NEWS LINE

Compiled by Patrick Duffey


Record growth for
Organic Valley
Producing organic farm products and marketing them through a cooperative can help farmers earn 60 percent more and buck the trend that is driving 330 farmers out of business every week, according to the George Siemon of Organic Valley Family of Farms, at La Farge, Wis. The co-op had record sales of $156 million in 2003, a 25-percent increase from 2002. It projects that 2004 sales will rise to $189 million. It paid its 633 members an average $20.17 per hundredweight of milk in 2003, which far outpaced the national average price of $12.07 per hundredweight, Siemon noted.

“Organic Valley’s goal is to plow our profits back into the earth and our rural communities,” Siemon says, adding that the co-op has been 100 percent farmer owned since its founding in 1988 and now produces 130 products labeled under USDA’s new organic standards.

“Organic Valley never measures success in dollars alone,” says Pam Riesgraf, a co-op board member who milks 60 cows and farms 250 acres with her husband, Jeff, near Jordan, Minn. “What counts for us is the number of farmers we’re able to keep on the land. This year’s total of 633 (members) is living proof that the Organic Valley model can be a lifeline.”

Organic Valley, which built a $4 million, 45,000-square-foot barnshaped headquarters in 2003, says major product accomplishments this year include: the introduction of its Omega 3 organic eggs, winning the prize for best salted butter at the World Dairy Expo, the introduction of 11-ounce plain or chocolate singleserve reduced-fat milk in Holstein-patterned packages and launching an educational organic foods Website, www.moomom.com, among others.

The co-op also has added a veterinarian to its services staff. Paul Detloff, DVM, will assist the cooperative’s members with a full range of animal health issues and provide special guidance to new organic farmers who are just learning new herd health strategies. Detloff is a leading authority on botanical, homeopathic and alternative animal treatment methods and the author of four books, including his newest, “Alternative Treatments for the Ruminants.”

CHS income down
despite sales climb
“What we do reaches far beyond the farmgate, grain elevator, refinery and food production plant,” CHS President and CEO John Johnson told shareholders attending the St. Paul cooperative’s annual meeting in December. While CHS net income of $123.8 million was down from $126.1 million in 2002, sales were up significantly from $7.2 billion to $9.3 billion in fiscal 203. During fiscal 2004, CHS will return $56.2 million of its fiscal 2003 earnings to its members and other investors in the form of cash patronage, equity redemptions and preferred stock dividends.

Highlights for the year showed growth in the CENEX brand energy business, initiation of federally mandated upgrades to reduce sulfur content in fuels and emissions produced at its refinery at Laurel, Mont., and opening grain shuttle facilities at Friona, Texas, and Collins, Miss., to reach livestock and poultry producers. Other highlights included completion of a soybean processing plant at Fairmont, Minn., and repositioning CHS’ Mexican food business to gain greater efficiencies and improved economics while enhancing service to food service and other customers.

Western Sugar plans
new $3.5 million diffuser
Western Sugar Cooperative has announced plans to install a $3.5 million diffuser at its processing plant in Billings, Mont. The new tower is expected to save the cooperative on energy costs by more efficiently extracting sugar from beets. The new unit will replace the existing diffuser, installed in 1955. The improvement is scheduled for February, after the sugar beet harvest.

Meanwhile, grower payments totaling $21.5 million for the 2002 crop and averaging nearly $40 a ton were mailed in December to the cooperative’s 1,300 members in four western states. It was the highest gross payment made to farmers in the past five years.

Swiss Valley picks pair
to replace CEO Quast
The board of Swiss Valley Farms at Davenport, Iowa, has tapped a pair from its management team to lead the cooperative during the interim until a replacement is found for CEO Gene Quast, who resigned in late October to pursue other interests. In his place, the board has chosen J. Gordon Toyne, vice president of membership and procurement, and Donald Boelens, chief financial officer, to jointly act as the office of interim chief executive officer.

Gerald Bratland, board president, said the pair had the board’s “full confidence and support to move the company forward. Jobs are secure and the coop’s leadership is strong and experienced and positioned for new opportunities.” The cooperative serves 1,400 dairy-producer members operating in five Midwest states. It has 700 employees and annual sales of about $550 million.

Meanwhile, dairy industry conditions have forced the cooperative to extend revolving members’ equity from a seven-year to a 10-year schedule. The change is for allocated earnings only, not the Swiss Valley Farms revolving fund paid in December. Coop leaders note that Swiss Valley still has one of the fastest member equity revolvements in the dairy industry and one of the strongest marketing arms in the upper Midwest.

DFA allocates $28 million;
plans N.M. cheese plant
For the fifth consecutive year, members of Dairy Farmers of America (DFA), Kansas City, Mo., are sharing patronage allocations totaling $28 million, including $7 million in cash. The payout represents 8 cents per hundredweight of milk on 35 billion pounds marketed in 2002. DFA annually markets and processes milk for more than 24,000 dairy farm families in 48 states.

Meanwhile, DFA has purchased 50 percent interest from its partners in Sinton Dairy, Colorado Springs, Colo., and subsequently sold its entire interest to National Dairy Holdings (NDH) LP of Dallas, in which DFA has an ownership interest and supply contract. An $8 million expansion was completed last spring at Sinton. The 232-employee workforce may be expanded if NDH decides to shift production to the plant. NDH now operates 32 plants in 15 states.

In another move, DFA is partnering with Glanbia PLC of Ireland and its cooperative partners in the Greater Southwest Agency in a $170 million cheese processing plant in Clovis, N.M. The plant will employ about 200 people. Operations should begin in the second half of 2005. The plant will benefit from low milk transportation costs, since many of the producers operate in a 50 to 60-mile radius of the future plant. Other cooperatives in the Greater Southwest Agency are Select Milk Producers Inc., Lone Star Milk Producers Inc. and Zia Milk Producers Inc. Select Milk was formed in 1994 by a group of dairies in New Mexico and has since added others in west Texas.

Tom Camerlo
Dairyman of Year;
Beckendorf to lead
NMPF
Dairy Farmers of America (DFA) Chairman Tom Camerlo Jr., a dairy farmer from Florence, Colo., was named 2003 dairyman of the year at the World Dairy Expo at Madison, Wis. “Those who initiate change and lead us in uncertain times inspire us and guarantee a bright future in the dairy industry,” Expo Manager Tom McKittrick said of Camerlo. Camerlo recently stepped down as president of the National Milk Producers Federation in Washington, D.C., to concentrate his attention on DFA. Charles Beckendorf of Tomball, Texas, also of DFA, was elected by NMPF delegates to succeed Camerlo. Beckendorf cited two major challenges facing the dairy federation: how to use dairy ingredients for the benefit of farmers and how to serve producers of every farm size.

Riceland buys ADM
share of grain venture
Riceland Foods of Stuttgart, Ark., has gained full control of a grain milling and storage partnership with Archer Daniels Midland (ADM). The ADM-Riceland Partnership, a nine-year-old venture, processes rice and rice products. Riceland President Richard Bell said the firms had “different missions and interests and concluded the assets in the partnership more nearly fit the continuing interests of Riceland.” He said the purchase will be financed from working capital, with no material impact on the cooperative’s balance sheet. Since its inception, the partnership has operated rice milling and grain storage facilities at Stuttgart and Jonesboro, Ark., and Crowley, La. Riceland intends to continue those operations.

Premium Pork plans
plant in Missouri
Pork producers of the Premium Pork cooperative plan to build a $130 million processing plant at St. Joseph, Mo. The plant would be built in the city’s stockyards area and eventually employ about 1,000 people. Chief Executive Officer Rich Hoffman anticipates that construction would begin this spring. Members of the cooperative claim to own 5 percent of the nation’s pork supply. While members will continue to own their individual farms, genetics and nutrition will be coordinated by the cooperative to produce a uniform pork product.

One of the members is Allied Producers Cooperative, which represents small and medium sized farms in Nebraska, Kansas and Missouri. The cooperative had been looking to invest in a processing center for the past few years. Allied Producers will be represented on the new board by Gerald Schmidt of Jansen, Neb. Members have committed 435,000 hogs to the venture.

Sun-Maid buys raisin
facility in Selma
The city manager of Selma, Calif., has welcomed Sun-Maid Growers back to the community after it purchased the former International Raisins property. Sun Maid owned the facility nearly 60 years ago. It will be used to receive, store and inspect the cooperative’s raisins harvested this season.

The facility has the capacity to store 10,000 tons of raisins. It will employ about 20 seasonal workers. Sun Maid President Barry Kriebel said the cooperative considered building a new facility but found purchasing the Selma property for nearly $1 million more cost effective. The raisin cooperative now owns three plants, including its 130-acre processing plant at Kingsford, its headquarters.

AGRI Industries to end
grain pact with Cargill
AGRI Grain Marketing, a joint venture of 17 years standing between AGRI Industries of West Des Moines, Iowa, and Cargill Inc., is being terminated as of March 1, 2004. The venture has 30 employees who handle grain trading, accounting and logistics and another 80 working at 11 grain handling facilities in Iowa, Illinois and Wisconsin. AGRI Industries also serves producers in Minnesota and Nebraska. The three terminals originally owned by AGRI Industries in Burlington, McGregor and Fulton, Ill. and Cargill’s seven terminals will revert back to the parent companies. No decision has been made on jointly owned facilities at Joy and Pekin, Ill.

AGRI’s share of the profits have accounted for 50 to 75 percent of the cooperative’s total annual net income. Chief Executive Officer Jerry Van Der Kamp says the decision was prompted by the changing nature of the grain trade. Farmers are now selling grain and soybean directly to feed mills and ethanol plants, bypassing grain elevators that had been their traditional market.

Chippewa Valley’s Lee heads
Renewable Fuels Association
Bill Lee, general manager of the Chippewa Valley Ethanol Co., a farmer-owned ethanol cooperative organized in 1993 at Benson, Minn., was elected chairman of the 30-member board of Renewable Fuels Association (RFA) at its recent annual meeting in Washington, D.C. RFA President Bob Dinneen said Lee’s election “is a reflection of the evolution of the ethanol industry. It has added 20 plants and more than a billion gallons of production in just the past three years. Most of that growth has been in farmer-owned ethanol plants, bringing jobs and economic development to rural America.”

Agway seeks court OK
to sell produce business
The Agway name continues to fade from the Northeast farm supply and fresh produce market as the Syracuse cooperative spins off segments of its operation to satisfy creditors lined up since it sought Chapter 11 bankruptcy court protection last year to cover $1.5 billion in liabilities.. The bankruptcy court at Utica, N.Y., had granted the cooperative until Jan. 25 to have its reorganization plan approved.

Agway signed a deal to sell its Agway Energy Products LLC assets to Suburban Propane Partners for $206 million from which Agway will net about $175 million. The energy subsidiary served 500,000 customers, employed about 1,800 people, and produced annual sales of $500 million. The cooperative is selling its Country Best Produce and Country Best Adams Divisions to AMPCO Distribution Services LLC for $8.3 million. The business had 223 employees and its sale should net Agway $7.6 million. Meanwhile, the Syracuse cooperative received a bid of about $6.7 million from NSM Feed of East Middlebury, Vt., for its Feed Commodities International division.

LOL member promotes
farmer-to-farmer aid
“Global leaders may sit around tables and discuss peace, but farmers helping farmers will build peace, because farmers know that peace doesn’t have a chance where people are hungry.” That was Pete Kappelman’s message at a recent press conference in Washington, D.C., held to showcase the efforts of the Volunteers for Peace program of the U.S. Agency for International Development (USAID).

Kappelman, a dairy producer from Two Rivers, Wis., and vice chair of the board of directors of Minnesota-based Land O’Lakes, discussed his trip to Malawi in sub-Saharan Africa. He worked there on a USAID-funded project designed to foster individual family dairy production and cooperative marketing of their milk to provide better nutrition for families and to stimulate economic development for their communities.

“The Volunteers for Prosperity initiative will allow Americans to play an expanded role in assisting people in developing countries, and give Land O’Lakes the opportunity to send more of its farmers and employees on volunteer assignments that build the foodproducing capacities of those nations,” Kappelman said.

“Volunteers for Prosperity is a vehicle for practical action. It facilitates the opportunity for concerned and dedicated American professionals to help meet people’s basic needs and lay the foundation required for peace to exist,” he said.

Established in May by President George W. Bush, Volunteers for Prosperity is a new volunteer-based initiative designed to support major U.S. development initiatives overseas, using the talents of highly skilled Americans who work with U.S. organizations in helping to promote health and generate prosperity in countries around the world.

NCRA invests $340 million
to settle clean air suit
National Cooperative Refinery Association (NCRA) will invest $340 million to install pollution-control equipment at its refinery at McPherson, Kan. The environmental enhancements will be completed within two years. The cooperative opted for the pollution controls to settle lawsuits with the Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment. The settlement included a $350,000 fine. The investments were part of the cooperative’s clean fuels modernization project aimed at meet ing EPA standards for low-sulfur fuels. Harmful air emissions will be reduced by more than 3,000 tons a year.

Another $1.5 million will be spent to clean up an underground water contamination zone south and east of McPherson. NCRA officials spotted trouble after an audit in 2000 and disclosed its findings to the environmental agencies. The inter-regional cooperative is owned by, and provides petroleum supplies to, CHS Inc., GROWMARK Inc. and MFA Oil Inc.

USDA, NRECA seek to
boost renewable energy use
Agriculture Secretary Ann Veneman has singed a memorandum of understanding between USDA and the National Rural Electric Cooperative Association (NRECA) to identify and advance voluntary opportunities for rural electric cooperatives to partner with farmers and ranchers to reduce greenhouse gas emissions. The agreement emphasizes the potential for public-private cooperation in research, standards development and education in communities served by rural cooperatives. The goal is to increase the use of renewable resources to generate electricity.

NRECA will help co-ops to increase the use of renewable energy, including biomass gasification power plants, waste-to-energy systems and wind and solar power. It will continue research and development of new technologies and will explore ways to integrate renewable electricity into the grid.

PCCA net margins double
as co-op marks 50th year
It was a fitting financial and marketing performance that marked the 50th anniversary of Plains Cotton Cooperative Association (PCCA) at Lubbock, Texas. Total net margins of $7.6 million for fiscal 2003 (ending June 30) more than doubled the 2002 performance. PCCA also distributed $15.2 million in cash patronage to its members.

The increase stemmed from an improved denim market for the co-op’s textile division, record setting warehouse division performances and good overall marketing volume. PCCA President and CEO Van May said working capital increased, as did patron equities. “We had a tremendous turnaround year in our textile division and posted an overall net margin of more than $4 million while most of the industry struggled.”

USDA to provide $1 million in grants
for rural home health care co-ops
USDA is providing $1 million in grants to promote the establishment of rural home health care cooperatives. Deadline for applying for the grants, provided under the Rural Community Development Initiative (RCDI), is Feb. 13, 2004. The grants are to be used for pre-development work or revolving loans.

“Creating a strong network of rural health care services is critical to improving the quality of life of families living in rural areas,” says Agriculture Secretary Ann M. Veneman. “These grants will support community-based efforts to establish home-based health care cooperatives that will help meet local health care needs.”

Pre-development grants to assist cooperatives with providing outreach to home-based health care providers, assessing local-level human service provider needs and assisting with the organizing and implementation of a successful cooperative structure are available to qualified public bodies or nonprofit-based community development organizations.

Grants to assist in the funding and administering of a revolving loan program to provide start-up and operating funds to newly created home-based health care cooperatives are available to qualified public or nonprofit intermediary organizations (including tribal organizations).

For revolving loan fund grants, recipients are required to obtain matching funds equal to the amount of the USDA grant. Eligible applicants must be located in rural areas with populations of 50,000 or less. Funding of selected applicants will be contingent upon meeting the conditions of the grant agreement.

Detailed information about grant requirements and information on how to apply is available in the Federal Register or by visiting USDA Rural Development’s Website at: http://www.rurdev.usda.gov/rhs/redi/



Trio being inducted into
Cooperative Hall of Fame

A trio of outstanding cooperative leaders will be inducted into the Cooperative Hall of Fame this spring. Honorees are Henry Schriver, Ohio farmer and cooperative educator, who has motivated thousands of young farmers in speeches and workshops to become active in cooperatives; Ralph Paige, executive director, Federation of Southern Cooperatives/Land Assistance Fund, and Allen Thurgood, founder and CEO of 1st Rochdale Cooperative.

The award, the most prestigious in the cooperative community, is a tribute to the inductees’ outstanding efforts on behalf of cooperatives. The presentations will be made April 28 at the National Press Club in Washington, D.C.

Schriver is a true believer of the cooperative model whose career as an active volunteer in local farm credit, farm supply and dairy cooperatives spans 61 years. Schriver left his mark as an exceptional volunteer, educator and advocate. Not only has he been a teacher of cooperative principles, but he also has been a motivator who has brought many people into cooperative organizations.

His success in teaching the basic principles of cooperatives, which spans more than 40 years, can be measured by the number of young farmers he has motivated to get involved in cooperatives in more than 3,000 speeches and participation in numerous workshops sponsored by farmer cooperatives, youth organizations and other farm groups. His cooperative legacy includes raising a family of true co-op believers. Six of his sons are currently farming and serving as members of a variety of cooperative organizations.

Paige has dedicated his life’s work to proving that cooperatives can be used to enhance incomes and improve quality of life for black family farmers and rural, lowincome families. Never deterred by scarcity of resources or organized resistance, he has been a tireless advocate, fund-raiser and teacher. Under his leadership, the federation has been the primary organization representing black farmers and fighting their precipitous decline in farm ownership and independence.

Among the federation’s accomplishments under his leadership: more than 200 units of low-income housing developed; 18 community credit unions formed; 75 cooperatives started; and the federation’s rural training center at Epes, Ala., was opened. He has put the federation at the center of national advocacy and legislative battles for public policy affecting farmers. He made the federation’s model and cooperative development expertise available to international audiences.

Thurgood has a well-earned reputation at the state and national level as an effective consumer advocate, community activist and government advisor. His clear, pragmatic understanding of the cooperative model helped him bring cooperative solutions to areas such as housing, health care, banking, issues of aging and energy. He led the metropolitan New York cooperative housing community as executive director of Cooperative Housing Services and as coordinator of the Coordinating Council of Greater New York. He formed a powerful coalition of diverse community housing cooperatives that have effectively worked together to address the common concerns of more than 500,000 New York families.

He helped secure passage of federal legislation to clarify IRS code exemptions for housing cooperatives and he played an important role in securing the funding for Naturally Occurring Retirement Communities that allow seniors to age in place. He led the New York community in its advocacy on behalf of credit unions as they competed with the commercial banking industry. And as New York restructured its electric utility industry in the 1990s, Thurgood developed 1st Rochdale as the nation’s first metropolitan electric utility cooperative.



January/February Table of Contents