NEWS LINE
Compiled by Dan Campbell
Darneille new PCCA CEO
Wallace L. Darneille, with 30 years
in the cotton industry, has been named
as president-elect and CEO of Plains
Cotton Cooperative in Lubbock,
Texas. Darneille succeeds Van May,
who will step down on Sept. 1. We
are excited to have someone with
Wally’s depth of experience in cotton,
says PCCA Chairman Eddie Smith.
His background
is a
very good fit
for this organization.
Darneille spent
much of his
career with
Weil Brothers
Cotton and is
a former president
of the
Texas Cotton
Association. He has a bachelor’s degree
from Dartmouth College and a MBA
from Auburn University.
May has been president and CEO
since 1992, and Smith credited him for
helping the co-op achieve unprecedented
success. During May’s years at
the helm, PCCA earned total net margins
of $236 million
and $293 million was
paid to members in
annual dividends,
stock retirements and
mill option capital
retains. Smith also
praised May for his
efforts to modernize
the co-op textile
mills, which made big
gains in production
capacity and efficiency
during his tenure while the diversity
and quality of denim was improved.
Repayment demanded
from Farmland bondholders
It was a run on the bank, created
by bondholders demanding payment
from the co-op, that precipitated
Farmland Industries’ bankruptcy filing
in 2002. But now, in a final bitter irony
to the demise of what had been the
nation’s largest farmer-owned co-op,
those bondholders may have to give
much of that money back.
The trust in charge of liquidating
the co-op’s assets is demanding repayment
from any bondholders paid
within 90 days preceding the bankruptcy
filing. Farmland had about
20,000 bondholders, many of them
small, individual investors. Because
Farmland was technically insolvent
when it made the payments to bondholders,
they are entitled to only the
same portion of payment from the
estate as other creditors.
An article in the Omaha World-Herald cites the example of one
bondholder-- a retiree who was paid
$10,000 for his bond before the co-op
filed for bankruptcy-- who has
received legal notice demanding repayment
of the entire amount plus $220 in
interest. It also reports that FI Liquidating
Trust is giving some bondholders
the option of repaying a smaller
percentage of their bond value if they
forgo any future claims against the
estate. One attorney representing a
group of the bondholders said most are
being asked to repay $15,000 to
$35,000, but some owe as much as
$400,000.
Tuscarora Organic Co-op expands
Tuscarora Organic Growers
Cooperative has opened a new, 3,600-
square-foot addition to its warehouse.
Since forming in 1988, the co-op’s output
has increased 30-fold. So, the
Huntingdon County, Pa., co-op decided
to invest $180,000 for the badly
needed warehouse expansion, as well as
for new coolers and information technology
upgrades. Funding included a
$65,000 loan from the Progress Fund,
which in turn received $750,000 under
the USDA Rural Development
Intermediary Relending Program. The
state Small Business First Loan
Program also provided $75,000 for the
project, while growers invested
$40,000. The bulk of the co-op’s products
are shipped to specialty stores and
restaurants around Washington, D.C.,
while others go to farmers markets and
roadside stands that appeal to tourists
in southern Pennsylvania.
Turkey growers form co-op
to pursue plant purchase
By an overwhelming vote of 144-7,
turkey growers in Virginia and West
Virginia have opted to from a co-op to
pursue possible purchase the Pilgrim’s
Pride poultry processing plant in
Hinton, Va., which they currently supply. The plant, which processes 8 million
birds for the fresh market annually,
has announced plans to close on
Oct. 1 if a buyer isn’t found. The plant
employs 1,300 and has contracts with
169 farmers. The Washington Times
cites data showing that a plant closure
would cost the area up to $225 million
in economic activity annually. Pilgrim’s
Pride, based in Pittsburg, Texas, is
reportedly closing the plant to concentrate
more on ready-to-eat deli meats
and heat-and-eat products.
Gold Kist eyes possible conversion
Gold Kist Inc.’s board has approved
a proposal to convert Gold Kist into
an investor-owned corporation. The
members of the co-op will be required
to approve the conversion. The co-op
anticipates holding a member election
on the conversion in the second half of
August. But the precise dates of the
next set of grower meetings and the
voting period will depend on the
Security Exchange Commission’s
review of the Gold Kist filings.
If approved, Atlanta-based Gold
Kist would complete the conversion by
merging into a new corporation, Gold
Kist Holdings Inc. An initial offering
of 18 million shares of common stock
is being eyed. The proceeds of the
stock sale would provide payments to
members, and would repay more than
$70 million in senior debt and for general
purposes.
Gold Kist is the third largest integrated
broiler company in the United
States, accounting for more than 9
percent of the nation’s chicken broiler
meat. Gold Kist’s broiler production
operations include nine broiler complexes
located in Alabama, Florida,
Georgia, North Carolina and South
Carolina. It employs approximately
16,000 people and contracts with about
2,300 family farmers who produce 14
million chickens per week. Its products
are sold both under the Gold Kist
Farms brand name and under supermarket
private labels.
For the nine months ending March
27, the company reported net margins
of $56.7 million, compared to a net
loss of $66 million for the same period
last year. Sales for the same period
were $1.62 billion, compared to $1.36
billion for the first nine months of
2003.
Organic Valley sponsors
swim for clean water
The first-ever swim of the entire
length of the Hudson River is being
sponsored by Organic Valley Family of
Farms, America’s leading organic farmers’
cooperative, as part of its ongoing
effort to heighten awareness of the link
between clean water and organic agriculture.
Christopher Swain, 36, an
award-winning advocate for clean
water, was to swim 315 miles down the
river through class IV rapids, raw
sewage and pesticides before stroking
past Manhattan, around the Statue of
Liberty and out into the Atlantic
Ocean in late July.
School visits, on-line teaching tools
for K-12 educators (at www.swimforcleanwater.
org), a visit to the New York
State Legislature in Albany, community
clean-ups and farm visits are all part of
the intensive educational program supporting
the swim. Since the Clean
Water Act passed in 1972, the Hudson
has come a long way, says Swain. But
if we ever want to see the Hudson
become a pristine stream, everyone in
the watershed will need to make a few
river-friendly choices each day.
Organized in 1988, Organic Valley
cooperative achieved record success in
2003 both in sales (up 25 percent to
$156 million) and in farmer recruitment
(up 23 percent to 633 farmers).
Co-op members now farm 95,000
acres and milk 20,500 cows. Organic
Valley brand milk is now the top-selling
organic milk in both mainstream
supermarkets and natural foods outlets
along the Eastern seaboard.
Iowa Premium Pork
to operate in Le Mars
The Iowa Premium Pork cooperative
is leasing a vacant packing plant in
Le Mars, Iowa, where it will process
value-added pork products. The co-op
will contract through Sioux-Preme
Packing Co. in Sioux Center, Iowa, to
slaughter its hogs, from where the carcasses
will be shipped to Le Mars for
further processing. The plant is
expected to employ about 50 workers.
Producer meetings were slated in June
to solicit an additional $400,000 in
equity investments. About $2.1 million
has already been invested by 102 producers.
The plant will be operated by
Majestic Food Group, a wholly owned
subsidiary of the co-op, which has a
two-year lease on the plant with an
option to buy it at the end of that
period.
ACDI/VOCA names
Baker interim president
Christopher Baker has been named
interim president and CEO of
ACDI/VOCA, which promotes international
cooperative and economic
development. Baker, a 25-year veteran
of international economic development
work, grew up in Cuba and spent
seven years as CEO of the World
Council of Credit Unions, during
which time he is credited for helping
the organization to improve cost efficiencies
and rebuilding its financial
reserves. He has also chaired the overseas
Cooperative Development
Council and the Committee for the
Promotion and Advancement of
Cooperatives. Baker will serve for a
three-month term, which can be
renewed for an additional three
months while ACDI/VOCA seeks to
define its future direction.
New Sacramento nonprofit
to promote cooperatives
Synergetic Enterprise Development
Group (SEDG) is a new, nonprofit
organization formed to promote cooperatives
as a way to meet a broad array
of future needs in California. The
Sacramento-based business will work
as a catalyst for co-op projects. Our
goal is to focus the resources available
to us to create new cooperative solutions,
says Lee Ruth, SEDG president.
We intend to strengthen relationships
between existing cooperatives,
aid in the creation of new models
and new legal forms of cooperatives
and strengthen the working bonds
between cooperative professionals.
The SEDG board has already
approved two projects, including
development of a California Snacks
student cooperative, which it is hoped
will serve as a prototype for use on
school campuses statewide. It will kick
off Aug. 20 during the California State
Fair. Fairgoers will be able to purchase
California-grown fresh foods, nuts,
dairy products, vegetables and juices
while students will gain valuable experiences
in learning how to operate a
similar business enterprise on their
own campuses.
The second project will be the creation
of a business plan for an agricultural
biomass bargaining cooperative,
allowing farmers to profit from the
transformation of farm waste products
into a supply of electricity. While
these first two projects are based in
agriculture, the intent of our diverse
board is to promote cooperatives as
solutions in all sectors of California
society, Ruth says. Other SEDG officers
include: Vice President Alan
Zepp, Northern California Power
Agency; Secretary Kim Coontz,
Yolo Mutual Housing Association;
Treasurer Casey Garten, CoBank;
and Legal Counsel Dan Best, Certified
Farmers Markets of Sacramento.
For more information, phone (916)
457-6529.
Farmland’s share of feed,
agronomy ventures sold
Land O’Lakes Inc. has signed an
agreement to purchase all of Farmland
Inc.’s ownership interest in Land
O’Lakes/Farmland Feed LLC. Under
the proposed agreement, LO’L would
pay just over $12 million to acquire
Farmland’s 8 percent interest, giving it
100 percent of the animal-feed joint
venture formed in 2000. The sale is
contingent upon bankruptcy court
approval in the Farmland case.
Meanwhile, CHS Inc. has completed
the purchase of Farmland
Industries’ ownership share of
Agriliance LLC, a leading supplier of
agronomic inputs in North America.
The purchase was approved April 20
by the U.S. District Court overseeing
Farmland’s bankruptcy. CHS now
owns 50 percent of the economic and
governance interests of Agriliance,
with the remaining 50 percent owned
by Land O’Lakes. CHS purchased
Wilbur Ellis Co.’s interest in
Agriliance in May 2003. Agriliance is a
major supplier of crop production
inputs and provider of agronomic
training for dealers across North
America. It reported sales of $3.5 billion
in 2003.
AMPI to close Glencoe plant
Shrinking Midwest milk volume has
led Associated Milk Producers Inc.
(AMPI) to close its Glencoe plant,
effective June 19. Though AMPI
market share has grown, Midwest milk
volume continues to shrink, AMPI
General Manager Mark Furth says.
AMPI will redirect the Glencoe milk
to maximize the efficiency of its other
plants. This will benefit all AMPI
members, including those shipping to
the Glencoe plant.
AMPI acquired the Glencoe facility
through a merger with the Glencoe
Butter and Produce Association in
1999. Although AMPI upgraded the
cheese and whey processing equipment,
Furth said the plant remains
small by industry standards. The
Glencoe facility is one of 13 AMPI
plants, of which five are located in
Minnesota. AMPI is working with the
30 employees of the Glencoe facility
to find new employment, including
positions in other AMPI manufacturing
plants. Member services such as
milk testing and hauling will not be
affected.
AMPI has 5,000 members who
annually market more than 5 billion
pounds of milk. Members represent
dairy operations located throughout
Wisconsin, Minnesota, Iowa,
Nebraska, Missouri, South Dakota
and North Dakota.
Decatur to lead FCL
CoBank has announced the
appointment of Steven Decatur as the
new president of Farm Credit Leasing
Services Corporation (FCL), which
provides leasing services to agricultural
cooperatives, producers and
communications and energy companies
nationwide. Through Steve
Decatur’s
experience in
leasing and
commercial
banking, as
well has his
proven leadership
skills,
we believe
FCL will
further
enhance
operations,
offerings and ongoing customer relationships,
says CoBank CEO Doug
Sims. Decatur brings with him nearly
30 years of experience in leasing, lending
and financial services, and has successfully
led initiatives to improve new
business prospects and profitability.
Prior to joining CoBank/FCL, he was
president of Marshall Bank in
Minneapolis and CEO of Marquette
Equipment Finance, a leasing company
in Wayzata, Minn.
Select Sires adds dairy
breeds to product line
Jersey and Brown Swiss genetics are
popular crossbreeding choices among
some dairy producers, but other breeders
are looking for specific traits not
found in those breeds. To accommodate
this, Select Sires has added three
new dairy breeds to its lineup, which
include Montbeliarde from France,
Norwegian Red from Norway and
Swedish Red from Sweden. Select
Sires is working in cooperation with
Creative Genetics of California Inc. to
make the new offerings.
While crossbreeding is not for
everyone, some producers are trying it
as a way to take advantage of the
strengths from several different
breeds, says Chuck Sattler, Select
Sires vice president for genetic programs.
In theory, crossbreeding can
provide a boost to profitability if producers
can identify several breeds that
meet their requirements and then utilize
them as part of a planned and
organized breeding program. Based in
Plain City, Ohio, Select Sires Inc. is a
federation of 10 farmer-owned and
controlled cooperatives.
USDA launches renewable
energy pilot project
Agriculture Secretary Ann M.
Veneman has announced a new guaranteed
loan pilot project aimed at
developing renewable energy systems
from the use of livestock as a raw
material. This program will provide
guaranteed loans for rural small businesses
to develop the means to effectively
destroy these specified risk materials
from cattle while providing a biobased
source of energy, Veneman said.
In January, USDA expanded the list
of specified risk materials prohibited in
the food supply as an additional firewall
to prevent bovine spongiform
encephalopathy (BSE). In addition, the
U.S. Food and Drug Administration
announced that it intends to prohibit
specified risk materials in food regulation
by the agency.
The maximum amount of total loan
guarantees under the pilot program
will be $50 million. USDA anticipates
up to three awards will be made.
There is no dollar restriction associated
with any one award, within the
budget allotment. The amount of the
loan guarantee cannot exceed 50 percent
of the total project cost.
Applicants must submit their application
and one copy to the USDA Rural
Development state office where the
proposed project is located, or where
the borrower is headquartered. The
notice of funding availability appeared
in the May 18 Federal Register. All
applications must be received by
August 16.
To contact to your USDA Rural
Development state office for more
information, call (202) 720-4323 and
enter 1, or visit the Web site:
www.rurdev.usda.gov.
Home health care co-ops
get $1 million USDA boost
Agriculture Secretary Ann M.
Veneman has announced the selection
of nine recipients to receive a total of
$1 million in rural development community
development initiative grant
funds to support the establishment and
operation of home health care cooperatives.
The development of rural
home-based health care cooperatives
provides a cost-effective means of providing
elderly and low-income families
an alternative to health care services
available to them, says Veneman.
Through partnerships, the Bush
administration is working to improve
the quality of life for rural residents.
Pre-development grants will assist
qualified public bodies or nonprofit
community development organizations
in providing outreach to homebased
health care providers, assessing
local-level human service provider
needs and other activities leading to
the organization and implementation
of successful home-based health care
cooperatives. Revolving fund grants
are made to qualified, nonprofit community
development organizations or
public bodies to provide start-up and
operating funds and technical assistance
to the newly created, homebased
health care cooperatives.
Recipients are required to obtain
matching funds, doubling the value of
the USDA grants. 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.
For more information, including
a list of all grant recipients, visit:
http://www.usda.gov/Newsroom/
0196.04.html.
Innovative practices focus of
Missouri co-op conference
Many cooperatives are at the forefront
of agribusiness innovation as
they strive to find new ways to
remain competitive while still continuing
to meet the needs of their members.
Cooperatives are, for example,
leaders in the renewable energy sector
where they are helping farmers
capture the full rewards of new market
opportunities. Recent changes in
state laws allow unprecedented
prospects for the evolution of the
cooperative model. These efforts will
be the focus of the seventh annual
Farmer Cooperatives Confe-rence,
Nov. 1-2 in Kansas City, Mo.
Cooperative Innovation is the title
of the event, to be held at the
Fairmont of Kansas City at the Plaza.
It will feature cooperative leaders who
have successfully initiated novel business
approaches within their organizations
or helped start new ventures.
More than 150 cooperative board
members, managers and cooperative
scholars are expected to attend. The
conference is sponsored by the
University of Wisconsin Center for
Cooperatives, which established the
conference in 1998 with the objective
of providing co-op directors, managers,
government and academia with
information on major trends and
issues impacting agricultural cooperatives.
For more information, visit the
conference website:
http://www.wisc.edu/uwcc/
farmercoops04/index.html,
or e-mail Ashwini Rao at:
rao@aae.wisc.edu, or call her at
(608) 262-3382.
Rural credit program
achieves mission in Russia
ACDI/VOCA’s Mobilizing
Agricultural Credit (MAC) program
ended in June after six years of success
that some doubted was possible.
The project’s legacy is the Rural
Credit Cooperation Development
Fund and 47 accredited rural credit
cooperatives which, together, are the
backbone of a robust private rural
credit system that has already disbursed
$24 million in loans.
ACDI/VOCA representative Fred
Smith came up with the idea, and
spent two years working with USDA
and USAID to secure initial funding.
While there were many skeptics,
ACDI/VOCA demonstrated that lending
to Russian farmers could be profitable
and that farmers would borrow
and repay at market interest rates.
ACDI/VOCA subsequently received
four cost extensions from USAID to
expand the project. There are now
more than 570 rural credit cooperatives
(RCC) serving 50,000 members
in Russia. Of these RCCs, 205 are
members of the Union of Rural Credit
Cooperatives. Since 1998, the number
of RCCs has increased 12 times and
membership by 50 times.
Co-op Month activity to focus
on contributions to communities
Cooperatives nationwide will highlight
economic and charitable contributions
to their communities under
plans for the annual observance of
National Co-op Month in October.
Using the theme Cooperatives:
Owned by Our Members, Committed
to Our Communities, the National
Cooperative Month Planning Committee
will encourage local co-ops
to stress community involvement,
employment and other identifiable
community contributions in their celebrations
and observances for the
month, observed annually since 1930.
The co-op month committee will
develop materials to help co-ops at the
local level promote their community
and member commitments. An electronic
toolkit of materials should be
available by early August-- including
an updated logo, advertisements, fact
sheets, draft news releases and letters--
on the Web site: www.co-opmonth.coop.
