COMMENTARY
The Third Way
Summertime, and the grilling is easy. Barbecue
season usually boosts both beef sales nationally and
spirits in cattle country. As such, it is fitting that our
cover story this month is on the Country Natural
Beef cooperative, which has grown steadily from
small roots in Oregon to become a rising force in the
natural beef market. Its success is a good reminder
that adding value to members’ livestock or crops
does not necessarily mean having to build a processing
plant.
There are three basic approaches to launching an
agricultural marketing cooperative:
- Organize producers to invest in a plant to process their
crops or livestock into a value-added food or other product.
Examples of this approach are the producer-owned
biofuels plants being formed all across the nation.
- A new or existing co-op can buy an investor-owned
company and convert it to producer ownership.
Examples of this approach include the Iowa Turkey
Cooperative/West Liberty Foods and American Crystal
Sugar Co.
- A producer group can contract with a third party to custom
process its product on a cost-plus basis. The co-op
then markets the product under its own brand (as
Organic Valley has done so successfully) or in the private
label or generic markets.
This third approach can be prudent where only razor-thin
margins can be derived from processing, and where there are
processors with extra capacity looking to maximize their plant
operations. Such an arrangement can allow the co-op to concentrate
on marketing and building its brand. And, of course,
in some cases, these co-ops may eventually choose to build or
purchase their own plant.
Twenty years ago, with ranchers all over Oregon staring
bankruptcy in the face, 14 families decided to pursue the
third way, forming a co-op without bricks and mortar to pursue
a niche market for lean, natural beef. It started with just a
few thousand head per year, but the co-op now markets more
than 40,000 head annually. Sales are growing an average of
16 percent annually and the co-op is expanding east of the
Rocky Mountains.
CNB doesn’t own a feedyard, processing plant or even a
business office. But it does own an ever-increasing slice of the
natural beef market.
Equally impressive is CNB’s commitment to promoting
land stewardship and its determination to play a vital part in
helping keep more family ranches in operation. Indeed, talking
to Brothers, Ore., rancher Connie Hatfield, you get the
impression that there is nothing she is prouder of than the
fact that the co-op has helped bring a number of young families
back to ranching who — were it not for the stable pricing
and marketing of the co-op — probably would have left
ranching behind.
Renewable energy conference slated
Those with an interest in renewable energy should mark
their calendar for Oct. 10-12, when USDA and the U.S.
Department of Energy will be sponsoring a major conference
on that topic in St. Louis. The nation’s leading experts on
biomass, wind and solar energy will be there to share ideas
that will help direct the future growth of these rapidly evolving
industries.
Renewable energy is also the focus of Co-op Development
Action, a new magazine department that will provide
highlights of activities being supported by the nation’s
network of Cooperative Development Centers. The Centers
receive funding through the Rural Cooperative Development
Grant program, administered by USDA Rural Development
to help keep the wheels of business innovation turning in
rural America.
Dan Campbell, editor
