NEWS LINE

Welch's sales soar; Pokeman coming!
ag co-ops, 1999 was a year they'd rather forget. One exception: Welch Foods Inc. of Concord, Mass. Thanks to new products, wider distribution and studies that tout the health benefits of grape juice, the marketing arm of the National Grape Cooperative Association Inc., recently out-performed much of the industry. Over the past eight months, Welch's has seen monthly sales running more than 20 percent above the previous year's levels, said Daniel P. Dillon, Welch president and CEO.

Most members grow their grapes in Michigan, New York, Ohio, Pennsylvania, Washington state and Ontario. As grapes thrive, many other farm products are hurting. The co-op may be thriving because it's doing a good job fulfilling its purpose: maximizing profits and preserving the long-term livelihood of members by stimulating demand through marketing efforts and advertising campaigns. Welch's ads target families and feature cute kids. New market efforts include a sponsorship of I-Village, a Website that caters to women. And soon Pokemon characters will be enlisted in a Welch's promotion. Also stimulating demand is medical research that Welch's has supported. This research claims that white grape juice may be the easiest juice for a young child to digest and that purple grape juice is as good for the heart as red wine.

What's really impressive about last year, according to Dillon, is that about one-third of sales came from new products introduced within the past five years; in the early 1990s, new products accounted for about only 10 percent of overall sales.

Merger creates Evergreen Co-op
McLean County Service Co. members recently attended their final annual meeting, followed by the first board meeting of Evergreen FS, created through a combination of McLean County Service and Woodford FS in Illinois. Farmer-members of the two Growmark Inc.-member cooperatives elected Dan Kelley, Normal, board president; Rick Dickinson, Congerville, vice president; and Darwin Builta, Bell-flower, secretary-treasurer. Other directors on the new board include Mark Newmann and Kent Hodel, both of Metamora; Irvin Bane, Bellflower; Russel Johnson, Chenoa; Jerry Wilsted, McLean; Lynn Rader, Bloomington; and Paul Duzan, Colfax.

Evergreen FS serves 4,200 farmers, providing them fuel, fertilizer, LP gas, agrifinancing, precision farming and grain marketing and storage services. The co-op employs 250 people, with its main office in Bloomington. Woodford FS posted 1999 sales of more than $11 million. McLean County Service completed its third-best year with sales exceeding $77.8 million. Doug Oehler, former McLean County Service general manager, remains in that position, while Bob Eichelberger, former Wood-ford FS general manager, takes over as assistant manager of operations.



Ag Council salutes Steve Easter
Steve Easter, who recently retired after a long career as vice president of member and government relations for Blue Diamond Growers, was honored with the Co-op Career Professional Award for 2000 during the 81st annual meeting of the Agricultural Council of California in Sacramento. Easter was saluted for his 32 years of service to agricultural cooperatives.

He continues to serve as a director of the Almond Board of California and is past president of the Almond Hullers and Processors Association. Easter is also a former chairman of the Agricultural Council of California and member of the Advisory Committee on Horticultural Trade to the Secretary of Agriculture and the U.S. Trade Representative. He also served as chairman of the American Institute of Cooperation.

Rural Utilities sells debt securities
National Rural Utilities Cooperative Finance Corp. (NRUCFC), Washington, D.C., filed to sell up to $300 million in debt securities. Combined with $100 million in previously registered securities, the offering is worth $400 million, according to the self registration filed with the Securities and Exchange Commission.

The non-profit Herndon, Va. based cooperative provides financing to supplement the loan program of the U.S. Agriculture Department's Rural Utilities Services. The proceeds from the offering will be added to NRUCFC general funds which will be used to make loans to members, repay debt, refinance long-term debt and other corporate purposes.

NRTC praises House Ag Committee for moving to close 'digital divide'
The U.S. House Agriculture Committee voted in mid-February to bring the benefits of local satellite TV broad-casts and perhaps high-speed Internet service to the half of America over-looked in last year's Satellite Home Viewer Improvement Act (SHVA). Bob Phillips, president and CEO of the National Rural Telecommunications Cooperative (NRTC) hailed approval of the "Rural Local Broadcast Signal Act" by the House Ag Committee as "a major step toward bridging the 'digital divide' looming in rural America." Phillips' comments came following a 410 vote by the committee to approve the bill, which contains $1.25 billion in federal incentives to assist non-profit organizations in providing local broadcast television services to rural areas.

"The Committee sent a clear message rural Americans are not second-class citizens and they deserve access to the same news and information services as urban Americans," Phillips said. "H.R. 3615 is the right bill at the right time to address the lack of access to broadcast signals in vast areas of the country," he said.

Phillips praised the co-authors of the legislation, Reps. Bob Goodlatte (R -VA) and Rick Boucher (D -VA) along with Rep. Charles Stenholm (D -TX) for moving quickly to provide the incentives. "They understand the plight of rural consumers, and they have crafted a bill that not only offers significant incentives to address the crisis, but a bill that puts the right agency the Department of Agriculture's Rural Utilities Service (RUS) in charge of administering the local broadcast signal program," he said. "The telecommunications loan guarantee program administered by RUS has a 100 percent repayment record not one dime of taxpayer money has ever been used to cover a loan default," he said.

SD co-op plans egg production plant
'Layers Cooperative received grant to plan an egg-production plant that would house 750,000 hens. The money comes from the South Dakota Governor's Office of Economic Development to study the feasibility of a plant north of Flandreau, reports Scott Ramsdell, president and founder of the farmer-owned cooperative.

The $41.5 million plant would create 15 jobs. It will use 650,000 bushels of corn and tons of soybeans. The co-op has held a public meeting to discuss the plan and has taken an option to buy a quarter section of land. The plant would consist of 10 barns, and the site would feature a processing plant to grade, clean and package eggs. In addition, a mill is being proposed to convert locally grown corn and soybeans into feed. Ron Wheeler, the state's economic development commissioner, said the plant would be a boon to Flandreau. Local businesses ranging from electric cooperatives to main street business should see increased business, he said.

Small Poultry Processor Co-op planned
Karen Machetta, a central Missouri woman who uses organic methods to raise free range chickens north of Columbia, says a poultry processing plant would let small producers compete with large corporations. Farmers would be able to bring birds in for processing and USDA inspection. Her effort received a boost with a $7,180 grant for consultants' services for the project. The money came from the Missouri Value-Added Grant Program of the state's department of agriculture. Last year, Machetta received $10,000 to study demand for the plant. She had hoped the latest grant would be enough to build the plant, but program manager Tony Stafford said capital expenses are ineligible. One possibility is for farmers to organize a cooperative. Larry Kieffer, a farmer in Macon, has been working on such a project but said his efforts are in a very early stage. Kieffer said the plant would be very important to small farmers. In a 1999 survey, nearly 300 farmers expressed interest in a processing plant and co-op that could help them market birds. The survey showed farmers would produce 96,000 chickens, 4,500 pheasants and 14,000 ducks.

NCBA to help 'false' co-ops become real
The national Cooperative Business Association (NCBA) has announced an initiative to address the problem of businesses presenting themselves as cooperatives when they are not cooperatives. The problem, explained NCBNs Paul Hazen, has become more prevalent with the advent of e-business and group purchasing. The businesses may be trading on the good will that the public has for cooperative businesses or may be ignorant of cooperative operating principles. "Regardless of the reasons for these false claims, NCBA:s mission is to support and protect cooperative enterprise," he said.

The association will rely on members and other interested cooperators to keep it informed of potential problem businesses. Indeed, the new initiative was prompted by a call to the association about the status of a business promoting itself as a cooperative when that was not the case. NCBM response to such cases is a two-stage program. When a questionable business is identified, NCBA will contact the business to determine whether it is operating as a cooperative. If it is determined to be a non-cooperative, NCBA will first educate the business about cooperatives and help it truly become a cooperative.

The initiative harkens back to the beginnings of the association in 1916. At that time, James Peter Warbasse, association president, exposed a number of stores calling themselves cooperatives that were not democratically controlled or run, but were instead generating substantial profits for a few people.

Tomato co-op files canner complaint
The California Tomato Growers Association, a Stockton-based coopera-tive of canning-tomato growers, filed an unfair trade-practices complaint against Sun Garden-Gangi Canning Co. The Association claims that the Riverbank canner has cut out every association grower and 100 percent of their tonnage from Sun Garden-Gangi's contracted tonnage for the 2000 crop year.

Facing lingering surpluses from last year's bumper crop, Kevin Gangi said that a number of canners have cut back on contracts for the upcoming harvest. The Association, which gives growers more clout than if they bargained individually, claims that Sun Garden-Gangi's actions constitute a boycott, discrimination and a failure to bargain. California law requires that commodity buyers bargain reasonably and seriously with grower cooperatives they recently had done business with.

Tri Valley Growers sues Oracle
Tri Valley Growers of California lawsuit against Oracle Corp., alleging fraud, negligent mis-representation, malpractice and breach of contract because the Redwood City, Calif., software developer allegedly failed to fulfill its promise to modernize the food co-op's production and man-agement systems. TVG is asking for more than $20 million in damages. The lawsuit follows Oracle's alleged refusal to accept responsibility for a failed venture into enterprise resource planning (ERP) software.

TVG retained Oracle in 1996 to install ERP software that would enable the co-op to integrate and computerize its operations from raw product delivery to finished goods distribution. For TVG, this modernization of production and management meant computer systems at nine factories employing more than 9,500 workers, processing more than 1 million tons of fruit and vegetables annually, and distributing and marketing 15,000 Stock Keeping Units (skus), 24 brands and thousands of private label food products domestically and internationally.

According to TVGs lawsuit, Oracle's ERP solution never worked. Rather than correct the problem, admit failure or provide the promised level of support to make the system work, Oracle blamed TVGs computers and its lack of technical expertise. The co-op reports it abandoned the investment and retained another vendor. TVG filed its lawsuit in California Superior Court. Founded in 1932, TVG processes and markets nearly half of the canned peaches, pears and apricots and close to 10 percent of the canned tomato products in the United States.

Co-ops buying into 'green' power
California co-ops are voting for the environment with their electricity purchases. At least five co-ops have switched to a green electricity provider for their stores. There is also an organized effort underway to get all 60,000 members of all the state's food co-ops to purchase power from one of several existing green power providers.

"The co-op movement was born on of a frustration with the status quo way of doing business," said Steven Kelly, executive director of the Renewable Energy Marketing Board. "It only makes sense for co-ops, which often offer more environmentally conscious and superior products, to purchase their electricity from non-polluting renewable sources such as solar, wind or geothermal steam power." Berkeley-based Missing Link, a worker-owned bike co-op, is one of the most recent to switch to green power. The store went to Green/Mountain.com's 100 percent renewable energy product, which helps support construction of a new solar photo-voltaic power plant in Mendocino County and costs less than generic power.

Another Berkeley-based co-op, University Students' Cooperative Association, switched to Green Mountain a year ago. The student housing cooperative the largest in North America owns 20 properties, all of which are now powered by green electricity. Co-opportunity Consumers Co-op, Santa Monica, went with Commonwealth Energy, Tustin, Calif., providing power generated from geo-thermal steam coming from Sonoma, Lake and Imperial counties. Both Isle Vista Food Coop-erative, Santa Barbara, and People 0.B. Organic Food Co-op, Ocean Beach, switched to Green/Mountain.com's Wind For The Future. These co-ops are paying about a 10 percent premium to ensure that 25 percent of their electricity is generated at new wind turbines installed in the San Gorgonio Pass, California's wind farming site.

The three food co-ops that have already switched are part of a statewide campaign organized by the Twin Pines Cooperative Foundation to get the 10 largest food co-op stores to purchase green power and then educate members to also switch to green power. The education campaign is funded by the California Energy Commission.

Imperial Sugar offers plants to co-op
Imperial Sugar Co., the largest U.S. marketer and processor of refined sugar, has offered to sell its plants in Tracy and Woodland, Calif., to the California Beet Growers Association. Based in Sugar Land, Texas, Imperial Sugar markets its products under a variety of brands, including Spreckels, Holly and Dixie Crystals.

"We discussed the possibility of a grower cooperative buying both plants and the growers said they would take the idea under consideration," said Bill Schwer, Imperial's executive vice president. "We talked in general terms, not specifics, so this is the start of our discussions. We offered to manage the plants and market the sugar and by-products."

Imperial, which owns four California plants, is the state's only processor Sugar beet profits have largely soured over the past decade, according to industry data. The value of the country's sugar beet crop plummeted from $34 million in 1989 to less than $7 million in 1998, the most recent figures available. Harvested acreage dropped. Other factors such as the emergence of a soil-borne virus, drought and growing popularity of substitutes for beet and cane sugar, also hammered yields and profits. Meanwhile, world expansion in planted sugar beet acreage has produced a record crop. And the possibility of significantly higher imports of Mexican sugar into the U.S. market beginning Oct.1 enabled by the North American Free Trade Agreement may further push prices down. Reacting to the news, refined bulk-sugar prices fell recently to 15-year lows.

American Crystal considers forfeiture of sugar
American Crystal Sugar Co., Moore-head, Minn., may forfeit sugar to the government for the first time in more than 20 years because of poor prices. In a member letter, President James Horvath told the 900 growers that it must consider the option. The USDA's sugar program allows processors to put sugar up as collateral for nine-month loans. If prices remain under the loan rate, processors have the option of forfeiting the sugar to the government instead of repaying the loan in cash.

Horvath blamed trade and domestic policies for pushing sugar prices to their lowest levels in some 15 years. Among other factors, Horvath said, the United States is required to import 1.25 million tons of sugar annually. Canadian imports of stuffed molasses a mixture of sugar and molasses have displaced at least 100,000 tons of domestic sugar, he claimed.

Mark Weber, executive director of the Red River Valley Sugarbeet Growers Association in Fargo, said forfeiting sugar also could give the industry a black eye. The federal sugar program was designed to operate at no cost to the government.

"When we won the farm program on sugar, we only won by nine votes in the House," Weber said. "We're going to have to build a program that's economically responsible, politically feasible and provides a safety net for growers within the budget constraints of Congress."


DFA Cow gets rave review
Hundreds of cows recently promenaded trhough the streets of downtown chicago. No, it wasn't the return of the stockyards. The bovine beatuies were life-sized fiberglass cows transformed by Chicago artists into enchanting works of art. Chicago's "Cow on Parade" were on display along Michigan Avenue, in the Loop and River North, near museums, in Grant Park and on the Moo-seum campus. Dairy Farmers of America's "Uncle Sam Cow" was the favorite of Chicago officials and tourists alike. For a statue, this cow really got around. She was featured on a postcard the nation's largest dairy cooperative sent to members of Congress in Washington, D.C.
photo courtesy Dairy Farmers of America.



Growmark adds facilities
Gowmark Inc. added 16 retail and is agrichemical facilities to its existing member company network of fertilizer and agrichemical plants by purchasing Agro Distribution LLC in Illinois. Bloomington based Growmark bought the facilities for an undisclosed price from Minnesota-based farm cooperative Cenex-Land 0' Lakes Agronomy Co., which bought the former Terra Industries facilities last June. "This purchase will complement the excellent distribution system our member cooperatives currently have," said Grow-mark CEO Bill Davisson. "Ultimately, adding these facilities into the Growmark system will mean better service to our farmer-owners, which is our top priority. This is a valuable opportunity to expand our ability to meet and exceed farmers' needs in an efficient manner."

New Nebraska pork co-op planned
Stan Rosendahl, Creston, Neb., immediate past president of the Nebraska Pork Producers, announced during the 27th annual Pork Expo at Platte County Agricultural Park that a new pork co-op is being planned. He is chairman of the steering committee developing Family Quality Pork Producers. Meetings are expected this spring to gauge interest and provide further details, including selection of a project site. The plan tentatively calls for producers to buy shares in the co-op. The co-op will not own livestock and all profits will go directly to producers. Consumers have started to ask for specific types and qualities of product and the co-op will try to market to those demands, Rosendahl said.

"The goal is to be further into the pork chain, closer to the consumer," Rosendahl said.

New pork co-op could hike profits
Jack Rundquist, a Butler County, Ill., ricer, has been elected chair-man of Pork America, a closed cooperative marketing association which plans to coordinate pork production, processing, distribution and marketing for members. With no funds to work with, revenue initially must come from Pork America memberships. Until April 15, producers who joined the co-op paid $500 for every 5,000 hogs they plan to market. Producers who market fewer than 5,000 hogs could combine forces with nearby pro-ducers to meet the commitment, Rundquist said. Producers who join have both the right and obligation to deliver hogs.

Rundquist and seven other board members from six states have a target of 2,000 memberships, after which they will look for marketing opportunities. "We may be able to cooperate with an existing processor," said Rundquist, citing a successful. effort by beef producers to buy slaughter space with Farmland Industries to market a special brand of beef.







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