designs, to be done in part-nership with the Cooperative Centerat the University of Wisconsin.

Cooperatives providetechnical assistance

Rural Development’s CooperativesProgram contracted with OICInternational, a Philadelphia-basednonprofit organization, to provide thein-country presence for the project,which worked directly with a set ofselected cooperative associations.Project coordinator FerdinandNyantakyi- Dapaah worked withcooperative organizations identified as“high potential” organizations. He

provided training and advisory assis-tance. The focus was on structural oroperating issues that were constrain-ing the organizations from taking thenext necessary step toward businesssuccess.

Farmapine Ghana Limited atNsawam, eastern region is a ‘farmer-owned’ limited liability companyowned by five pineapple cooperativesocieties (with an 80 percent share) andtwo limited liability companies (with a20 percent share) that received its orig-inal capitalization through a WorldBank loan. The cooperative’s goal wasto build an export- based marketingprogram for Ghanaian pineapples.Farmapine’s major challenges includedrestructuring its finances to replace theexpiring World Bank loan, improvingproduct handling practices, and resolv-ing significant schisms within themembership base.

The Cooperative Development pro-ject coordinator provided formal train-ing to 320 members of the five pineap-ple cooperatives to help in the devel-opment and implementation of work-able business plans, cooperative basicprinciples and governance, and pineap-ple crown reduction to meet exportrequirements. In addition, there is on-going mediation to help the coopera-tive work through these issues andmove to a more sustainable footing.Within two years of operation,Farmapine Ghana Ltd. became thesecond largest exporter of freshpineapples in Ghana.

Dawhenya Irrigation CooperativeRice Growers Society is an irrigated-rice cooperative composed of about 120farmers, each farming 1-2 hectares ofrice. This cooperative, formed around aGhanaian government irrigation plan,enabled farmers to produce high-qualityrice, but they lacked capacity to millmore than about 10 percent of themembers’ production, meaning theyhad to sell lower value, in-hull rice.

The development project workedwith the cooperative to establish amore formal business plan that provid-ed the foundation for the co-op toarrange milling services for all of its

Ghana Co-op College staff members try out computers at a new training center in Kumasi.


members’ crop. This basic, value-added improvement produced a prod-uct farmers could sell for nearly twicethe value of their unprocessed rice.Through the cooperative developmentproject, the members have also beenlinked to a large- scale buyer,Continental Commodity Trading Co.This company provides inputs forfarmers on credit and buys the majori-ty of the rice produced by these farm-ers, processes and packages it, thenmarkets the rice under the GhanaPride brand.

Cassava-starch projecthas major potential

A major poverty reduction initiativeunder Ghana President J. A. Kufourinvolves the creation of a starch-manu-facturing industry to help Ghanaianfarmers increase income from theircassava crop. Cassava, a root crop thatis a staple of Ghanaian diet, has histor-ically been subject to considerable loss-es. President Kufour’s program isintended to build 10 cassava-starchproduction plants over a five-year peri-od. They will sell commercial-gradestarch, primarily to European markets.The first of these plants, the AyensuStarch Company (ASCo), establishedat Bawjiase in the central region, wasformally commissioned by PresidentKufour on Feb. 24.

The cooperative development pro-ject is working with the GhanaianMinistry of Trade and Industry todevelop farmer cooperatives to supply

cassava root to the plants and, eventu-ally, to take an ownership position.Some 10,000 small farmers have beenorganized into cooperative units tosupport the initial plant of thisnationwide program. The grassroots,

democratic structures established forthese co-ops have facilitated produc-tion planning, input supply and tech-nical assistance. Additionally, two newfarmer cooperatives are being orga-nized for two new cassava-processingplants for Eastern and Ashanti regionsthis year.

Many challenges remainBusiness success is never guaranteed

for cooperatives, even in the mostadvanced economies. The vulnerabili-ties and fragilities present withineconomies of developing nations makethe cooperative development processeven more daunting. For example, inspite of its significant gains, the sur-vival of Dawhenya IrrigationCooperative Rice Society Ltd., is verymuch in doubt. The situation is thesame for another cooperative targetedfor assistance, Weiji IrrigationCooperative Vegetable GrowersSociety Ltd.

Significant changes in electric-price policies of the Ghanaian govern-ment have jeopardized the viability ofall agribusinesses tied to public irriga-tion projects. Many other challengeswill continue to face Ghanaian coop-eratives.

Other needs include: better trans-portation systems, more reliable utili-ties and communications systems, bet-ter post-harvest handling practices,adoption of meaningful grades andstandards and modern processing andpackaging capacities. These are justsome of the needs against whichGhanaian farmers must struggle torealize a degree of the success of theircounterparts in the developed world.Yet by addressing their problemstogether, in cooperative businesses thatthey own and in which they activelyparticipate, Ghanaian farmers arelearning the power of cooperation. ■

Often, when hearing of USDA’s efforts to helpcooperatives in developing nations, people ask“why?” This is understandable. The answer is basedon both pragmatism — it helps us — and a humani-tarian philosophy of helping others learn to supportthemselves.

Successful cooperatives will generate income forfarmers and directly contribute to economic growth.Increased income will, eventually, lead to increaseddemand for U.S. products. Stronger cooperative busi-

nesses in developing nations will also facilitate tradebetween those cooperatives and U.S. trading partners.

Activities of this sort — which improve the eco-nomic and social conditions in developing nations —build permanent reservoirs of goodwill toward theUnited States. The benefits of this can be far reaching.

Finally, participatory democracy is a fundamentalprinciple of the cooperative form of business. In a timeof challenge such as this, what better “product” canthe United States export than democracy? ■

Why help Ghana’s cooperatives?

By addressing theirproblems together,in cooperative businesses that theyown and in whichthey actively partic-ipate, Ghanaianfarmers are learn-ing the power ofcooperation.


By Bruce J. Reynolds,

EconomistUSDA Rural Development/RBS [email protected]

Editor’s note: This article is the second in athree-part series on selecting and compen-sating directors. The first article discussedmethods cooperatives use to select and nominate board candidates (see page 21 of the November-December 2003 issue, on line at: www.rurdev.usda.gov/rbs/pub/openmag.htm.). This second article exam-ines election and member voting policies.

he critical trade-off incooperative voting poli-cies is the need to estab-lish sufficient voice formembers in electing their

directors, while at the same time pro-viding for a certain amount of boardindependence from disruptive memberpressures. Election and voting policiesare designed to choose directors whowill exercise leadership in reconcilingmember interests and prioritizing goalsthat will yield the most long-term ben-efits for membership as a whole.

Survey results of election and votingpolicies show different ways that coop-eratives have sought to establish lead-ership that both represents membersand achieves business success. The fol-lowing six policies influence this bal-ance:

• board size in relation to membership;

• term lengths;• term limits;• competitive elections; • outside directors;• member voting power.

Many of these policies have variouskinds of interrelations. For example, inthe first policy issue, the number ofboard seats is influenced by the size ofthe membership. As another example,cooperatives with the longest directorterms more often apply limits on thenumber of times a director can be re-elected. In addition, the much-debatedissue of member voting power centers

on whether larger producers shouldhave more votes than provided by aone member-one vote policy. Thispoint was raised in an article aboutpreparing for the future in the Nov-Dec 2003 Rural Cooperatives. A ques-tion for research is whether votingmethod influences a tendency foreither relatively large or small farmersto serve on cooperative boards ofdirectors. To help answer this question,data were collected on the farm size ofdirectors in relation to the member-ship as a whole.

Board sizeTable 1 reports the number of

director seats on cooperative boards,sorted by different membership sizeintervals. Seven-member boards arethe most popular board size, with nineand five-member boards being the nextmost popular sizes. Only in the largestmembership size interval, 3,000 andabove, are nine directors the most fre-quent board size (occurring in 16 outof 80 cooperatives).

E lect ion and vot ing po l ic ies o f agr icu l tu ra l cooperat ives

T

Table 1: Size of board of directors for 437 respondent cooperatives in2003, expressed as a percent of membership size intervals and in total.

Number of directors on respondent boards

Members 5 7 9 : 6&8 >9 : Cooperatives

<800 13% 52% 19% : 6% 10% : 144

800-1,499 10% 35% 23% : 10% 22% : 107

1,500-2,999 8% 26% 25% : 6% 35% : 106

>3,000 9% 17% 20% : 15% 39% : 80

Total 11% 35% 22% : 8% 24% : 437

Election and votingpolicies are designedto choose directors whowill exercise leader-ship in reconcilingmember interests andprioritizing goals…


As membership size increases, sodoes the frequency of boards withmore than nine directors (see column>9, table 1). For boards that exceednine directors, no particular board sizepredominates, being widely dispersedin the range from 10 to 51 directors.But the fact that nine directors is themedian for co-ops with 1,500 or moremembers shows that large organiza-tions also tend to restrain the size oftheir boards.

Table 2 reports the data for surveyrespondents that have only at-largedirectors (no districts), and for thosewith districts. There were 145 respon-dents without districts and 292 withdistricts. The latter generally havelarger boards, with a much higher per-cent having more than nine directors,while 48 percent of cooperatives with-out districts have a board size of 7directors. Another distinction, thoughnot reported in Table 2, is cooperativeswith membership districts where mem-bers, or delegates, elect only the direc-tor for their district (and perhaps oneor two at-large directors), vs. thosewhere directors are elected by district,but all members get to vote for alldirectors, regardless of which districtthey live in.

Term lengthsLength of board terms varied

between one to seven years, with threeyears being the overwhelmingly popu-lar choice. The survey results for thisquestion are reported in table 3. Theseven cooperatives with seven-yearterms are all in Tennessee, suggesting

that at the time these cooperativesorganized there, the state incorpora-tion statute may have specified thatparticular term length.

Term limitsLimits on the number of consecutive

times directors can serve (term limits)are used by 154 cooperatives (35 per-cent), while 281 (65 percent) have nolimits on consecutive terms (based on435 responses). Term limits are now

more frequent than in the past, as indi-cated by comparison with the 1949 sur-vey.1 In that survey, 76 cooperatives (8 percent) had term limits, while 827cooperatives (92 percent) let incum-bents run for election to board seats foran unlimited number of terms.

Furthermore, out of 31 respondentswith term lengths of one or two years(those in the first two columns of table3), none have term limits. This seems

only practical, since the incumbentshave to run for election so frequently.Three of the seven respondents havinga seven-year term prohibit directorsfrom running for a second term, butthe other four have no term limits.

Of the 154 cooperatives reportingthe use of term limits, 149 also report-ed the maximum number of consecu-tive terms directors may serve. Four ofthese respondents prohibit election toconsecutive board terms, i.e., a one-term limit. Table 4 reports the numberof respondents with term limits. Ineach of six instances where co-ops limitdirectors to five or six consecutiveterms, the term length is three years.Many cooperatives allow members whohave reached the limit on consecutiveterms to run again after they have beenoff the board for one term.

Competitive electionsMany democratic organizations,

including some cooperatives, havenominating committees that follow the

recommendations of Robert’s Rules ofOrder in submitting only one candi-date for each board vacancy.2 However,cooperatives have traditionally beenadvised to run more than one candi-date per seat, usually by encouragingopen and flexible processes for nomi-nating candidates.3 About one-third(148) of respondent cooperativesrequire that at least two candidates runfor each board seat.

Table 2: Size of board of directors for 437 co-ops surveyed in 2003,expressed as a percent of co-ops without districts and with districts.

Number of directors on the boards

Cooperatives 5 7 9 : 6&8 >9

Without districts 17% 48% 22% : 5% 8%

With districts 7% 29% 22% : 10% 32%

Total 11% 35% 22% : 8% 24%

Table 3: Length in years of an elected term on the board, reported by 434cooperatives, 2003.

Term length (years) 1 2 3 4 5 6 7

Number of cooperatives 19 12 382 9 4 1 7

Table 4: Single term and consecutive terms that members may serve onthe board, reported by 149 cooperatives with term limits, 2003.

Number of terms 1 2 3 4 5 6

Number of cooperatives 4 17 90 32 5 1


There is no practical reason fornominating committees to limit theirselection and nomination to one candi-date per seat. Robert’s Rules have formore than a century been a useful pro-cedural guide, but their applicationsought to be flexible. The rules haveinfluenced some organizations to adoptgovernance policies that might beimpractical for many applied situa-tions, as noted by one scholar.4

One survey respondent from acooperative without an opposing can-didate requirement commented that itstill always has two candidates run forboard seats. Ten other respondentscommented that, although notrequired, they still make extra effortsto recruit second candidates, but donot always succeed.

Several respondents commentedthat two opposing candidates arepreferable, but finding members to runfor the board is difficult. Anotherrespondent mentioned that the coop-erative recently terminated the policy

of having at least two opposing candi-dates because “members got tired ofgetting beat” when running againstincumbents.

Outside directorsOne of the traditional requirements

for directors is that they are membersof the cooperative. Various objectivescan be accomplished by requiringcooperative boards to exclusively con-sist of members, with member controlbeing especially important. Memberscan also establish control when aminority of non-members may serve ona board, so long as member directorscan exercise a majority under all votingand decision rules where more than asimple majority might be required.

In this survey, 18 cooperativesreported having outside, or non-mem-ber, directors with the power to voteon decisions. Two of the 18 coopera-tives define their outside board mem-bers as “public directors,” while 16cooperatives select outsiders to servefrom the general community of busi-ness leaders and professionals. Four ofthe 16 had more than one seat ontheir boards designated for outsidedirectors.

An equally impor-tant trade-off is tohave a board thatcan pursue indepen-dent deliberation,and not simplydeliver mandatesfrom their support-ers or districts.

Photo by Richard G. Biever, courtesy Indiana Statewide Association of RECs.


Some respondents commented thattheir bylaws permit outside directors,but that they did not exercise thatauthority. Others said they were study-ing the use of outside directors. In sur-veys completed by co-op managers,several wrote that having one seat onthe board designated for a non-mem-ber with special business or profession-al experience would be very helpful tomanagement.

Farm size and voting method Does a policy of one member-one

vote result in disproportionate influ-ence by relatively small farmers? Thisquestion can only be answered on acase-by-case basis, but the compositionof boards in terms of relative farm sizeis worth a look. The survey resultsshow the extent to which boards aremade up of the largest farmers in acooperative’s membership. There areno presumed advantages or disadvan-tages of directors having either large orsmall farms. Of course, the critical dis-tinction is differences in patronage vol-ume, and farm size is only an approxi-mation. But above all, electing the bestdirectors possible is the key task.

The issue of member voting poweris often debated under the assumptionthat the one member-one vote proce-dure results in boards with under-rep-resentation for large farm operators(large volume patrons). Some arguethat proportional voting corrects suchimbalance, and feel that this method isused too infrequently. Out of the 379survey responses on the relative farmsize of directors, only 27 have propor-tional voting.

Table 5 reports the percent of direc-tors in the four quartiles (the smallest25% of members are in the 1st quar-tile). The percent of directors in thelargest and smallest halves for coopera-tives with proportional voting and forthose with one member-one vote arealso reported in table 5. Even thoughthe size of the two comparative groupsis lopsided, it shows that proportionalvoting resulted in more of the largerproducers being elected to boards ofdirectors. The 4th quartile of farm

operators by size held 37% of theboard seats in 27 proportional votingcooperatives, in contrast to 26% in the352 one member-one vote coopera-tives. Still, most one member-one votecooperatives also prefer to elect direc-tors from among the relatively largestfarmers in their membership. About63% of one member-one vote cooper-atives elect directors who are amongthe largest half of farm operating sizein the membership.

Policy by designDesigning policies for board elec-

tions and member voting can be a sim-ple matter of adopting commonlyreported practices or implementing therecommendations from manuals suchas Robert’s Rules. It can also be moredemanding when members take it uponthemselves to design a system thatreflects their values and, more specifi-cally, try to balance attributes thatwhile creating some friction, caninduce more pressures for superiorleadership. Election and voting policiesusually try to offer members goodchoices and enough influence from vot-ing so that elected directors will repre-sent their interests. But an equallyimportant trade-off is to have a boardthat can pursue independent delibera-tion, and not simply deliver mandatesfrom their supporters or districts.

Another trade-off, discussed in thearticle on selecting candidates, involves

the importance of election and votingpolicies that support the developmentof strong team-building on the board.Yet, brought to an extreme, a cohesiveteam can be complacent and unrecep-tive to new ideas that challenge the sta-tus quo.

Election and voting policies usedmost frequently are not necessarily thebest. That evaluation has to be madein the context of each individual orga-nization. When members are involved

with designing or revising their poli-cies, a fresh and creative approach canmake the difference between the mere-ly functional and the achievement ofexcellence in the governance of coop-eratives.

1 Nelda Griffen, H. N. Weigandt and K. B.

Gardner, Selecting and Electing Directors of

Farmers’ Cooperatives. USDA/Farmer

Cooperative Service, General Report #14,

1955.

2 Henry M. Robert III, et al, Robert’s Rules of

Order. 10th edition, 2000, (1st edition, 1876) p.

419.

3 Helim H. Hulbert, David Volkin, and Nelda

Griffen, Bylaw Provisions for Selecting Directors

of Major Regional Farmer Cooperatives.

USDA/Farmer Cooperative Service, General

Report # 78, 1960, p. 12-13.

4 Russell Hardin, Liberalism, Constitutionalism,

and Democracy. Oxford University Press, 1999,

p. 110.

Table 5: Percent of directors in farm size quartiles of the membership forcooperatives with proportional voting and with one vote per member.

Proportional voting One member-one vote

(27 co-ops) (352 co-ops)

Percent Percent1st quartile 9 122nd quartile 17 253rd quartile 37 374th quartile 37 26

100% 100%

Smallest half 26 37Largest half 74 63

100% 100%


By Pamela J. Karg

Editor’s note: Karg is a freelance journalistbased in Baraboo, Wis., with more than 20years experience writing about cooperatives.

t started as a way to tack-le issues swirling aroundderegulation of the elec-tric industry. But theeffort led to a merger

that has since become the organiza-tional norm, rather than the exception,for the nation’s state cooperative coun-cils. As individual members and coop-eratives change, America’s state coop-erative councils have had to changealong with them to survive.

The trendsetter for broader-basedco-op councils was Wisconsin in thelate 1980s. Rod Nilsestuen, now thestate’s secretary of agriculture, thenheaded the Wisconsin Federation ofCooperatives (WFC), which had a pri-marily farm co-op membership base.The Wisconsin Rural ElectricCooperative Association (WRECA) satdown to talk with WFC about workingtogether to educate legislators and oth-ers about electrical deregulation issues.At that time, Wisconsin and Californiawere in a dead-heat to be the first toderegulate. Each had proponents whowanted to win that race.

“We knew each other,” Nilsestuenexplains of the relationship betweenWisconsin’s farm and electric co-opassociations. “Many rural electricswere members of WFC. We had cross-over membership where, for example,a dairy farmer representative to WFCmight also be a rural electric represen-tative to the state electric association.”

The net result of the meeting of thetwo organizations was an interim man-

agement plan for the rural electricassociation to reorganize and restruc-ture, initially to ward off any fall-outfrom deregulation, Nilsestuen says.The management plan turned into acoalition. That, in turn, led to a consol-idation of office space and, eventually, amerger of staff.

Unbeknownst at the time, this join-ing of the state co-op farm and theelectric councils was the forerunner ofsimilar moves made by a number ofcooperative councils in other states,which are broadening their member-ship to include farm and non-farmcooperatives.

A changing rural landscapeCooperative service and trade asso-

ciations, including state councils, havebeen at the vortex of a changing rurallandscape. In agriculture, for example,there are fewer, larger farming opera-tions. In turn, there are fewer, yet larg-er farmer-owned cooperatives. Smallerco-op organizations are consolidatingto better serve larger farming opera-tions.

Fewer cooperatives means fewerdues-paying members in state co-opcouncils. Simultaneously, technologicaladvances are making it possible forpeople to communicate from oppositesides of a state, the nation or even theworld just as though they were in thesame room.

Amid the multi-faceted businesschanges, Wisconsin and Minnesotafarmers began talking about how theirstate co-op councils could better servethem. As a center of America’s dairyindustry, milk producers from bothstates had been working togetherthrough cooperatives for much of thepast century. The two states also had

worked together in other organizationsto form an Upper Midwest power-house of cooperative activities.

So it came as no surprise whenWFC and the Minnesota Associationof Cooperatives (MAC) announced analliance in 1999. Nilsestuen says thehistory of working together helped thetwo state councils grow together,develop a cooperative research consor-tium and establish the CooperativeDevelopment Service. MAC, in partic-ular, had been struggling in a numberof areas, and it was felt it could bestrengthened through the union withWisconsin.

When the separate boards approvedthe alliance, each organization kept itsseparate identity, yet gained the singlemembership benefits from shared pro-grams that increase program efficiencyand effectiveness. The alliance is prov-ing successful by coordinating educa-tion, dairy and communications pro-grams, as well as certain administrativefunctions, he observes. Each state con-tinues to operate its own legislativeaffairs office.

“It proved to be a mechanism formembers to do things together thatthey just couldn’t do separately,”Nilsestuen says.

Volunteers are essential “What keeps these organizations

going is the volunteer help they get,”says James R. Barnett, past presidentof the Mid-Atlantic Alliance ofCooperatives (MAAC). “As individualcooperatives merge and look at theirbudgets, they try to reduce their costsand decide to pay for only one mem-bership where, prior to merger, theywould have had to pay for at least twomemberships. With fewer and fewer

Shar ing the umbre l laState co-op councils broaden base to serve consolidating co-op sectors

I


employees and members, you haveless people to carry out programs.The people you do have, have lesstime to commit to helping put onprograms.”

Something had to give before allwas lost in the region. So the leadersfrom 24 Pennsylvania- and Maryland-based cooperatives formed a jointorganization. They recognized theywould individually gain strength bycombining efforts to meet their spe-cialized needs and interests.

“It’s not always easy,” admits

Barnett. “People with both organiza-tions — some for 30 years — ask,‘How can you let this go away? Ihelped build this up — how can I let itgo?’”

According to the MAAC leader,cooperatives face many challenges: theneed to increase profitably and com-petitiveness; managing change; theneed to expand membership; hiring,training and retaining employees.Through MAAC, the member cooper-atives are creating services that willhelp them deal with a host of prioritiesin today’s business world. The organi-zation’s primary thrusts are education,networking, encouraging appreciationfor co-ops and strengthening commu-nities through cooperatives.

Pennsylvania and Maryland statecouncil directors initially served on thenew MAAC board. They fed the neworganization hundreds of ideas of whatprogramming to maintain to meet its

goals. The directors decided to takethe strengths of the founding councils— including youth programs, youngcooperator workshops and directortraining sessions — and parlay theminto the common ground on which tobuild MAAC.

“We had been using the NationalInstitute on Cooperative Education(NICE) as a carrot — an incentive —to get youth to our programs,” Barnettexplains. “When they participated, wehad a process to select several youthsto attend NICE. With the reorganiza-

tion of NICE [now held strictly as ayouth co-op education conference], welooked at the programming, foundways to keep our youth involved in thenew NICE program and we have somesuccess stories.”

Even though MAAC found feweryouth with cooperative experience, itdecided to target groups for specializedcooperative training. For example, 75percent of last year’s state FFA officersparticipated in a MAAC program.Meanwhile, the director-trainingworkshops become more sophisticatedbecause, as farms and cooperativesgrow, so do oversight issues.

“When you make a decision anymore, it’s not just a million-dollarquestion, but a $5 million or a $500million question,” Barnett says. “So weneed to make sure our programs givedirectors a better understanding offinancing, how to ask the right ques-tions of general managers and how to

speak up at meetings to make them-selves heard.”

Gaining political powerthrough co-op unity

Back in Wisconsin, the WFC-MACAlliance headed to the statehouserather than concentrating on theschoolhouse. While communicationand education are important, the realvalue comes from its political know-how and perseverance.

“We are very ‘retail’ oriented,” saysBill Oemichen, president and CEO of

the WFC-MACAlliance. He and theAlliance were seeminglymade for each other.Oemichen formerlyserved as deputy com-missioner of theMinnesota AgricultureDepartment and then asWisconsin’s top con-sumer protection officialat the WisconsinDepartment ofAgriculture, Trade andConsumer Protection —the agency Nilsestuennow heads. The attorney

stepped into his Alliance leadershiprole in 2002. That ‘retail’ orientationmeans the Alliance continually listensto its members to determine what theyexpect of their trade association.

“What a lot of cooperatives aretelling us is that we need to function astheir trade association, representingtheir legislative interests to the gover-nor, legislatures, state and federaladministrations and agencies and toCongress,” Oemichen says. “Ourmembers and leadership put forwardideas that they want us to enact tomake the business environment easierfor cooperatives to operate.”

While many cooperatives are get-ting larger, it creates niches for small-er cooperatives to serve other mem-bers’ needs. The Alliance strives toput forward legislation that helpscooperatives regardless of size, ser-vices, sector and other distinguishingfeatures. Bringing together nearly 800

“Our members and leadership put forward ideas they want us toenact to make the business environment easier for cooperativesto operate in,” says Bill Oemichen, president of the MFC-MACAlliance. Photo by Pamela J. Karg

“What keeps these organizations goingis the volunteer help they get,” saysJames Barnett past president of theMid-Atlantic Alliance of Cooperatives.


separate cooperatives — some of themcompetitors in the marketplace or thecountryside — is often a struggle,Oemichen admits.

With its Scandinavian background,Minnesotans are more governmentactivists. They’re very involved indeveloping new agricultural coopera-tives. By contrast, Wisconsin’sGerman Lutheran and Catholic back-ground gives it a more conservativeflavor.

“But we’re learning from eachother, blending different attitudes andengaging in healthy discussions thatare leading us to make more innova-tions,” he says.

“Yet it’s efficient, becauseWisconsin and Minnesota coopera-tives face similar challenges and theyrealize the alliance can bring politicalpower to the lobbying process. In ourdiversity, we’re finding our power,”Oemichen says. “But our real power isthat unity, because we come togetheras cooperatives to talk to politicalleaders. That’s 2.9 millionWisconsinites and 3.4 millionMinnesotans. That’s 20 percent of allthe members involved in the 48,000cooperatives across the United States.That’s pretty powerful.”

Legislative focus benefits all Dairy producer Edward Brooks also

sees great value in regional co-op orga-nizations. Brooks, who milks 50 BrownSwiss cows, serves as board chairmanof the Foremost Farms USA dairycooperative, headquartered in Baraboo,Wis., and as chairman of WFC, withoffices in Madison, Wis. (The MAChalf of the Alliance is housed in St.Paul, Minn., and it is chaired by CurtEischens of CHS Cooperative.)Foremost ranks as the 26th largestcooperative in America, according tothe National Cooperative BusinessAssociation. But even large co-ops likeForemost rely on trade associationssuch as the WFC-MAC Alliance,Brooks says.

“I don’t think Foremost would haveenough resources to cover all the dif-ferent legislative issues that could

impact its business operations and itsmembers in the seven different stateswhere we have a presence,” Brookssays. “The Alliance has people who canfollow all those issues. They know howthey all work together and they havepeople who are respected in state capi-tals who can communicate our pointsof view.”

The Alliance backs up legislativepositions presented by staff with itsmembers’ CEOs and directors, makinglegislative contacts and testifyingbefore committees. These local coop-erative leaders such as Brooks are onthe frontline, living within current leg-islation and ably equipped to providefirst-hand explanations for making newlaws, Oemichen says.

Brooks sees other advantages toworking together through the Alliance.For example, when Wisconsin cooper-atives pushed to develop rural grouphealth cooperatives, it could examineand build on Minnesota’s experience.Or, when Minnesota cooperative lead-ers across sectors wanted to delve intosome type of dairy investment taxcredit program, they could pull out thebest parts of a Wisconsin plan.

“I think working together throughthe Alliance has made us wiser andallowed us to feed off of each other’sexperiences so that we’re all strongerin the long run,” Brooks says.

Follow the member trailRecently, Chuck Cruickshank

addressed Mid-Atlantic membersattending their first-ever annual meet-ing. The director of procurement andmember services for the Mid-Atlanticregion of Land O’Lakes, Cruickshanktalked about profitability, stayingcompetitive, keeping current andmeeting price expectations. Yet, hecited survey results where 44 percentof respondents worried whether theirco-op would be able to compete inthe future.

With challenges of governmentregulation, dwindling numbers, pres-sures to consolidate and a volatileeconomy, Cruickshank said that ifcooperatives are to survive, they have

to move ahead of the customer, avoidcommodity pitfalls, demonstratestrategic agility and form partnershipswith other cooperatives and with theprivate sector.

If a cooperative is only as effectiveand profitable as its individual members,how do the changes taking place acrossrural America then impact the organiza-tions that serve the cooperatives?Examine what individual members aredoing and figure out where the organi-zation needs to head, advises BruceAnderson, professor of business man-agement and marketing in the Collegeof Agriculture and Life Sciences atCornell University, Ithaca, N.Y.Anderson also serves as an advisor to theNortheast Cooperative Council(NECC), which focuses on co-op edu-cation issues, and as a director of a pur-chasing cooperative owned by Cornellsororities and fraternities. Strategicplanning is one of Anderson’s specialties.

When farm numbers decreased inNew England, so did the number ofcooperatives. Like other regions, thesurviving farms and cooperatives werelarger. NECC responded by expandingits membership area to include allNortheastern states’ agricultural co-opcouncils, extending to the New York-Pennsylvania border.

“I think we realized that our inter-ests are so diverse that we couldn’t getconsumer cooperatives or credit unionsinvolved with agricultural coopera-tives,” Anderson says. “It could happenin the future,” he speculates. “If thefinancial pain ever gets high enough,people do come together in the sameroom and start to think about workingtogether. But, right now, things lookpretty good.”

There’s no doubt in his mind thatmore consolidations will come —whether across sectors, within indus-tries or among state councils — as thecooperative movement goes forward.Whether they fill education voids orform a political front, Anderson saysall cooperatives will still need to worktogether through some type of tradeassociation to tackle issues unique totheir business structure. ■


CALIFORNIAAgricultural Council of CaliforniaDonald G. Gordon, Jr., President1225 H StreetSacramento, CA 95814-1910Telephone: (916) 443-4887 FAX: (916) 443-0601 E-Mail Address: [email protected] Home Page: www.agcouncil.org

COLORADOColorado Cooperative Council, Inc.Doyle Smith, ConsultantP.O. Box 506, Eaton, CO 80615Telephone: (970) 454-4054 FAX: (970) 454-4082 E-Mail Address: [email protected]

FLORIDAFlorida Council of CooperativesPerry Hansen, PresidentP.O. Box 287Waverly, FL 33877Telephone: (813) 439-3602 FAX: (813) 439-2639

GEORGIAGeorgia Cooperative Council, Inc.Dick Schermerhorn, Executive DirectorP.O. Box 447Bethlehem, GA 30620Telephone: (706) 542-0768 FAX: (706) 542-0851 E-Mail Address: [email protected] Page:www.agecon.uga.edu/~gacoops/

IDAHOIdaho Cooperative Council, Inc.Rick C. Waitley, Executive Director55 SW 5th Avenue, Suite 100Meridian, ID 83642-3030Telephone: (208) 888-0988 FAX: (208) 888-4586 E-Mail Address: [email protected]

ILLINOISIllinois Cooperative CoordinatingCommitteeJim Fraley, Secretary

1701 Towanda AvenueBloomington, IL 61701Telephone: (309) 557-3109 FAX: (309) 557-3729 E-Mail Address: [email protected]

IOWAIowa Institute for CooperativesDavid Holm, Executive Director2515 Elwood Drive, Suite 104Ames, IA 50010-8263Telephone: (515) 292-2667 FAX: (515) 292-1672 E-Mail Address:[email protected] Home Page: www.iacoops.org

KANSASKansas Cooperative Council(Vacant), Executive Vice President816 SW Tyler, Suite 300Topeka, KS 66612-1635Telephone: (785) 233-4085 FAX: (785) 233-1038 E-Mail Address: [email protected] Page: www.kansasco-op.coop/

KENTUCKYKentucky Council of CooperativesDr. Lionel Williamson, State Coordinator APES306 Charles E. Barnhart BuildingUniversity of KentuckyLexington, KY 40546-0276Telephone: (859) 257-1637 FAX: (859) 323-1913 E-Mail Address: [email protected] Home Page: www.uky.edu/Ag/AgEcon/apes_2002prog.html

LOUISIANALouisiana Council of Farmer CooperativesLenny Waguespack, SecretaryP.O. Box 67St. James, LA 70086Telephone: (225) 265-4056 FAX: (225) 265-4060 E-Mail Address:[email protected]

MID-ATLANTIC(Serving Maryland, Pennsylvania,Delaware and New Jersey)Mid-Atlantic Alliance of CooperativesPatricia E. Heuser, Executive Director526 Brittany DriveState College, PA 16803Telephone: (814) 238-2401 FAX: (814) 238-7051 E-Mail Address: [email protected] Page:maacooperatives.org

MID-AMERICA COOPERATIVE COUNCIL(Serving Illinois, Indiana, Michigan andOhio, some of which still maintain statecouncils for some functions)Martin Hall, Executive DirectorP.O. Box 223Caledonia, MI 49316Telephone: (616) 891-5547FAX: (616) 891-5598E-Mail Address:[email protected] Page: www.macc.coop

MINNESOTAMinnesota Association of CooperativesAmy Fredregill, Managing DirectorBlair Arcade West, Suite Y400 Selby AvenueSt. Paul, MN 55102Telephone: (651) 228-0213 FAX: (651) 228-1184 E-mail Address: [email protected] Home Page: www.wfcmac.coop

MISSISSIPPIMississippi Council of CooperativesHarry Dendy, Secretary/TreasurerP.O. Box 122Clinton, MSTelephone: (601) 925-5423

State or regional cooperative associations


MISSOURIMissouri Institute of CooperativesKristi Livingston, Education CoordinatorUniversity of Missouri125C Mumford HallColumbia, MO 65211-6200Telephone: (573) 882-0140 FAX: (573) 882-3958 E-Mail Address: [email protected]

MONTANAMontana Council of CooperativesWalter Coffman, Executive Secretary2250 8th Lane NEDutton, MT 59433Telephone: (406) 753-2296 FAX: (406) 753-2296 E-Mail Address: [email protected]

NEBRASKANebraska Cooperative CouncilRobert C. Anderson, President134 South 13th Street, Suite 503Lincoln, NE 68508-1901Telephone: (402) 475-6555 FAX: (402) 475-4538 E-Mail Address: [email protected] Home Page: www.nebr.coop

NORTH CAROLINACooperative Council of North CarolinaCarlyle Teague, PresidentP.O. Box 10426Raleigh, NC 27605Telephone: (919) 834-5544 FAX: (919) 828-9322 E-Mail Address: [email protected]

NORTHEASTNortheast Cooperative CouncilDept. of Applied Economics & ManagementBrian Henehan, Senior Extension AssistantRoom 203, Warren HallCornell UniversityIthaca, NY 14853-7801Telephone: (607) 255-8800 FAX: (607) 255-9984 E-Mail Address: [email protected] Home Page:www.cooperative.aemcornell.edu

OKLAHOMAOklahoma Agricultural Cooperative CouncilMike Frickenschmidt, Executive DirectorP.O. Box 251Enid, OK 73702Telephone: (580) 233-2115 FAX: (580) 242-1030 E-Mail Adress: [email protected] Home Page: www.okagcoop.org

OREGONAgricultural Cooperative Council ofOregonJohn H. McCulley, ExecutiveSecretaryP.O. Box 2042Salem, OR 97308-2042Telephone: (503) 370-7019 FAX: (503) 587-8063 E-Mail Address: [email protected]

SOUTH CAROLINASouth Carolina Cooperative CouncilMarie Stiles, CMP, Executive Director151 Rocky Ridge RoadLeesville, SC 29070Telephone: (803) 463-9706FAX: (803) 604-9141 E-Mail Address: [email protected]

SOUTH DAKOTASouth Dakota Association of CooperativesBrenda Forman, Executive Secretary222 East Capitol Avenue, Suite 1Pierre, SD 57501Telephone: (605) 945-2548 FAX: (605) 945-2269 E-Mail Address: [email protected] Home Page: www.sdvalueadded.coop

TENNESSEETennessee Council of CooperativesHubert King, General MaganerP.O. Box 272McMinnville, TN 37110Telephone: (931) 473-3116 FAX: (931) 473-4939

TEXASTexas Agricultural Cooperative CouncilTommy Engleke, Executive Vice President6210 Highway 290 East, Suite 300Austin, TX 78723Telephone: (512) 450-0555 FAX: (512) 450-0655 E-Mail Address: [email protected] Home Page: www.texas.coop

UTAHUtah Council of Farmer CooperativesChristopher Falco, General Manager8700 South 700 WestSandy, UT 84070Telephone: (801) 255-4228 FAX: (801) 255-4678

VIRGINIAVirginia Council of Farmer Cooperatives, Inc.Hugh Harris, Executive SecretaryP.O. Box 25202Richmond, VA 23260-5202Telephone: (804) 281-1452 FAX: (804) 281-1141 E-Mail Adress:[email protected] Page: www.vcfc.net

WASHINGTONWashington State Council of FarmerCooperativesDan Coyne, Executive Director9103 Chestnut Hill Lane, SEOlympia, WA 98513Telephone: (360) 786-8180 FAX: (360) 438-9170 E-Mail Address: [email protected] Home Page: www.wscfc.org

WISCONSINWisconsin Federation of CooperativesBill Oemichen, President and CEO131 West Wilson Street, Suite 400Madison, WI 53703-3269Telephone: (608) 258-4400 FAX: (608) 258-4407 E-Mail Address: [email protected] Home Page: www.wfcmac.coop ■


en years ago, none of the2,500 U.S. cooperativesand other rural business-es that make upCoBank’s membership

connected electronically with theDenver-based bank.

Today, nearly 1,000 of CoBank’scustomers manage their loan accountsand company funds through the bank’sonline delivery platform, CoLink®,with a growing number of them usinga more robust line of cash-manage-ment services: CoBank Cash Manager.

Online banking and cash manage-ment is just one way CoBank hasresponded to its customers’ changingbusiness needs in recent years. Facedwith increasing consumer demands,along with pressing regulatory, politi-cal, environmental and trade policyissues, CoBank’s customers haverequired greater resources and capabil-ities to compete in the marketplace. Asa major provider of financial productsand services to rural America, CoBankhas actively focused on anticipating itscustomers’ changing needs and deliver-ing the competitive advantages theyrequire to succeed in their businesses.

“We are continually looking for waysto deliver more value and adapt to ourcustomers’ needs and to the market-place,” says Douglas D. Sims, CoBank’sCEO. “Adaptability has been key to ourcustomers’ success and to CoBank’s.”

For example, CoBank, a federallychartered bank in the Farm CreditSystem (FCS), is part of a broad coali-tion of cooperatives and agriculturalassociations that support legislation toallow CoBank to finance a new genera-tion of farmer-owned cooperatives.Increasingly, CoBank’s cooperative cus-tomers are adjusting their corporatestructures so they can access newsources of nonmember equity capital.Some of these new structures create eli-gibility issues for organizations whichwant to do business with CoBank.

“We believe these new cooperativestructures can be especially useful for

value-added farmer-owned coopera-tives in certain situations,” Sims says.“This legislation will continue to allowthe flow of capital to rural America.Access to capital is key to any growingand changing business. CoBank musthave the same ability to adapt as itscustomers if the bank is going to suc-ceed in today’s business environment.”

In an increasingly competitive envi-ronment that has produced fewer, butlarger, cooperatives, building CoBank’sfinancial capacity remains an ongoingpriority. In November 2003, CoBankstrengthened its capital position by

issuing $200 million in perpetual pre-ferred stock under favorable marketconditions. This outside infusion ofcapital — CoBank’s second in threeyears — further positions the bank tomeet the growing needs of its cus-tomer-owners.

Building capacity extends beyondfinancial transactions, such as preferredstock issuance, to business expertiseand people. To help the bank continueto fulfill all aspects of its mission ofserving U.S. agriculture and ruralAmerica, CoBank has established com-plementary strategic partnerships andalliances that broaden CoBank’s accessto capital, products and services. Someof these partners are Farm CreditSystem banks and associations; othersare well-known commercial banks orinternational correspondent banksaround the globe. This network helpsCoBank bring billions of dollars inloan capital to CoBank’s customers,deliver cash management services torural America, and finance $200 mil-lion in ag exports sales monthly.

In addition, in early 2004, CoBankincreased its ownership stake in FarmCredit Leasing Services Corporation

(FCL) from 82 percent to 100 per-cent. As a wholly owned subsidiary,FCL strengthens the bank’s ability todeliver on its value proposition ofbringing market-competitive leasingservices to rural America. To reachsuch a wide market, FCL will partnerwith Farm Credit associations toensure that the leasing needs of theircustomers are met.

In a post-Enron age shaped by theSarbanes-Oxley Act, CoBank has fur-thered its long-standing commitment togood governance and transparent dis-closure practices. A special restructuringcommittee of the bank’s board of direc-tors is developing recommendations toenhance CoBank’s governance. Oneresult is likely to be a reduction in sizeof CoBank’s board, which now numbers26 directors. The committee is alsoconsidering the need for additional out-side or independent directors, and forincreased attention to the qualificationsof future board candidates.

For the past five years, CoBankshareholders have received an averageof $125 million per year in cashpatronage as a result of their invest-ment in the bank. ”

“It’s balancing the right combinationof so many things,” Sims emphasizes.“It’s serving your customers’ needs bet-ter than anyone else, employing pru-dent risk management practices, con-trolling expenses, improving businessprocesses, strengthening your financialcapacity, and maintaining the rightstrategic partnerships.”

With $31 billion in assets and $2.8billion in capital, CoBank has built astrong cooperative bank for ruralAmerica. But as CoBank’s CEO notes,“The job is never done.”

Contact information: website: www.cobank.com, phone 1-800-547-8072; address: 5500 S.Quebec St., Greenwood Village, Colo.80111. CEO: Douglas D. Sims;President and COO: Robert B. Engel;Board Chairman: J. Roy Orton,President, Orton Farms, Ripley, N.Y. ■

CoBank keeps pace with co-ops’ changing needs

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ince 1929, the NationalCouncil of FarmerCooperatives (NCFC)has been the nationalassociation representing

America’s farmer cooperatives. Thereare nearly 3,000 farmer cooperativesacross the United States whose mem-bership includes a majority of ournation’s more than 2 million farmers.

NCFC ensures that farmer cooper-atives have a strong and effectivevoice in addressing public policyissues at the national level. It synthe-sizes a wealth of information to keepmembers current on antitrust and taxlegislation and other legal issues, aswell as agriculture, trade, energy,transportation and environmental pol-icy. It also tracks and analyzes eco-nomic trends.

A member-led committee systemforms the basis for NCFC’s policydirection. Among these committeesare: The Legal, Tax and AccountingCommittee — through its subcommit-tees and task forces, it provides NCFCwith policy guidance in the areas oflaw, cooperative accounting andfinance and tax policy. TheGovernment and Public AffairsCommittee — identifies the nationalpublic policy issues affecting farmercooperative businesses and their mem-bers and develops, with NCFC staff,strategies for addressing these issues.

The Cooperative EducationCommittee — plans the director’seducation conference held in conjunc-tion with the NCFC Annual Meeting,which gives the farmer directors ofNCFC members the opportunity tocome together and address issues ofcooperative governance, board respon-sibilities and the changing nature ofthe food and fiber marketplace.

NCFC has a proven track record ofeffectively communicating, through itsclose working relationships, the inter-ests of its members to Administrationofficials and members of Congress,including the Congressional FarmerCooperative Caucus.

Recent issues on which NCFC hastaken a lead role include:

• Access to equity capital — Asfarmer cooperatives must competein a rapidly changing marketplace,one of the greatest challenges facedby farmer cooperatives is access tothe equity capital necessary to mod-ernize, expand and take advantageof new market opportunities.NCFC strongly supported introduc-tion of legislation in both the Houseand the Senate to eliminate thethird layer of tax imposed on farmercooperative dividends paid on capi-tal stock under the DividendAllocation Rule. This discriminato-ry tax structure (regular corporatedividends are taxed only twice)unfairly limits the ability of cooper-atives to raise equity capital andreduces patronage paid to a cooper-ative’s farmer members.

• Addressing changes to coopera-tive laws — A number of stateshave either changed or are planningto change their cooperative laws toallow outside investment in farmercooperatives as a means of raisingequity capital. Through its LTACommittee, NCFC has carefullymonitored these developments, andis looking at how such changes mayaffect federal policies and programs.In particular, NCFC has beenactive in efforts to ensure that these

new generation cooperatives willcontinue to have access to a com-petitive source of credit fromCoBank.

• Strengthening USDA programsfor cooperatives — NCFC wasinstrumental in ensuring that farmercooperatives have the ability to par-ticipate in USDA programs, includ-ing: the commodity purchase pro-gram, export programs, Value AddedProducer Grants, 2002 Farm Billconservation programs and theBusiness and Industry Loan pro-gram. NCFC continues to work toensure sufficient funding for theseprograms and continued eligibilityfor farmer cooperatives.

• Interaction with policy makers —The annual NCFC WashingtonConference brings farmer coopera-tive directors, CEOs and seniormanagement to Washington helpfurther the policy interests of farmercooperatives. Attendees meet withtop policy makers from Congressand the Administration to help put afarmer’s face on cooperatives forthese officials.Contact Information: Web site:

http://www.ncfc.org. Telephone: (202)626-8700. Facsimile: (202) 737-6430.address: 50 F Street, N.W., Suite 900,Washington, DC 20001. President &CEO: Jean Marie Peltier; BoardChairman: John E. Gherty, President& CEO Land O’ Lakes Inc. ■

NCFC champions issues c ruc ia l to ag co-ops

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Agriculture Secretary Ann Veneman addresses an NCFC meeting in Washington. NCFC’s pri-mary mission is to make sure farmer co-ops have a strong voice at the national level on pub-lic policy issues. USDA Photo by Dan Campbell


he National CooperativeBusiness Association(NCBA) is a nationalmembership organizationrepresenting cooperatives

of all types and in all industries. Itsmembers operate in areas includingagricultural supply and marketing, child-care, energy, financial services, healthcare, housing, insurance, telecommuni-cations, purchasing and shared services,and food distribution and retailing.

Through its education, co-op devel-opment, public policy and internation-al development programs, NCBAhelps co-ops compete in a changingeconomic and political environment. Italso provides a strong, unified voice forco-ops on Capitol Hill.

Founded in 1916, the NationalCooperative Business Association wasknown as the Cooperative League ofthe USA until 1985. It was the firstnational organization for cooperatives.Although NCBA’s name has changedover the years, its primary missionnever has. For nearly 90 years it hasbeen dedicated to developing, advanc-ing and protecting cooperatives.

In the United States, NCBA hasplayed a key role in creating many newself-help organizations to support thecooperative sector. It helped formNorth American Students ofCooperation in 1946, the NationalAssociation of Housing Cooperativesin 1950, Parent CooperativePreschools International in 1960,Cooperative Business International in1984, and both Cooperation Works!and the Cooperative GrocersInformation Network in 1999. In the1970s, NCBA lobbied Congress tocreate the federally chartered NationalCooperative Bank.

In the 1990s, NCBA played a lead-ing role in convincing Congress toestablish the USDA’s Rural Cooper-ative Development Grants program asa new source of funding for coopera-tives in rural areas. The program hassince provided more than $35 million

to a network of centers nationwide thathelp develop cooperatives that enhancefarmers’ income and boost ruraleconomies. Today, NCBA remains astrong advocate for increased fundingfor the program.

In 2000, NCBA brought co-ops tothe cutting edge of technology by win-ning approval for a new top-levelInternet domain exclusively for cooper-atives. The new domain, .coop, joins.com and .org at the end of web and e-mail addresses. The .coop registry,launched in January 2002, has regis-tered more than 8,000 .coop Internetaddresses.

Over the past half century, NCBAhas also played a prominent role inmaking cooperatives a key componentof international development policy.In 1944, it formed the Freedom Fundto help cooperatives recover in war-torn Europe. The following year, it

played an integral role in creating theCooperative for AmericanRemittances to Europe, which provid-ed economic relief to war-tornEurope. Today we all know this orga-nization as CARE.

Since the 1950s, in partnership withthe U.S. Agency for InternationalDevelopment, NCBA’s CLUSAInternational Program has managedmore than 200 long-term internationaldevelopment projects in 53 countries.

Today, NCBA is using its develop-ment expertise to help troubled innercities. Its new Urban Cooperative

Development Initiative seeks to expandthe role of cooperatives in creatingeconomic opportunity in inner cities,both through self-help and legislativesolutions.

As it looks to the future, NCBAcontinues to address the challengesfacing cooperatives and to identifysolutions that will help co-ops over-come those challenges. Its currentagenda includes countering efforts tolimit or repeal cooperative tax exemp-tions and studying the conversion ofco-ops to other business structures. Inaddition, in recent months, NCBA hasorganized opposition to a ruling by anational accounting standards boardthat threatens to throw the balance

sheets of thousands of co-ops intochaos by reclassifying member equityas debt.

With these and other issues inmind, in early 2004 the NCBA boardapproved formation of a CooperativeTax and Finance Council that willfocus on key cross-sector legal, finan-cial and tax issues.

Contact information: website:www.ncba.coop; Phone: (202) 638-6222.Address: 1401 New York Ave. NW,Suite 1100, Washington, D.C. 20005.President and CEO: Paul Hazen; BoardChair: Ann Hoyt. ■

NCBA helps co-ops compete in t ime of change

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Richard Dines, NCBA’s director of co-op development, testifies before the House FinancialServices Subcommittee. Photo by Robert Visser/Photopress Washington

he National Society ofAccountants for Cooper-atives (NSAC) is a pro-fessional society of 2,000accountants, attorneys,

financial officers, bankers and othersactively involved in the financial plan-ning and management of cooperativebusinesses. NSAC strives to enhance

the professional performance of itsmembers in their service to coopera-tives by providing information, educa-tion and training on issues affectingcooperative management, accounting,taxation and finance. NSAC acts as atechnical representative for coopera-tives in formulating accounting princi-ples and auditing standards.

Since its formation in 1936, NSAChas sponsored an annual meeting andtax seminar. The annual meeting pro-vides a forum for addresses by, and dis-cussions with, recognized experts inaccounting, taxation, finance, manage-ment, and government. The tax semi-nar features concurrent sessions forvarying interests and experience levels.

he National MilkProducers Federation(NMPF) represents dairymarketing cooperativesthroughout the United

States and is the “granddad” of com-modity organizations, formed in 1916.Soon after formation, NMPF formal-ized and focused efforts of severaldairy leaders to secure passage of theCapper-Volstead Act, the “MagnaCarta” of farmer cooperatives. Thisessential legislation provides a limitedexemption from anti-trust laws, allow-ing farmers and associations of farmersto lawfully act together to market theircommodities.

NMPF continues to provide theforum for dairy-farmer involvement inthe formation of national public policy.The federation, headquartered inArlington, Va., provides dairy farmersand their cooperatives an organizationto develop policy positions and long-range objectives. These positions arerepresented to Congress, executiveagencies and regulatory bodies affect-ing the dairy industry.

NMPF tries to maintain and improvethe economic well-being of dairy farm-ers and their cooperatives and to assureconsumers an adequate supply of whole-some milk and dairy products. A majori-ty of NMPF’s voting delegates, board ofdirectors and executive committee

members are active dairy farmers.Federation activities focus on leg-

islative and regulatory actions concern-ing federal milk marketing orders, thedairy price support program, productstandards and quality programs, inter-national trade, child nutrition pro-grams, animal health, and food safety.

A few of NMPF’s major accom-plishments in the past yearinclude:• Creating a unique new

milk supply-and-demandbalancing program,Cooperatives WorkingTogether, to helpimprove low producerprices;

• Working to strengthenthe dairy price supportprogram by proposingchanges that will prevent thefarm-level price from droppingbelow $9.90/cwt.;

• Gathering more support for legisla-tion restricting the imports of MilkProtein Concentrate (MPC) andCasein;

• Developing a new dairy proteinsprogram to encourage the produc-tion of a domestic supply of MilkProtein Concentrate;

• Helping to ensure that mad cow dis-ease in the United States does notadversely affect dairy operators;

• Seeking the best-possible treatmentof the U.S. dairy production sectoras the White House negotiates tradedeals within the World TradeOrganization, Australia, Chile andCentral America.Numerous information services of

the federation are designed to helpinterpret the dairy industry to govern-

ment leaders, the media and vari-ous public audiences, plus keep

dairy farmers informed offederal actions affectingthem. A biweekly newslet-ter, “News for Dairy Co-ops,” reports on congres-sional and regulatorydevelopments and federal

administrative action. Anannual booklet, “Dairy

Producer Highlights,” containsa wide variety of data about milk

production, purchases, utilization andrelated statistics.

“The Regulatory Register” and“Import Watch” are regular newslet-ters that cover key areas of interest tothe dairy industry.

Contact information: website:www.nmpf.org; phone: (703) 243-6111;address: 2101 Wilson Boulevard, Suite400, Arlington, Va. 22201. Presidentand CEO: Jerry Kozak. BoardChair-man: Charles Beckendorf (DFA). ■


NMPF tack les tough issues fo r da i ry co-ops

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NSAC: Making sure co-op numbers add up r ight


Each of NSAC's 12 chapters sponsoran annual technical session and taxseminar. All the programs offer contin-uing professional education credits toparticipants, as do the NSAC Auditand Accounting (A&A) Seminars. Thebasic course targets accountants andaccounting employees of cooperativesand public accounting firms who havelimited experience in the field. The

advanced course was designed for theexperienced cooperative accountant.

NSAC publishes a quarterly maga-zine, The Cooperative Accountant, whichfurnishes members with timely infor-mation on accounting, tax and miscel-laneous financial and economic topicsabout co-ops and their patrons.

NSAC is dedicated to ongoingresearch, seeking solutions to problems

unique to cooperatives. NSAC goalsand policies are established by anational board of directors, whichmeets twice a year. Its five-memberexecutive committee is authorized toact on its behalf between meetings.

Contact information: NSAC ismanaged by Advanced ManagementConcepts, 136 South Keowee St., Day-ton, Ohio, 45402. (937) 222-5794. ■

NAHC advocates for co-op housing nat ional lyhe National Associationof Housing Cooperatives(NAHC) helps low- andmoderate- income fami-lies govern, operate and

preserve affordable cooperative hous-ing communities for themselves andfuture residents. Over 1.2 millionfamilies in 44 states benefit fromcooperative homeownership.

NAHC is the national advocatefor affordable housing developmentand preservation through the coop-erative form of ownership. It pro-vides extensive training to boards ofdirectors of housing cooperatives tomake them more effective in man-aging their communities and pro-viding service to residents. NAHCalso trains on-site management per-sonnel, who represent the first con-tact in providing service and attract-ing new residents.

NAHC works with other non-profit groups in sponsoring the cre-ation of new cooperatives for low-and moderate-income families andsenior citizens.

In rural areas, housing cooperativescan be financed with the USDA RuralDevelopment’s Section 515 program orthe U.S. Department of Housing andUrban Development’s Section 213program. Manufactured-home parkscan be developed as cooperatives under

HUD’s Section 207 mortgage insur-ance program.

In 2003, NAHC successfully per-suaded Congress to increase the HUDmortgage limit for manufactured homeco-op parks from $9,000 to $17,000.

President Bush signed the increaseinto law in December 2003.

Many NAHC member cooperativesare coming to the end of their originalHUD-insured mortgages. NAHC iscreating new educational workshopsand publications to help cooperatives

through that transition, addressing re-financing and rehabilitation needs,adopting policies to replace HUD reg-ulations, and deciding whether toretain sales price or income restric-tions.

The aging of cooperativeleadership creates serious gover-nance challenges, and bad gover-nance is one of the three biggestthreats to co-op survival. NAHCrecently adopted a code of ethicsfor co-op board members andappointed a committee to devel-op a series of workshops onexcellence in governance.

NAHC is a member agency inthe Combined FederalCampaign through the Humanand Civil Rights Charities ofAmerica. NAHC is also an eligi-ble recipient in the United Co-op Appeal workplace giving cam-paign and the United Way of theNational Capital Area.

Contact Information: web-site: www.coophousing.org;phone: (202) 737-0797; address:

1707 H St., NW, Suite 201,Washington, D.C. 20006. President:Bill Magee, Noble SquareCooperative, Chicago, Ill.; BoardChairman: Barbara Meskunas, SanFrancisco, Calif. Executive Director:Douglas Kleine. ■

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Residents of the Meredith Center Cooperative — NewHampshire's first manufactured housing park co-op —gather for a "family" photo. Photos courtesy New HampshireCommunity Loan Fund


he Farm Credit Council(FCC), based inWashington, D.C., is thenational trade associationof the Farm Credit

System and represents the system’s leg-islative and regulatory interests, as wellas providing a wide range of businessservices to Farm Credit institutions.The Farm Credit System’s mission isto maintain and improve the quality oflife in rural America and on the farm,through constant commitment to com-petitive lending, expert financial ser-vices and advice, and a feeling of part-nership with our customers.

Council membership is comprisedof five district Farm Credit Councilsand five Farm Credit banks, whosemembership in turn, comes from near-ly 100 direct lending associationsacross the country. The cooperativeassociations and banks in the FarmCredit System are owned by the mem-ber-borrowers. Together, they are theleading lender to agricultural produc-ers and rural businesses and communi-ties. Through the national network oflending institutions, the Farm CreditSystem:• Provides more than $93 billion in

loans and manages over $116 billionof total assets;

• With more than $18.9 billion in cap-ital, Farm Credit has the strength toensure that agricultural producersand others in rural America have aconstant source of competitivelypriced credit in good times and bad;

• As a customer-owned organization,Farm Credit returned more than$365 million in cash distributionsand patronage dividends to our cus-tomer-owners in 2003.

• Knowing the difficulties faced byyoung, beginning and small farmers,Farm Credit takes seriously its oblig-ation to assist the next generation ofagriculturists. In 2003, the System

had $11.5 billion in loans benefitingfarmers age 35 or younger; $16.9 bil-lion in loans that benefit beginningproducers who have 10 years experi-ence or less; and $28.6 billion inloans to small producers with lessthan $250,000 in annual gross salesof agricultural products.

• With five banks, nearly 100 lendinginstitutions and more than 1,000branch locations, Farm Credit is inthe communities and areas of ourmore than 450,000 customer-owners.

The Farm Credit Council wasestablished in 1983 to provide an effec-tive voice with the U.S. Congress andgovernment agencies on farm creditissues. The structure for developingpositions on legislative issues is provid-ed by the district councils. The processbegins with the farmer-directors of themember organizations.

The Farm Credit Council is gov-erned by a 23-member board thatimplements the Council’s public policypositions. The current board chairmanis M. Wayne Lambertson, a poultryand crop producer from PocomokeCity, Md. Under the direction of theboard, Kenneth E. Auer, President andCEO, coordinates and directs the dailyaffairs of the Council, carried outthrough its Washington-based staff.Council funding comes from duesassessed to its member organizations.

The Council’s mission is to enhancethe political effectiveness of the mem-bership and their member institutions,and in doing so, the Council centers itsattention on legislative, governmentaland regulatory issues that affect agri-cultural credit. The Council staffmaintains close liaison with govern-ment agencies such as the Farm CreditAdministration, the U.S. Departmentof Agriculture and with Farm CreditSystem standing committees, amongothers.

As a regular part of its operation,the Council serves as a conduit ofinformation from Washington to itsmembership, and serves to informCongress and government agencies onthe views of its members.

Contact information: website:www.fccouncil.com; phone: (202) 879-0854; address: 50 F Street, NW,Suite 900, Washington, D.C. 20001.President and CEO: Kenneth E.Auer; Chairman: M. WayneLambertson. ■

Farm Cred i t Counc i l p romotes lend ing systemdedicated to improved qua l i ty o f fa rm l i fe

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The winter issue of Financial Partnermagazine is a product of Farm CreditFinancial Partners Inc. (FPI), Agawam,Mass., and the four Northeast Farm CreditAssociations. FPI provides Farm CreditAssociations nationwide with customerservice for information technology, opera-tions, human resources, legal services,marketing, communications and training.


he National RuralUtilities CooperativeFinance Corporation(CFC) is a privatelyowned, non-governmen-

tal organization that provides low-costcapital and state-of-the-art financialproducts and services to its owners, themore than 1,000 electric cooperativesacross the United States. CFC is theprimary private market lender to ruralelectric systems, which serve morethan 32 million end-users of electricity.

CFC’s owners con-sist of electric cooper-ative distribution sys-tems, power supplysystems, statewideassociations and ser-vice organizations. Itserves as the solesource of financing formore than 200 electriccooperatives and sup-plements the creditprograms of theUSDA RuralDevelopment’s utilitiesprograms.

CFC was launchedin the mid-1960s,when the electriccooperative programbegan to seek alterna-tive funding sources tosupplement federalfinancing of coopera-tives’ growing capitalneeds. In 1967, theNational Rural Electric CooperativeAssociation (NRECA) proposed thecreation of a nonprofit financing insti-tution that would be cooperativelyowned by the electric cooperatives.NRECA members approved this plan,and on April 10, 1969, CFC was incor-porated.

As a financial powerhouse withmore than $21 billion in assets and

some $34 billion in total credit com-mitments, CFC offers rural electricsystems the financing they need toensure a dependable source of energyfor rural consumers.

Guided by a 22-member board ofdirectors representing the managersand directors of its member coopera-tives, CFC operates from its corporateheadquarters in Herndon, Va., withmore than 200 employees, 15 of whomare regional representatives locatedthroughout the United States. By

maintaining high credit standards andcredit ratings, CFC provides its ownerswith competitively priced financingand investment opportunities throughits role as a conduit to the worldwideprivate capital markets.

CFC manages several related orga-nizations. Rural Telephone FinanceCooperative (RTFC) is a member-owned, nonprofit finance cooperative

created in 1987 solely to serve theneeds of the rural telecommunicationsindustry. RTFC has carried out an

essential role in rural tele-phone financing, providingneeded funds for systemupgrades, new technology,acquisitions, and an array ofservice enhancements.

National CooperativeServices Corporation (NCSC)is a privately funded, mem-ber-owned, taxable coopera-tive that began operations in1981. NCSC provides electriccooperatives and their affili-ates with specialized financingand related financial services.NCSC offers a loan programthat provides financing to for-profit and nonprofit associatesaffiliated with CFC owners,generally for rural economicdevelopment initiatives.

CFC works closely withNRECA, the National RuralTelecommunicationsCooperative, USDA RuralDevelopment, Federated

Rural Electric Insurance Exchange,and similar organizations to ensurethat electric cooperatives have thetools they need to prosper in a chang-ing marketplace.

Contact information: website:www.nrucfc.coop ; phone: (703) 709-6700; address: 2201 Cooperative Way,Herndon, Va., 20171. CEO: SheldonPetersen. ■

CFC: ru ra l e lec t r i c co-ops’own f inanc ia l powerhouse

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CFC — the Herndon, Va., headquarters of which is seen here — is the pri-mary private market lender to rural electric systems serving more than 32million consumers. Photo courtesy CFC


ational Rural ElectricCooperative Association(NRECA), located inArlington, Va., representsthe national interests of

the nation’s more than 900 cooperativeelectric utilities and the consumers theyserve. Organized in 1942, NRECAprovides national leadership and mem-ber assistance through legislative repre-sentation before Congress and theexecutive branch. It also provides: rep-resentation in legal and regulatory pro-ceedings affecting electric service andthe environment; communication ser-vices; education and consulting forcooperative directors, managers andemployees; energy, environmental andinformation research and technology;training and conferences; and healthinsurance, retirement benefits andfinancial services. Programs are fundedthrough dues and fees.

NRECA’s member cooperativesserve 37 million people in 47 statesand 80 percent of the nation’s counties.Most of the 865 distribution systemsare private, consumer-owned coopera-tives, although some are public powerdistricts. NRECA membershipincludes other organizations formed bythese local utilities: generation andtransmission cooperatives (65);statewide and regional trade and ser-vice associations; supply and manufac-turing cooperatives; data processingcooperatives; and employee creditunions. Associate membership is opento equipment manufacturers and dis-tributors, wholesalers, consultants andother entities that do business withelectric cooperatives.

Two major publications inform andeducate members, decisionmakers andthe interested public: RE Magazine,published monthly, and Electric Co-opToday, a weekly newspaper that reportson activities and issues important toelectric cooperatives and NRECA.

NRECA’sannual meeting isone of the largestnational gather-ings of coopera-tive and ruralleaders and con-sumers, oftenattracting morethan 12,000 directors, managers,employees and cooperative member-owners. Delegates consider and act onpolicy resolutions that guide NRECA’sissue and organizational agenda, hearaddresses by key public figures andattend panel sessions on major issuesaffecting cooperatives, electric utilities

and their consumer-owners.Concurrently, the TechAdvantageConference and Expo commands morethan 50,000 square feet of exhibitspace, showcasing more than 250 lead-ing-edge suppliers of power produc-tion, information technology, powerdelivery, and customer managementproducts and services.

NRECA and its member coopera-tives administer a program of technicaladvice and assistance in developingcountries around the world. NRECAInternational Ltd. has helped more than50 million people in the world’s poorestcountries achieve the economic andsocial benefits of reliable, affordablepower by adapting the successful modelof locally owned electric cooperatives.Programs are designed with close atten-tion to local demand conditions and usethe most appropriate power generationmethods, including distributed genera-tion and renewable energy systems. TheNRECA International Foundation,funded by voluntary contributions,coordinates the Sister CooperativesProgram and directs the collection andshipping of donated equipment andmaterials to support overseas projects.

As new demographic and economicpatterns emerge, electric cooperatives’operations evolve and their needsbecome more diverse. NRECA’s leg-islative, legal and regulatory agendahas become more diverse, embracinghundreds of issues affecting electricutility generation, transmission anddistribution; energy policy and theenvironment; finance and tax matters;telecommunications; jobs creation;federal disaster assistance; the coopera-tive business model and governance;and consumer protections.

Efforts in the last two decades toforge a national energy policy throughlegislation in Congress and sweepingregulatory initiatives at the FederalEnergy Regulatory Commission(FERC) have the potential to alter rad-

NRECA programs benef i t 865 co-ops,37 mi l l ion consumers nat ionwide

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Touchstone Energy Cooperatives teach middle-school students about the science,history, and value of electricity through the"Get Charged!" program, in cooperation with the Discovery Channel School. Photo courtesy NRECA


ically the relationship between electricutilities and their consumers. NRECA’slegislative and regulatory advocacyefforts focus on controlling costs forconsumers, protecting them againstmarket power abuse and anti-competi-tive behavior, and on preserving mem-ber co-ops’ governance structure bykeeping operational and policy deci-sions in the co-op boardroom.

One of the toughest challenges elec-tric cooperatives face as employers is theever-increasing cost of healthcare cover-age for their employees and retirees.The association’s legislative efforts inthis area focus on employer flexibility,access to quality programs and providersand equity for rural Americans.

Education, training and leadershipprograms have evolved to focus atten-tion on the increasing level of publicand policymaker scrutiny of Americanbusiness resulting from the latest waveof illegal activity in the corporateworld. Courses cover director fiduciaryresponsibility and conduct; cooperativebusiness principles and ethics; effectiveworking relationships between direc-tors, CEOs, attorneys and auditors;development of principle-centeredpolicies; and strategic planning.

The Touchstone Energy®Cooperatives brand supports the com-munication and marketing efforts ofelectric cooperatives. Award-winningmaterials developed for member sys-

tems help unify advertising, marketingand community relations activities andprovide a consistent image of electriccooperatives nationwide.

NRECA also assists its member sys-tems through community and econom-ic development support, including awide array of resources for financing,planning, and partnering through pub-lic and private organizations across thecountry.

Contact Information: website:http://www.nreca.coop; Telephone:703-907-5500; Address: 4301 WilsonBlvd., Arlington, VA 22203. President:David J. Cowan, Gettysburg, Pa.;Chief Executive Officer: GlennEnglish. ■

ince 1967, theFederation of SouthernCooperatives/LandAssistance Fund(Federation) has success-

fully provided self-help economicopportunities and hope for many low-income communities across theSouth. The Federation is, in fact, theonly organization in the SoutheastUnited States that has as its primaryobjectives the retention of black-owned land and the use of cooperativesfor land-based economic development.

“Cooperatives are businesses thatare locally controlled and build wealththrough the participation of people,”says Federation Executive DirectorRalph Paige. “They are an ideal wayof helping poor folks advance theirown interests and provide for theirown destinies.”

In 1984 the Emergency Land Fund,the pioneer organization in black landretention, merged with the Federation.

This led to a much stronger andmore comprehensive program thatretains, acquires, manages and devel-ops land and other resources usingcooperative principles.

Membership includes 12,000 blackfarm families, who individually ownsmall acreage, but collectively ownmore than a half million acres of landand work through 35 agriculturalcooperatives to purchase supplies, gaintechnical assistance and market theircrops. It also includes 15,000 smallsavers in 16 community developmentcredit unions that have accumulated$24 million in shares and made $113million in loans since inception.

The Federation owns and operatesthe Rural Training and ResearchCenter (RTRC) on 850 acres of landnear Epes, Ala., where members learnfarming skills, rural business develop-ment practices, leadership skills andways of working together in coopera-tives and credit unions.

The programs of the Federation arecomprehensive. They cover agricul-ture, credit, housing, markets, landretention and advocacy. While its pro-grams are implemented in its offices in

Federat ion o f Southern Co-ops:Three decades of sustaining rural Southern communities, saving black-owned farmland

James Nesmith says there simply aren’tany better organic tomatoes than thosegrown in South Carolina by his dad,Theodore Nesmith, a member of PeoplesCooperative. Photo by D.J. Johnson, courtesyS.C. Extension Service

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Mississippi, Alabama, Georgia andSouth Carolina, the RTRC is the hubof the Federation’s outreach and train-ing efforts. Primary programs include:• Small Farm and Sustainable

Agriculture — The Federation iscommitted to providing outreach andtechnical assistance to black familyfarmers as integral to its overallthrust. One of the avenues of out-reach to farmers was the 1990Minority Farmers Act (Section 2501of the Farm Bill). As an initiative ofthe Federation, Section 2501addresses the need for USDA tooffer more services to limited-resource minority farmers by offer-ing grants to community-based orga-nizations and landgrant colleges tooffer outreach services. The primarygoal of the sustainable agriculture

program is to help farmers developsuccessful family farm businessesthrough: financial analysis of farms;technical assistance in setting indi-

vidual farm goals; technical assistancein farm management; assistance indebt restructuring; and alternativecrop analysis.

ARKANSASArkansas Rural Enterprise CenterDonna Uptagrafft, Program Associate38 Winrock DriveMorrilton, AR 72110-9537Telephone: (501) 727-5435 Fax: (501) 727-5242E-Mail: [email protected] Page: www.winrock.org

COLORADORocky Mountain Farmers’ UnionCooperative Development CenterBob Mailander, Director5655 S. Yosemite St., Suite 400Greenwood Village, Co 80111Telephone: (303) 752-5800 FAX: (303) 752-5810E-Mail: [email protected] Page: www.co-ops.org

KENTUCKYKentucky Cooperative Development CenterLarry Snell, Executive Director411 Ring RoadElizabethtown, KY 42701Telephone: (270)763-8258 FAX: (270) 763-9927

E-Mail: [email protected] Page: www.kccd.org

MASSACHUSETTSCooperative Life/CooperativeDevelopment InstituteLynn Benander, CEO277 Federal StreetGreenfield, MA 01301Telephone: (413) 774-7599 FAX: (413) 773-3948E-Mail: [email protected] Page: www.cooplife.coop

MISSISSIPPIMississippi Center for Cooperative DevelopmentMelbah Smith, Director233 E. Hamilton StreetJackson, MS 39202Telephone: (601) 354-2750 FAX: (601) 354-2777E-Mail: [email protected] Page:www.supermarketcoop.com/mac.htm

MISSOURIMissouri Farmers Union Family Farm Opportunity CenterRuss Kremer, President325 Jefferson StreetJefferson City, MO 65101Telephone: (573) 659-4787 FAX: (573) 659-4787E-Mail: [email protected] Page: www.missourifarmersunion.org

MISSOURIMissouri Incutech FoundationRussell C. Lindenlaub, ExecutiveDirector800 W. 14th Street, Suite 111Rolla, MO 65401(573) 364-8570www.missourienterprise.org

Rural Cooperative Development Centers

The Federation is helping Eugene Hall and other farmers in Sumter County, Ala., form a goatproducers’ cooperative. Photo by Jim Alexander


MONTANALake County Development CenterBillie J. Lee, Executive Director319 Main St.Ronan, MT 59814Telephone: (406) 676-5901E-Mail: [email protected] Page: www.lakecountycdc.org

NEBRASKANebraska Cooperative Development CenterDr. Lynn H. Lutgen, Director217 H.C. Filley Hall Lincoln, NE 68583-0922Telephone: (402) 472-3406 E-Mail: [email protected] Page: ncdc.unl.edu

NORTH DAKOTADakotas Cooperative BusinessDevelopment CenterBill Patrie, Rural Development Director3201 Nygren Drive, NWPO Box 727Mandan, ND 58554-0727Telephone: (701) 663-6501 FAX: (701) 663-3745E-Mail: [email protected]

NORTHWESTNorthwest Cooperative Development CenterDiane Gasaway, Project Manager1063 Capitol Way South, Suite 214Olympia, WA 98501Telephone: (360) 943-4241 FAX: (360) 570-8415E-Mail: [email protected] Page: www.nwcdc.coop

OHIOOhio Cooperative Development CenterJohn Ellerman, Coordinator1864 Shyville RoadPiketon, OH 45661Telephone: (740) 289-2071 FAX: (740) 289-4591E-Mail: [email protected] Page: www.aede.osu.edu

PENNSYLVANIAKeystone Development Center860 Ridge RoadCarlisle, PA 17013Telephone: (717) 243-2765 FAX: (484) 214-0115E-Mail: [email protected] Home Page: www.kdc.coop

SOUTH CAROLINASouth Carolina Center forCooperative Business DevelopmentDr. Emmanuel N. Onunkwo, DirectorPO Box 7568Orangeburg, SC 29117Telephone: (803) 533-3682 FAX: (803) 533-3639E-Mail: [email protected]

SOUTH DAKOTAValue-Added Agricultural CenterDallas Tonsager, Executive Director303 Illinois Avenue SW Huron, SD 57350 Telephone: (605) 352-9177 FAX: (605) 352-9179E-Mail: [email protected] Page: www.sdvalueadded.com

WISCONSINCooperative Development ServicesKevin Edberg, Executive Director131 West Wilson Street, Suite #400Madison, WI 53703Telephone: (608) 258-4396 FAX: (608) 258-4394E-Mail: [email protected] Page: www.cdsus.coop

• Land Assistance — Black rural landownership has declined drasticallyover the last century, from 16 to 19million acres owned in 1910 to only7.8 million acres in 1997. And thedecline continues. To help retain andprotect rural land ownership, theLand Assistance Fund Programfocuses on: legal assistance; educa-tion; tax sales; wills and estate plan-ning; adverse possession; eminentdomain and condemnation; mineralrights; and financial assistance.

• Cooperative Marketing — Theaverage size of an African Americanfarm is just over 100 acres. TheFederation encourages alternativecrop production that is more suitableto smaller farm size to help ensuresustainability of the farm. The focusof our marketing program is: produc-tion/marketing assessments; coopera-

tive development; value-added pro-jects; rural/urban marketing; andemerging market opportunities.

• Credit Unions — The focus of thecredit union department is to pro-vide technical assistance and train-ing to individuals from low-incomerural communities who have deter-mined a need for low-cost, commu-nity-controlled consumer credit.Technical assistance is offered in thefollowing areas: chartering; comput-erizing; non-member deposits; busi-ness plans; youth credit unions;auditing; board training; and com-mittee training.

• Housing — The Federation hasbeen instrumental in building qualityaffordable housing and manages itshousing programs through thePanola Land Buyers Association.The housing department focuses on

three major areas: multi-family hous-ing development; multi-family hous-ing management, and technical assis-tance for single family housing

• Advocacy and Coalition Building— To ensure appropriate and rele-vant program services for rural com-munities, the Federation works incoalition with other organizationsand advocates for: rural community-based economic development;affordable rural housing; farmers’rights; fair trade policies; cooperativeand credit union development;renewable energy strategies; environ-mental policy.

Contact Information:www.federation.coop; (404) 765-0991;2769 Church St., East Point, GA 30344; Executive Director: Ralph Paige. ■

In addition to the University ofWisconsin Center for Cooperatives,there are two other U.S. university-based cooperative research and educa-tion centers.

Arthur Capper CooperativeCenter (ACCC) — Located at KansasState University, ACCC serves as apremier center of excellence in cooper-ative education. Its focus is onresearch, business development,finance, leadership, strategic manage-ment and marketing for cooperatives.Its primary objective is to increaseunderstanding of the cooperative formof business. It conducts teaching,research and educational extensionprograms to help students and cooper-atives understand and improve decisionmaking in cooperatives, cooperativeperformance, customer service topatrons of cooperatives, cooperative

industry standards and the ability ofcooperatives to compete with otherbusinesses in the marketplace.

Contact information: www.age-con.ksu.edu.accc/; phone: (785) 532-1508; address: ACCC, Dept. of AgEconomics, 305 Waters Hall, K.S.U.,Manhattan, Kan. 66506. Director:David G. Barton

Quentin Burdick Center forCooperatives (QBCC) — Located atNorth Dakota State University,QBCC functions in four primaryareas: (1) education, including acade-mic and executive; through academiceducation, QBCC seeks “to create apool of university graduates who thor-oughly understand cooperative philos-ophy, principles and managementstrategies.” It is also involved in pro-viding in-service, executive-level train-ing for directors and management; (2)

research — academic research topicstend to be general, with results pub-lished and accessible to the public;specific research is usually undertakenfor a single cooperative, with resultsconfidential to the client; (3) out-reach/communication — by spreadingthe word about cooperative businesssystems, QBCC fulfills the traditionalrole of a land grant university; and (4)coordination/cooperation — QBCCseeks to coordinate its activities withother organizations and agencies inthe region. In some areas it takes on aleadership role, while in others it playsa supportive role.

Contact information: website:www.ag.ndsu.nodak.edu/qbcc; phone:(701) 231-1016. address: QBCC, 301Morill Hall, N.D. State University,Fargo, N.D. 58105. Director: Dr.William C. Nelson. ■


By Ashwini Rao, Associate

Outreach Specialist

UW Center for Cooperatives

he University ofWisconsin Center forCooperatives (UWCC)was established in 1962to provide co-op train-

ing, assistance and education programsto international and domestic coopera-tives, and to conduct research directedat all aspects of a cooperative business.Decades later, the Center continues topromote and research cooperativeaction as a means of meeting the eco-nomic and social needs of people.

So what has changed?“While the Center’s core mission

has not changed, the focus of our workhas definitely shifted,” explains BobCropp, professor emeritus and formerdirector of the Center. Adds Interim

Director Anne Reynolds, “We aredoing more work with a wider varietyof co-ops,” a reference to the broadclient base that the Center interactswith, which has expanded over the pastfew years to now include forestry, utili-ties, health care, housing, food andworker co-ops, among others. For oth-ers at the Center, the shift has been ingaining a “deeper understanding of theissues” in our society and “achievinggreater impact through a broader rangeof contacts” within our community.

The research arm of the Centerremains as robust as ever. AssistantProfessor and Senior Faculty AssociateKim Zeuli joined the Center in 2001 tostrengthen research in the areas of agri-cultural co-ops and co-ops in ruralcommunities. “There has always been alot of emphasis on research, and it con-tinues to remain a strong and criticalpart of the organization,” says Zeuli.

The shift in focus, however, hasaffected much of what the Center doeson a regular basis. The educationalworkshops that UWCC organizes, inpartnership with the WisconsinFederation of Cooperatives and theMinnesota Association ofCooperatives, have seen a progressiontoward topics on joint ventures, merg-ers/acquisitions, alternative co-opstructures and resulting financialimplications.

UW Center fo r Co-ops:Work ing together…then and now

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KSU, NDSU Centers researching co-op issues

eteran cooperative com-municator Ann Mosbysays the decision to stoppublishing CCA News inprinted form was

“painful progress.”The GROWMARK communica-

tions director led the CooperativeCommunicators Association (CCA)committee that recommended thegroup move to an electronic newsletterrather than the traditional black-and-white paper version. The decision mir-rors those Mosby and her peers makeat cooperatives everyday. It also high-lights how changes within the businessworld, in general, and cooperatives, inparticular, have a rippling effect.

“CCA provides a testing ground forinnovative communications strategiesand tactics,” says CCA PresidentSheryl Doering Meshke, AssociatedMilk Producers Inc. communicationsdirector in New Ulm, Minn. “Ourpeer network enables communicatorsto speed the learning curve.”

Formed in 1954 after Minnesotaand Wisconsin editors of cooperativepublications got together to share ideasand learn how to better perform their

jobs, the organization now countsmembership across the United States,Canada and England. CCA is commit-ted to keeping pace — or a few stepsahead — of the changing communica-tions needs of the cooperative commu-nity. Members’ duties include writing,editing, photography, videography,design and all the other skills neededto help cooperatives tell their story.

The steps CCA took to determinewhat to do about its member newslet-ter within the context of consolidatingcooperatives and skyrocketing printingand postage costs provide insight forcooperative communicators faced withsimilar decisions at their own organiza-tions.

The volunteer-driven CCA con-ducted a readership survey, reviewedthe results by committee and acted ona recommendation to change the waythe newsletter was delivered. “Givenall this, I had to admit that leveragingavailable mechanisms to communicatewith members made real sense,”Mosby says. “The change offeredinteractivity, it would save expense, itwould provide more timely deliveryand it meant that technical issues could

be resolved without members havingto struggle with them.”

Mosby’s involvement exemplifieshow members learn new skills fromone another and exercise their know-how on behalf of the association, aswell as their cooperative employer.

“The association work gives CCAmembers a forum for trying innovativeideas where the stakes are not as highas in their ‘real jobs’,” says CCAExecutive Director Susie Bullock fromthe organization’s headquarters inLubbock, Texas. Once tried, the com-municator can adapt those skills orknowledge to the particular challengesfaced in real-life cooperative settings.

CCA’s successful ideas and programsare replicated in its members’ dailywork – from the planning stages totheir implementation. Those stages, in


“The focus on such topics reflects thechanging needs of our clients,” saysCropp. “As University of Wisconsin-Extension state specialists, we need to beflexible and be able to respond to their[clients’] needs.” Annual conferencessuch as the Farmer CooperativesConference, started a few years ago bythe Center, stimulate critical thinking onhow cooperatives need to address majorissues as well as engage researchers andco-op leaders in a dialogue about bestpractices and future trends impactingagricultural cooperatives.

The response to changing trends is,perhaps, more clearly reflected in theCenter’s initiatives to extend its services

beyond the university. A website(www.wisc.edu/uwcc) offering extensiveinformation and resource links hasresulted in increased visibility for theCenter, expanding its reach beyond thephysical borders of the state ofWisconsin. The availability of fundsand a heightened interest in rural devel-opment start-ups and cooperatives havealso helped position the Center as aresource for cooperative developmentin the areas of agriculture, housing,healthcare delivery and emerging mar-kets, such as organic foods.

The ever-increasing demand forvalue-added agriculture, along with thecontinuing strength of the co-op

movement and new opportunities incooperative development ensures thatthe Center’s efforts to promote co-opeducation and research will continuefor some time to come.

“The Center plans to continue topartner with co-op leaders, educatorsand researchers, and use these partner-ships to enhance the work that we dofor co-ops,” says Reynolds.

Contact information: website:www.wisc.edu/uwcc; phone: (608) 262-3382; address: 230 Taylor Hall,427 Lorch St., Madison, Wis. 53706.Officers: Interim Director: AnneReynolds; Senior Faculty Associate/Center for Co-ops: Kim Zeuli. ■

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CCA: Ref lec t ing change, set t ing the pace50 years of promoting innovative co-op communications

he Association ofCooperative Educators(ACE) has a big vision:to strengthen coopera-tives and the cooperative

movement by promoting innovativeeducational responses to social andeconomic changes.

From the outside, ACE appears tobe an unassuming organization. Itspart-time executive administratorworks from her home in Arlington, Va.The Cooperative Foundation providesmany of the organization’s support ser-vices out of the CHS Inc. offices inInver Grove Heights, Minn. Its web-site is hosted by the University ofWisconsin Center for Cooperatives inMadison, Wis.

At a time when cooperatives havebeen cutting back on education staff,ACE’s membership has been growing.

“ACE gives a lot of bang for thebuck,” says Leslie Mead, ACE execu-tive administrator. “The combinationof a committed board, organizationaland foundation supporters, and tech-nology allows ACE to serve its diversemembership and promote cooperativeeducation very efficiently.”

ACE brings together researchers,educators and cooperators from acrosscooperative sectors as well as nationalboundaries, linking an otherwise decen-tralized field. Most ACE memberscome from the United States, Canadaand Puerto Rico with membership fromthe rest of the world growing.

The Internet not only offers a cost-effective way to reduce administrativeexpenses, but it also allows frequentcommunications with members andoffers a wealth of information oncooperative research, education pro-grams and developments.

“The ACE newsletter contains a lotof information gleaned from web-sites,” says Mead. “The web makesavailable information on some verygood cooperative education resourcesand innovative programs from all overthe world. Few people have the time


themselves, reflect how sophisticatedcommunication is today. One doesn’tjust speak and expect to be heard.Rather, the messenger speaks in manydifferent venues and different ways,depending on the audience, yet withthe same key messages.Though communicationmethods change, organiza-tions such as CCA still helpmembers hold true to thecooperative principle oneducation, training andinformation.

“CCA operates muchlike a growing and chang-ing cooperative, striving toeffectively manage anddeliver member resources,”Meshke says. “We’re amicrocosm of the coopera-tive community.”

Mosby agrees, sayingrecommending an elec-tronic newsletter forcedher to leave the “comfortzone” behind for CCA andmade her think about her

own cooperative’s communicationdelivery systems. “With that, this lag-gard became an adopter and an activesupporter of the process to improveCCA communications,” she says.

The change is indicative of thegroup’s – and their cooperative’s –changing needs. As CCA goes, so goescooperatives – or maybe it’s thereverse.

CCA members gather for an annualCo-op CommunicationsInstitute each June forthree days of seminarsand discussion designedto improve the skills ofmembers in the fullspectrum of communica-tions. This year theinstitute will be held Jun12-15 in Louisville, Ky.The 2005 institute willbe held in Denver.

Contact informa-tion: website: www.com-municators.coop ;phone: (806) 777-6489;address: 5307 43rd St.,Lubbock, Texas 79414-1315. ExecutiveDirector: Susie Bullock;President: SherylMeshke (AMPI). ■

Assoc ia t ion o f Cooperat ive Educators Cross-border membership and collaboration brings growth

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CCA board member Leta Mach (right) and Jamie Gasper of the Ag Commun-icators of Tomorrow participate in a communications exercise during arecent CCA Institute. USDA photo by Dan Campbell


to search for it. The newsletter pro-vides a valuable service by distillingthis information and making peopleaware that it’s available.”

ACE recently began publishing itsnewsletter electronically. The changereduced printing and mailing costsand allows greater flexibility in size,design and color. The newsletters areposted on the ACE website and avail-able to all.

While the Internet has expandedACE’s information and communicationcapacity, the annual ACE Instituteremains an important event for coop-erative education and networking.

The Institute includes recognitionof the best cooperative education pro-grams and honors cooperative educa-tors at the annual awards banquet.This year, ACE member Cooperativade Seguaros Múltiples de Puerto Ricocommissioned an artist to redesign theACE awards. The result is a stainedglass trophy that symbolizes the

national and sector diversity of ACEmembership.

This year’s institute in Montreal willbe simultaneously translated in Spanish,French and English. (The 2004Institute will be held Aug. 4-7.)

Though ACE has been around forover 40 years, its importance grew sig-nificantly in recent years as events andorganizations once considered cooper-ative education institutions were cur-tailed or eliminated.

“Despite continual changes indemographics and economies, thereremains a significant interest in coop-erative education and recognitionthat education is essential to membercommitment and support of coopera-tives,” says William Nelson, presidentof the CHS Foundation and TheCooperative Foundation.“Cooperative Centers, universitiesand state and national organizationsare all components in the revitaliza-tion of cooperative education. TheCooperative Foundation sees the net-working and information servicesprovided by ACE as very importantto this process.”

Contact Information: website:http://www.wisc.edu/uwcc/ace/ace.html ;Phone: (651) 355-5481; address: ACEC/O The Cooperative Foundation,P.O. Box 64047, St. Paul, Minn.55164. President, Anne Reynolds(University of Wisconsin); ExecutiveAdministrator: Leslie Mead. ■

ACDI/VOCA spreads co-op model wor ldwide“The future belongs to the organized.”

—motto of the NationalSmallholder FarmersAssociation of Malawi

nonprofit arm of theU.S. cooperative commu-nity, ACDI/VOCA worksoverseas to foster broad-based economic develop-

ment and vigorous civil society. It assistsdeveloping and transitional countries in:enterprise development and trade; foodand agricultural systems; financial sys-tems and crisis recovery.

In the early 1960s Congress soughtto reprise overseas the role co-ops hadplayed in developing rural America.Thus, landmark foreign aid legislationwelcomed member-owned and democ-ratically run business and financialorganizations as partners in America’sinternational assistance efforts, andACDI/VOCA was born. Today, the

U.S. government funds most of theorganization’s activities.

ACDI/VOCA is a bridge betweenthe advantages and expertise ofAmerica’s cooperatives and pressingneeds abroad. Sometimes thelink is person-to-person:approximately 500 U.S. volun-teers serve in two- or three-week assignments each year toprovide technical and manage-ment assistance.

Improving the well-being ofpeople overseas is a win-winproposition since increasedincome abroad fuels U.S.exports. And developingnations, where populations areburgeoning, are this country’sgrowth markets of the future.

ACDI/VOCA, using U.S.farm credit volunteers, helpedprivatize 400 cooperativebanks in Poland. It spearhead-

ed a U.S. co-op community project toset up India’s largest fertilizer companyas a cooperative.

Today ACDI/VOCA carries theco-op banner in Paraguay, Brazil,

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Town hall-style meetings in Iraq are a means ofdetermining community priorities and organizinginfrastructure improvement projects. Photos courtesyACDI/VOCA

ACE brings togetherresearchers, educa-tors and cooperatorsfrom across coopera-tive sectors...


Mozambique, South Africa, Tajikistanand 30 other countries with a pro-gram that approaches $100 million invalue. Even where its work is notstrictly co-op related, it alwaysmanifests the principle of peo-ple organizing for their ownself-improvement.

Last year Andrew Natsios,administrator of the U.S.Agency for InternationalDevelopment, affirmed thatapproach and calledACDI/VOCA “the premieragricultural development NGO[nongovernmental organiza-tion] in the world.”

The economic efficiencyand organizational impetus ofcooperatives are especiallyvaluable in countries that arestruggling. As Norway’sMinister of InternationalDevelopment, Hilde Johnson,said, “For the poor around theworld, cooperatives can pro-vide a much-needed opportu-nity for self-determination andempowerment.”

By pooling resources andwill, cooperative members posi-tion themselves to obtain ser-vices, negotiate preferred termsin the marketplace and exercisepolitical clout. Co-ops repre-sent the grassroots and theybalance corporate power, whichare both welcome roles givenglobalization’s inequities. Co-ops are founded and shaped by healthydemocratic principles, which they, inturn, foster.

ACDI/VOCA builds cooperativesbased on sound business practices sothat producers and marketers canmove into the market, achieveeconomies of scale and capture moreof their goods’ value.

Crisis? Call on co-opsAs U.S. foreign assistance focuses

increasingly on helping countries avoidor recover from crisis, ACDI/VOCA’sco-op development work is doublyimportant.

Cooperation helps knit togethertorn societies. From Ethiopia, whereagricultural co-ops assisted smallhold-ers to recover from war and repressive

government and ultimately sell high-quality coffee to Starbucks, to Iraqwhere nation-building and economicprogress depend on communities orga-nizing for self-benefit, ACDI/VOCAhelps people under stress overcomecrisis, win freedoms and reach forprosperity.

In fractional Serbia, 49 collectiveshave been assisted by ACDI/VOCAsince 2001 to create unity, stability andeconomic progress. Staffer Gene Neillsays: “We provide lasting solutions byestablishing functioning, member-owned, democratic units that serve allmembers in the area to achieve a com-

mon goal whether it is livestockimprovement, agricultural marketing,providing machinery to increase pro-duction, etc. Each of these projects has

a sustainability element oftenlacking in pre-crisis coopera-tives funded by the state. Inaddition, we are encouragingcooperation among producersto increase their incomes andprovide better lifestyles forthemselves and their families.”

ACDI/VOCA’s coopera-tives enlist hard-to-reach ruralpeople in the fight of theirlives against HIV/AIDS. Foodsecurity and economic sustain-ability often depend on theproductivity of smallholderfarmers, and HIV/AIDS canin one generation turn foodsurplus into shortage. As rurallivelihoods are undermined,social disintegration is theresult.

In Ethiopia, where infec-tion rates range up to 50 per-cent, ACDI/VOCA is helping400 co-ops, with a total familymember population of 2.5million, develop HIV/AIDSeducational materials, sellcondoms in cooperative shops,host frank trainings and usemusic and drama to powerful-ly convey health messages.

ACDI/VOCA’s activitiesrevolve around helping farm-ers and entrepreneurs over-

seas participate in the global econo-my. But ACDI/VOCA’s cooperativeand association partners show theirtrue colors in also rising to meetmembers’ social, political and evenhealth needs.

Contact information: website: See www.acdivoca.org; phone: (202) 879-0269; address: 50 F St.NW, Suite 1100, Washington, D.C.,20001. ACDI/VOCA is affiliated with the National Council of FarmerCooperatives and the Farm CreditCouncil. Interim President: DonCrane; Board Chair: Jean MariePeltier. ■

ACDI/VOCA helped establish the 100,000-member-strongNational Smallholder Farmers’ Association of Malawi, whichprovides a solid array of member services. Its fiery birdseye chilipeppers fetch premium prices on the international market.


redit Union NationalAssociation (CUNA)works in cooperationwith all the state creditunion leagues and the

District of Columbia for the better-ment of America’s credit unions —not-for-profit cooperatives that pro-vide affordable financial services topeople from all walks of life. Morethan 90 percent of the nearly 10,000credit unions in the United States —which are owned by more than 83 mil-lion consumer members — are affiliat-ed with CUNA throughmembership in theirleagues.

CUNA, chartered in1934, is headquarteredin Madison, Wis., andWashington, D.C.,where it maintains agovernmental affairsoffice. CUNA providesnational leadership, aliaison with Congressand the various federalagencies, publicationsand Internet-related ser-vices, market and demo-graphic research, newproduct development,economic analysis, pub-lic relations, education and trainingand other services to its affiliated cred-it unions.

United with CUNA and the leaguesthrough a combined management andleadership structure is CUNAStrategic Services, Inc. (CSSI), theassociation’s financial products and ser-vices affiliate. CSSI provides creditunions with access to high-qualityproducts, services and technologiesdelivered with a competitive advantagemade possible through volume pricingand strategic program development.Products offered by CSSI’s chosenproviders include: office supplies,imaging equipment, promotional prod-ucts, rate intelligence services, moneyhandling equipment, ATM access,security systems, membership and

audio marketing programs, sharedrafts, member business lending, IDverification, money orders, IRAs, trav-elers checks, etc.

Another CUNA affiliate, U.S.Central Credit Union in Lenexa, Kan.,provides investment, liquidity and cor-respondent financial services to creditunions through a network of state orregional ‘corporate’ credit unions,which are essentially credit unions forcredit unions.

Some of CUNA’s recent accomplish-ments and challenges facing it include:

• Privacy and the Fair CreditReporting Act: FCRA reauthoriza-tion was passed as part of the “Fairand Accurate Transactions” (FACT)Act of 2003. President Bush signedit into law on Dec. 4, 2003. CUNAplayed an integral role for creditunions and consumers in advocatingpassage of the legislation, whichensures that our national system ofcredit reporting continues withoutinterruption and, in turn, assuresthat our nation’s consumers haveeasy access to credit and receive fairand appropriate protections of theirpersonal financial information tohelp protect against identity theft.CUNA was the only national tradegroup for credit unions to testifybefore the full House Financial

Services Committee on this legisla-tion.

• Challenges from banks: Banks arecontinuously lobbying to have creditunions pay federal income taxes —despite credit unions’ exemptionsthrough their not-for-profit status.These additional taxes would ulti-mately prove detrimental to creditunion members, as this exemptionallows credit unions to return theirwould-be “profits” to their membersin the form of lower loan rates, high-er deposit rates and lower fees thanother financial institutions.Additionally, these lower rates bene-fit all American taxpayers, becausethey ensure that other financial insti-tutions stay competitive and avoidusury — which was a major con-tributing factor behind the begin-nings of credit union organization.

• Financial literacy: CUNA workstirelessly to inform credit unions, thegovernment, the media, America’syouth and the general public on theimportance of financial literacy.

• Hispanic Initiatives: As a tribute toanother founding principle - servingpeople of modest means - CUNAworks to help credit unions betterserve the financial needs of the UnitedStates’ growing Hispanic community.Here are some of the ways thatCUNA has worked to achieve thisgoal. CUNA has published a freeresource guide for Hispanics and thenewly translated version of theNational Endowment for FinancialEducation’s High School FinancialPlanning Program student guidedesigned to help build financial litera-cy among high school seniors. CUNAis also fostering use of IRnet to pro-vide a lower cost remittance alterna-tive to Hispanic and other immigrantpopulations. Contact information: website:

www.cuna.org; phone: (800) 356-9655;address: P.O. Box 431, Madison, Wis.53705. President/CEO: Daniel A.Mica; Board Chair: Dick Ensweiler,(Texas Credit Union League). ■

CUNA: Meeting the needs of 83 mil l ion members

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Credit Union House in Washington, D.C., includes rooms thatcredit unions can use for meetings or receptions when engagedin lobbying efforts in the nation’s capital. Photo courtesy CUNA


he NationalTelecommunicationsCooperative Association(NTCA) is a nonprofitassociation representing

about 560 small and rural telephonecooperatives (or “telcos”) and commer-cial telephone companies. These telcosserve more than 3.6 million rural busi-nesses and residences and employmore than 14,000 people.

In an era of rapidly evolving tech-nology, deregulation and marketplacecompetition, NTCA’s goal is to ensure

that rural Americans receive telecom-munications service on par with thoseavailable to urban residents — and atcomparable rates.

NTCA’s members are completecommunications providers, offeringevery service from basic phone to high-speed broadband Internet to videoentertainment. NTCA is a full-serviceassociation, offering a wide array ofmember services, including: an effectivegovernment affairs program; expertlegal and industry representation; abroad range of educational services;comprehensive regular and special pub-lications and public relations programs;assistance with business and technologyprograms; and a complement of nation-al and regional meetings.

NTCA also offers a complete rangeof employee benefits programs throughits wholly owned subsidiary, Services

Management Corporation (SMC). The$1 billion benefits program ensures thatmembers and their employees havehealth care, retirement income, savingsplans, and insurance. TheTelecommunications EducationCommittee Organization (TECO) is theassociation’s political action committee.

The Foundation for Rural Service(FRS) is NTCA’s nonprofit, 501(c)(3)organization. The foundation’s missionis to promote, educate and advocate tothe public on rural telecommunicationsissues in order to sustain and enhance

the quality of life within rural commu-nities. Funded solely through contribu-tions, FRS supports a number of pro-grams that address the needs of ruralcommunities and, in particular, theyouth of rural America. The foundationsponsors a college scholarship programand an annual Youth Tour that bringsrural high school students to thenation’s capital to learn about thetelecommunications industry and towitness the legislative process. It alsoruns an advocacy campaign, providinginformation to help increase awarenessof important telecom issues facing ruralconsumers across the country.

NTCA’s record of service andachievement has led policymakers andthe public, alike, to have confidence inits capabilities. This year marksNTCA’s 50th anniversary as the voiceof rural telecommunications. While

much has changed in 50 years, the onething that has remained constant: dedi-cation to members and the success ofrural telecommunications.

Recent NTCA accomplishmentsinclude: • Its intercarrier compensation work

group undertook an extensive datacollection to evaluate the impact ofaccess charge reform proposals onrural incumbent local exchange car-riers.

• Lobbied successfully to change theFederal CommunicationCommission’s attribution rulesrequiring a cooperative to include adirector’s outside income in the com-pany’s revenues when applying forspectrum bidding credits.

• With other associations, NTCA fileda joint petition with the FCC and anotice of appeal with the U.S.Circuit Court of Appeals for D.C.,challenging the FCC’s intermodal(wireline-to-wireless) local numberportability rules.

• Successfully challenged FinancialAccounting Standard Board 150rules requiring cooperatives to treatretained capital credits as liabilitiesrather than equity.

• Was instrumental in the creation andpassage of a new communicationslaw in Nigeria.

• Conducted a comprehensive casestudy of its work in the early 1990sto create two Polish telecom cooper-atives, both of which are still thriv-ing, more than 10 years later.

Contact information: website:www.ntca.org; phone: 703-351-2000;address: 4121 Wilson Blvd., 10th floor,Arlington, Va. 22203. CEO: MichaelE. Brunner; Board President: NormanT. Welker, president, McDonoughTelephone. ■

Nat iona l Te lecommunicat ions Cooperat ive Assoc ia t ionResponses to evolving technology, deregulation key to members’ future

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Nat iona l Cooperat ive BankGrocery, housing & purchasing co-ops on spectrum of organizations financed

An independent organicgrocery in San Franciscomakes the transition to100-percent employeeownership. An Alaska

native corporation based in Nomestarts a clothing manufacturing busi-ness in Puerto Rico. A New York Cityco-op apartment building refinances tomake long-overdue capital improve-ments. A Native American tribal enti-ty opens a stunning, award-winninggolf course on Pueblo Indian lands inNew Mexico. A charter school in alow-income Bronx neighborhoodmoves from a makeshift temporarylocation to a new, state-of-the-art

high-tech campus.These are just a small sample of

recent projects made possible byfinancing from National CooperativeBank (NCB), headquartered inWashington, D.C. For more than 20years, NCB has been providing a com-prehensive array of financial services tocooperatives and other member-ownedorganizations throughout the country.

Currently owned by more than1,800 of its customers, NCB serves aspectrum of cooperatives, includingwholesale grocery co-ops, retailer-owned purchasing co-ops and housingco-ops. Beyond this customer base,however, NCB also meets the needs ofother enterprises, each grounded in a

spirit of cooperation and democratical-ly organized, even though they are notcooperatives in the strictest sense.

These groups, for example, may benonprofits that deliver services to theirlocal communities. They may beESOPs (Employee Stock OwnershipPlans) giving workers an equity stakein their companies. Or they may beAlaska Native enterprises that, by theirvery nature, are member-run andmember-driven.

NCB is unique because it was createdto serve the financial needs of thisunderserved market-niche — peoplewho join together cooperatively to meetpersonal, social or business needs, espe-

cially those in low-incomecommunities.

Chartered by Congressin 1978, NCB was priva-tized in 1981 as a member-owned financial institution.

As a bank whose missionis to serve and promotecooperatively organizedenterprises, NCB’s successis measured by the degreeto which its customers suc-ceed. So, the bank continu-ally changes and innovates

as its customers seek new financialsolutions in an increasingly competi-tive environment: • In real estate lending, NCB promotes

multifamily homeownership by offer-ing an array of financial services tohousing cooperatives and other typesof community associations.

• In commercial and small businessbanking, NCB helps member-drivenorganizations of all shapes and sizesgrow with customized financial ser-vices.

• In community development, NCBassists at-risk communities with aunique blend of technical assistanceand development finance.

• In personal banking, NCB provides

financing for co-op and condo apart-ments, as well as checking and sav-ings for consumers nationwide.

Working to ensure the continuedvitality of the cooperative sector as awhole is also very much a part ofNCB’s mission. Which is why, everyyear, the bank publishes the NCB Co-op100, in both print and online versions,highlighting the nation’s top 100 co-ops and their contributions toAmerica’s economy.

Each October, NCB also plays arole in the celebrations surroundingNational Co-op Month. In 2003, aspart of this annual observance, thebank produced a video and accompa-nying brochure titled “What is a Co-op? You’d be Surprised.” It shows howcooperatives are interwoven through-out American life. Copies can beobtained by calling NCB at (202) 336-7742 or by sending an e-mail requestto [email protected].

The enterprises NCB serves are largeand small. They are located in rural andurban communities. They affect thelives of Americans in essential ways,enabling them to realize their dreams ofowning a home, running a competitivebusiness, giving their children a goodeducation and making sure they haveaccess to quality health care now and asthey grow older. NCB helps them bycrafting financial solutions tailored totheir continually evolving needs.

Contact information: website:www.ncb.coop; phone: (800) 955-9622;address: 1725 Eye St. N.W., Suite 600,Washington, D.C. 20006. President &CEO: Charles Snyder; Chairman:Stuart Saft, Council of New YorkCooperatives. ■

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NCB provided a $5 million line of credit to help an AlaskanNative Corporation launch this garment-manufacturingplant in Orocovis, Puerto Rico. Photo courtesy NCB


SDA Rural Developmentis committed to helpingimprove the economyand quality of life in allof rural America. It helps

to build a stronger nation by promot-ing development of rural housing andcommunity facilities, investing in ruralbusinesses, promoting development ofnew cooperatives and improved opera-tions of existing co-ops, and buildingan infrastructure of modern electri-cal, telecommunications, water andwaste disposal services.

USDA Rural Developmentachieves its mission by helping ruralindividuals, communities and busi-nesses obtain the financial and tech-nical assistance needed to addresstheir diverse and unique needs. Theagency provides about $13 billionper year in direct loans, guaranteedloans and grants; it has an $86 bil-lion loan portfolio.

To help raise homeownershiprates, USDA Rural Developmentadministers both direct and guaran-teed homeownership loan programs.It also has a self-help housing pro-gram, under which low-income peo-ple can use “sweat equity” tobecome homeowners. RuralDevelopment also helps to buildaffordable rental housing and farm-worker housing in rural areas.

USDA supports loans to busi-nesses through banks and communi-ty-managed lending pools for pro-jects that create or preserve qualityjobs and/or promote a clean rural envi-ronment. The agency’s financialresources are often leveraged withthose of other public and private creditsource lenders to meet business andcredit needs in under-served areas.Recipients of these programs mayinclude individuals, corporations, part-nerships, cooperatives, public bodies,nonprofit corporations, Indian tribesand private companies.

USDA Rural Development oper-ates through a network of 47 stateoffices and more than 800 field officeslocated throughout the nation. Manyof these are located in USDA ServiceCenter offices.

Because readership of this magazineis primarily cooperative-oriented, thefollowing information focuses on RuralDevelopment’s Cooperatives and RuralUtilities Programs.

Rural Cooperatives Program The mission of Rural Develop-ment’s

Cooperatives Program is to promoteunderstanding and use of the coopera-tive form of business for marketing anddistributing agricultural products. Itserves cooperative members, directors,management, educational institutions,rural residents and all others with aninterest in the cooperative form of busi-

ness. USDA maintains a library of morethan 200 cooperative publications andvideos, ranging from How to Start aCooperative and Co-ops 101, to multi-volume sets on tax laws for cooperatives.More than 50,000 of these publicationsare distributed every year, makingUSDA the world’s leading distributor ofco-op educational materials. Many moreare distributed electronically via theRural Development website.

Primary co-op program areasinclude:

Technical assistance — is provid-ed to existing cooperatives facing spe-cific problems or challenges.Examples of this aid can include:helping a cooperative develop astrategic marketing plan to cope withchanging competitive forces; assistinga co-op in making a crucial decisionwhether to merge or form a jointventure; finding ways to turn rawproducts of cooperative into value-added products. These matters areoften life and death issues not onlyfor a cooperative, but for the ruralcommunities in which they operate.

USDA co-op staff can helpimprove a cooperative’s businessstructure and operating efficiency.This work often involves an analysisof operations or assessing the eco-nomic feasibility of new facilities oradding new products or services.Technical assistance is largelydesigned to benefit a specific cooper-ative business or group. However, theresults often provide business strategy

for all cooperatives.Cooperative research — creates a

knowledge base necessary to supportcooperatives dealing with changingmarkets and business trends. Studiesinclude financial, structural, managerial,policy, member governance, legal andsocial issues, as well as various othereconomic activities of cooperatives.Research is designed to have directapplication to current and emerging

USDA Rura l Development : commit ted to thefuture o f Amer ica ’s ru ra l communi t ies

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Under USDA’s Mutual Self-Help Housing Program,rural people can become homeowners through aninvestment of “sweat equity.” USDA Photo


requirements of cooperatives. Recentresearch studies have focused on equityredemption plans used by cooperatives,identification of new niche markets forcooperatives and opportunities andobstacles cooperatives face whenexporting goods overseas.

Cooperative education — TheCooperative Marketing Act of 1926mandates that USDA “promote theknowledge of cooperative principlesand practices and cooperate in promot-ing such knowledge with educationaland marketing agencies, cooperativeassociations, and others.” To meet thisgoal, Rural Development’s Co-opsProgram provides a wide range oftraining and educational materials.

The agency’s bimonthly magazine,Rural Cooperatives, reports significantachievement by cooperatives andexamines the key issues facing them,presents the most advanced thinking ofcooperative leaders and provides high-lights of agency research, technicalassistance and educational activities.

Cooperative development — thisassistance can range from conducting aninitial feasibility study to the creationand implementation of a business planand development of bylaws. We alsoprovide training for cooperative direc-tors. The overall goal is to provide arealistic view of what it will take to makea new cooperative succeed, and to helpguide the leaders through the variousstages of launching a cooperative.

Cooperative statistics — are col-lected and published to detect growthtrends and changes in structure andoperations of cooperatives. Data helpidentify and support research and tech-nical assistance activities. This infor-mation is used extensively by legislativeand executive branches of governmentin formulating agricultural and cooper-ative-related policy.

Some recent special co-op initiativesinclude: • Value-Added Producer Grant

Program — Now in its fourth year,this grant program provides match-ing grants to cooperatives and othersin agriculture seeking to producevalue-added products from U.S. farm

commodities. These grants cannotbe used for agricultural production.The awarding of the grants — $13.2million for 2004 — is as competitiveprocess, in which detailed applica-tions and business feasibility plansare reviewed by panels. Website:www.rurdev.usda.gov/rbs/coops/vadg.htm.

• Agricultural Marketing ResourceCenter (AgMRC) — Funded inpart by USDA Rural Development,this is a national “virtual resource”center providing the latest informa-tion on value-added agriculturalenterprise development. The centerhas grown from a small website witha few areas of expertise to more than

150 different commodity areas.Website: www.agmrc.org.

• Rural Cooperative DevelopmentGrants — help establish operatingcenters for cooperative developmentto improve the economic condition ofrural areas through the developmentof new cooperatives and improvingoperations of existing cooperatives.Eligible applicants are nonprofit cor-porations, including institutions ofhigher education. Applications aresolicited annually and scored accord-

ing to defined selection criteria. In2003, $6.3 million in grants wereawarded to 21 applicants.

Rural Development’s Other Business Programs

The rural business programs helpprovide financing to rural business own-ers, nonprofit organizations, coopera-tives, public bodies, and Indian tribes forbusiness ventures which create qualityjobs and stimulate the economy of ruralareas. The Business and Industry (B&I)Guaranteed Loan Program creates part-nerships with commercial lending insti-tutions, the Farm Credit System andFarmer Mac to provide financing forqualified rural business enterprises,

including cooperatives. This often takesthe form of loan guarantees which bol-ster existing private credit structures infunding projects which foster lastingcommunity benefits.

B&I loan guarantees can cover asmuch as 60 percent of a loan of $10million to $25 million, or as much as80 percent of a loan of $5 million orless. This assistance is available tobusinesses in areas outside the bound-ary of urban areas with populationsunder 50,000.

Charles Ling, left, dairy economist with USDA Rural Development’s Cooperatives Program,gets a tour of a milk bottling plant in Wisconsin. USDA photo by Ken Hammond

The Cooperative Stock PurchaseProgram, which operates as part of theB&I program, can help ag producersbuy stock to join a new-generation orother stock-ownership cooperative, upto a maximum of $400,000. USDA willguarantee up to 80 percent of theseloans for as long as seven years.

The Rural Business EnterpriseGrant Program provides grants topublic bodies and private, nonprofitorganizations serving rural areas out-side the boundary and adjacent urban-ized area of a city with a population of50,000 or more. Priority is given toapplications from rural areas andtowns with populations of 25,000 orless. These grants can finance smalland emerging private businesses andcooperatives, or fund a revolvingloan program.

For more details of these andother Rural Development BusinessPrograms, visit:www.rurdev.usda.gov, or call (202) 720-7287.

Rural Utilities Programs Modern utilities came to rural

areas of the nation through some ofthe most successful government ini-tiatives in American history, carriedout through USDA working withrural cooperatives, nonprofit associa-tions, public bodies and for-profitutilities. Today, USDA RuralDevelopment’s Utilities Programcarries on this tradition, helping ruralutilities expand and keep their tech-nology up to date, helping establishnew and vital services such as distancelearning and telemedicine.

The public-private partnershipwhich is forged between USDA andthese industries results in billions ofdollars in rural infrastructure develop-ment and creates thousands of jobs forthe American economy.

Rural Electric Program Providing reliable, affordable elec-

tricity is essential to the economicwell-being and quality of life for all ofthe nation’s rural residents. The elec-tric program provides leadership and

capital to upgrade, expand, maintainand replace America’s vast rural elec-tric infrastructure. Under the authori-ty of the Rural Electrification Act of1936, USDA Rural Developmentmakes direct loans and loan guaran-tees to electric utilities to serve cus-tomers in rural areas. USDA is themajority noteholder for more than700 electric systems.

USDA’s Electric Program makesloans and loan guarantees to financethe construction of electric distribu-tion, transmission and generation facil-

ities, including system improvementsand replacement required to furnishand improve electric service in ruralareas, and for demand-side manage-ment, energy conservation programs,and on-grid and off-grid renewableenergy systems.

Loans are made to corporations,states, territories and subdivisions andagencies, such as municipalities, peo-ple’s utility districts and cooperative,nonprofit, limited-dividend, or mutualassociations that provide retail electricservice needs to rural areas or supplythe power needs of distribution bor-rowers in rural areas. USDA also pro-

vides financial assistance to rural com-munities with extremely high energycosts to acquire, construct, extend,upgrade and otherwise improve energygeneration, transmission, or distribu-tion facilities. USDA’s Rural UtilitiesProgram services approximately 686active electric borrowers in 47 states.

Rural Telecommunications ProgramUSDA continues to provide many

programs for financing ruralAmerica’s telecommunications infra-structure. The traditional infrastruc-ture loan program — consisting ofhardship, cost of money, RuralTelephone Bank and guaranteedloans — provides financing of broad-band and other advanced services.Since 1995, every telephone lineconstructed with USDA financinghas been capable of providing broad-band service using digital subscriberloop (DSL) technology. TheDistance Learning program contin-ues its charge to wire rural schools totap into a rich universe of education-al classes and resources; theTelemedicine program is helping toimprove health care delivery in ruralAmerica by “linking” small clinicsand hospitals to major medical facili-ties.

The Broadband Program is a loanprogram designed to increase the rateof deployment of broadband technol-ogy to small towns in rural areas.Under this program, RuralDevelopment can fund borrowers

serving communities of up to 20,000inhabitants.

Contact information: RuralDevelopment website:www.rurdev.usda.gov; phone numbers:Cooperatives Program (202) 720-7558;Rural Business Program (202) 690-4730; Rural Utilities Program (202)720-9540; Rural Housing andCommunity Facilities Programs: (202) 690-1533; address: (CooperativesProgram): USDA Rural Development,Cooperatives Program, Stop 3250,1400 Independence Avenue, S.W.,Washington, D.C. 20250. E-mail: [email protected]. ■


A lineman repairs damage following a winter stormin Texas. Rural telecommunications and electriccooperatives throughout the nation look to USDAfor much of their financing needs. USDA photo byDan Campbell


USDA to award $23 millionfor renewable energy projects

Agriculture Secretary Ann M.Veneman announced in early May theavailability of approximately $23 millionin grants to support President Bush’senergy plan to develop renewable ener-gy systems and promote energy effi-ciency improvements. Veneman saidthe Renewable Energy Systems andEnergy Efficiency Improvements pro-gram was created as part of the 2002Farm Bill to assist farmers, ranchers andrural small businesses develop renew-able energy systems and make energyefficiency improvements to their opera-tions. In 2003, the Bush administrationinvested $21.7 million to assist 114applicants from 24 states develop orimprove wind power, anaerobicdigester, solar, ethanol and other bioen-ergy related systems or energy efficien-cy improvements.

Applicants must be agricultural pro-ducers or rural small businesses, U.S.citizens or legal residents and havedemonstrated financial need. USDARural Development grants may be usedto pay up to 25 percent of the eligibleproject costs. Eligible projects includethose that derive energy from a wind,solar, biomass or geothermal source, orhydrogen derived from biomass orwater using wind, solar, or geothermalenergy sources.

Applications must be completed andsubmitted with a postmark no later thanJuly 19, 2004. Detailed informationabout program requirements and infor-mation on how and where to apply isincluded in the funding notice in theMay 5 Federal Register. Awards will bemade on a competitive basis for thepurchase of renewable energy systemsand to make energy improvements.

UW’s Ann Hoyt electedNCBA board chair Ann Hoyt, one of the nation’s mostrespected and widely published expertson cooperatives, has been elected to atwo-year term as board chair of theNational Cooperative BusinessAssociation (NCBA). Hoyt is a profes-sor of consumer science at theUniversity of Wisconsin-Madison and asenior faculty associate at the universi-ty’s Center for Cooperatives. She teach-es, does research and develops trainingmaterials for all types of cooperatives.

For more than two decades, Hoyt hastrained hundreds of cooperative direc-tors and managers for nonprofits. Shehas also written widely on the historyand development prospects of consumercooperatives. Hoyt holds a Ph.D. fromKansas State University and is currentlydoing research on urban cooperativedevelopment in the United States.

N E W S L I N ECompiled by Dan Campbell

Send items to: [email protected]

For their tremendous, lifetime contributions to the nation’s cooperative system, the Cooperative Hall of Fame in Washington recently inductedthree new members: (from left): Ralph Paige, executive director of the Federation of Southern Cooperatives; Henry Schriver (holding plaque), aco-op educator and leading proponent of cooperatives for 61 years, and Allen Thurgood, founder and CEO of 1st Rochdale Cooperative. WithSchriver are: NCFC CEO Jean Marie Peltier, DFA Executive Vice President Don Schriver (Henry’s son) and CoBank CEO Douglas Sims. For detailsabout each of the inductees, see the January-February 2004 issue of Rural Cooperatives, page 32. Schriver photo by Agi Schafer, courtesy DFA; Paigeand Thurgood photos by Art Jaeger, courtesy NCBA


“Ann is extremely knowledgeableand has led numerous other co-opboards over the years,” NCBAPresident & CEO Paul Hazen says.“The depth of experience she brings toNCBA will be a tremendous benefitfor us.” Hoyt succeeds Charles M.Snyder, president and CEO of theNational Cooperative Bank.

Elected to replace Hoyt as 1st vicechair was Steven Cunningham, presi-dent and CEO of IMARK Group inOxon Hill, Md. Elected 2nd vice chairwas Andrew Brown, vice president forindustry and member relations of theNational Rural TelecommunicationsCooperative in Herndon, Va. Electedsecretary-treasurer was Kathy Brick,senior vice president and chief finan-cial officer of U.S. Central CreditUnion in Lenexa, Kan. The only newboard member elected was RuffinSlater, general manager of the WeaverStreet Market, a worker-owned andconsumer-owned food cooperative inCarrboro, N.C. Headquartered inWashington, D.C., the 88-year-oldNCBA represents cooperatives acrossall sectors of the economy, includingagriculture, food distribution andretailing, childcare, credit unions,housing, healthcare, energy andtelecommunications.

Wisconsin’s Co-op Care Program finalist for prestigious award

Representing a major change in thedelivery of home care services,Waushara County’s Cooperative Carehas been named one of 15 finalists forthe esteemed Innovations inGovernment Award, a program of theAsh Institute for DemocraticGovernance and Innovation atHarvard University’s Kennedy Schoolof Government. The program is noweligible to win $100,000 in what isoften referred to as “the Oscars” ofgovernment award programs.

The Waushara County Departmentof Human Services facilitated develop-ment of the co-op in 1999 in an effortto strengthen and expand its homecare workforce by transferring man-agement of the service from the county

to the care providers. With guidancefrom USDA Rural Development andother organizations, the care providerscreated a business plan reflecting theirwishes for decent pay and benefits.Cooperative Care was officiallylaunched in 2001 by 52 workers whovoted to incorporate, paid dues andelected a board of directors.

Today, with 84 members,Cooperative Care is fulfilling the mis-sion of its founding members by pro-viding the county’s home care workerswith fair pay and benefits through abusiness they democratically own andoperate themselves. The best aspect ofthis program is that it gives this once-disenfranchised group of workers avoice on the job.

Cooperative Care was one of nearly1,000 applicants for the 2004Innovations in American GovernmentAward. The committee will select fivewinners, which will be announced onJuly 28 at the Excellence inGovernment 2004 Conference, inWashington, D.C.

Co-ops eligible forValue Added Grants

USDA Rural Development is pro-viding more than $13 million in feder-al funds for the Value-Added ProducerGrant (VAPG) Program in 2004.Eligible applicants include farmer- andrancher-owned cooperatives, indepen-dent producers, agricultural producergroups and majority-controlled pro-ducer-based business ventures.

Grants may be used for planningactivities and working capital for mar-keting value-added agricultural prod-ucts and for farm-based renewableenergy. The maximum amount thatcan be awarded is $500,000, and allVAPG funds must be matched by anequal amount of funds from the appli-cant or a third party.

At press deadline for this magazine,the announcement of fund availabilitywas scheduled to be published in lateMay the Federal Register, website:http://www.gpoaccess.gov/fr/index.html, and on the USDA program website:http://www.rurdev.usda.gov/rbs/coops/

vadg.htm. Deadline for application is45 days from the date of publication.

Farm Credit Bank of Texas doubles earnings in 2003

The Farm Credit Bank of Texas(FCBT), a $7.4 billion wholesalelender, today reported strong earningsfor 2003 and one of the largest patron-age distributions in the bank’s 87-yearhistory. Bank net income of $64.8 mil-lion for 2003 was nearly double theprevious year’s income of $32.5 mil-lion, due largely to the sale of thebank’s mineral rights holdings inNovember 2003 — a one-time event.These strong earnings allowed theFCBT to declare $50.8 million inpatronage distributions last year to itsstockholders — 22 rural financingcooperatives in Alabama, Louisiana,Mississippi, New Mexico and Texas.These lending associations provideloans and financial services to agricul-tural producers, agribusinesses, coun-try homeowners and other rurallandowners.

“We are extremely pleased that wewere able to share our success with ourstockholders, who are also our cus-tomers, by paying them a substantialpatronage on our earnings. That is ourway of reducing their effective net costof borrowing, and it is the single great-est advantage of doing business with acooperatively owned bank,” says bankCEO Larry Doyle.

The bank’s gross loan volume of$5.8 billion at Dec. 31, 2003, reflecteda modest $8 million increase fromDec. 31, 2002. This figure was impact-ed by the bank’s sale of $300 million inparticipations in its direct notes fromassociations in November 2003. TheTexas bank is part of the nationwideFarm Credit System, which reportedcombined net income of $1.82 billionfor the year ended Dec. 31, 2003, ascompared with combined net incomeof $1.773 billion for the prior year.

ACDI/VOCA’s Deegan resignsMichael Deegan announced his

immediate resignation on April 29 aspresident and CEO of ACDI/VOCA.


Deegan said he plans to pursue othercareer opportunities. TheACDI/VOCA board immediatelylaunched a search for a replacement.Don Crane, executive vice president ofACDI/VOCA, will carry out the day-to-day chief executive functions untilan interim president is appointed.

During Deegan’s eight-year tenureas ACDI/VOCA president, the organi-zation experienced unprecedentedgrowth and success in its developmentoperations worldwide, Crane noted.ACDI/VOCA, headquartered inWashington, D.C., is a private, non-profit organization which promotesbroad-based economic growth and thedevelopment of civil society in emerg-ing democracies and developing coun-tries (see page 37).

New logo adopted forCalifornia Tree Fruit

The California Tree FruitAgreement (CTFA) has approved anew logo for use in the marketing offresh California peaches, plums andnectarines. “The new logo is designedspecifically to promote Californiapeaches, plums and nectarines and

communicates images of sunshine andhealth that are associated with thesefruits,” said CTFA President BlairRichardson. He said the old logo —which depicted a tree illuminated withsun rays — seemed to work better atpromoting the organization ratherthan the fruit.

“First and foremost, CTFA exists topromote our growers’ fruit and is notan organization that promotes itself,”Richardson said. He noted that the

new logo will be used in both tradeand consumer marketing efforts andwill appear on new point-of-sale mate-rials being developed for the 2004 sea-son. Initially, the logo will be printedwith the words “peaches, plums, nec-tarines.” “Eventually, we expect thatthe logo will stand on its own withoutthe need for these tag lines,”Richardson said.

Forum for Dairy Womenslated in Madison, Sept. 26-27

The 2nd International Forum forWomen in Dairying (IFWD) will beheld Sept. 26-27 in Madison, Wis. Theforum strives to enrich the lives of glob-al dairy women by encouraging them toshare challenges and contributions tothe industry and to provide a venue tolearn, network and be inspired.

Jackie Pflug, who survived an airlineterrorist attack, will give the forum’skeynote address, sharing how we canbecome peak performers through ourattitude and reaction to change, adver-sity and challenge. A full program canbe found at www.world-dairy-expo.com. For a registration packet,contact Marlene Schmidt, WorldDairy Expo visitor services manager, at(608) 224-6455 or [email protected].

USDA awards $385 millionfor rural electric expansion

Agriculture Secretary Ann M.Veneman in March announced 28 ruralelectric guaranteed loans totaling near-ly $385.6 million to expand rural elec-tric infrastructure in 16 states.“Expansion of rural infrastructure is afirst step in opening the door forexpanded rural economic developmentand improved quality of life for ruralresidents,” said Veneman. “These pro-jects will serve 62,980 future customers,build 4,300 miles of new line and fundgeneral system-wide modernization.”

Through USDA RuralDevelopment’s utilities program, loansand loan guarantees are made tofinance the construction or replace-ment of electric transmission and gen-eration facilities. In fiscal year 2003,

the Bush administration invested over$6.3 billion in grants, loans and loanguarantees to support the developmentand/or improvements to rural electric,telephone and water/wastewater infra-structure that will help to create orsave an estimated 150,000 jobs.

The loans announced today include25 distribution projects and threetransmission and generation ventures.A complete list of the loan recipientscan be viewed at USDA RuralDevelopment’s website at: www.rur-dev.usda.gov.

USDA announces $190 millionin high-speed internet loans

Agriculture Secretary Ann M.Veneman in early May announced theapproval of 20 rural broadband andtelecommunication loans totaling$190 million to expand access toadvanced technology in 19 states.The funding is part of the Bushadministration’s effort to expand theavailability of broadband technologyin rural areas.

“President Bush is committed toensuring that every household inAmerica has access to broadband bythe year 2007,” said Veneman. “Thistechnology is important for familiesand businesses to succeed in a globalenvironment.”

Veneman announced in January2003 that USDA would expandefforts to bring farmers, rural resi-dents and businesses greater access toimproved telecommunication tech-nology through loans and loan guar-antees to rural telecommunicationsproviders. Funds for the programwere authorized through the 2002Farm Bill. To date, over $206 millionin broadband loans have beenapproved in this program.

The rural broadband access pro-gram provides loans and loan guaran-tees for the construction, improve-ment, and acquisition of facilities andequipment for broadband service ineligible rural communities. Priority isgiven to applications that are propos-ing to serve areas where no residentialbroadband service currently exists. ■


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