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Co-op developments, coast to coast
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Co-op developments, coast to coast
CoBank earnings surge
to $538 million
CoBank, a national cooperative bank
serving U.S. agribusinesses and rural
utilities, saw its net earnings for 2008
increase 28 percent, to $533.4 million.
That’s up from $415.6 million in 2007.
The increase was driven by robust
growth in average loan volume across
all operating segments. Net interest
income rose 34 percent, to $862.6
million, compared to $645.4 million in
2007.
At year’s end, the bank’s loan and
lease portfolio totaled $44.6 billion and
total assets were $61.2 billion, a $9-
billion increase from 2007.
“CoBank delivered exceptional
financial performance during 2008 on
behalf of customer-owners, investors
and our other stakeholders,” says
Robert B. Engel, CoBank president and
chief executive officer. “As importantly,
we were able to stand by our borrowers
in the face of extremely challenging
conditions in commodity markets,
credit markets and the broader
economy.”
Extreme volatility in the grain,
oilseed and farm supply markets during
the first eight months of the year were a
key driver of increased financing
requirements from CoBank’s
agribusiness customers (see related
article, page 4). Lending to rural
providers of power, water and
communications services also
experienced robust growth.
CoBank is issuing $314 million in
patronage payments to customerowners,
up significantly from the $245
million in patronage paid in 2007. Of
that, $207 million will be paid in cash,
with the remainder distributed in
CoBank stock. Patronage distributions
represent an average 25 percent return
on the stock investment of active
borrowers.
“The increased patronage payout
authorized by our board of directors
underscores the strength of the
cooperative model and the overall value
proposition that CoBank offers its
customer-owners,” Engel says.
At year-end, capital levels at the bank
remained well in excess of all regulatory
minimums. Due to the ongoing turmoil
in the credit markets, CoBank says it
took steps to enhance liquidity by
issuing long-term debt, when possible,
and holding higher levels of liquid
assets, including cash.
“We have deliberately bolstered the
bank’s liquidity and capital base in order
to preserve our foundation of strength
and stability in volatile markets,” says
Brian Jackson, CoBank’s chief financial
and administrative officer.
About 97.2 percent of the bank’s
loans and leases outstanding rank in the
highest regulatory category used to
measure credit quality. Non-accrual
loans and leases increased to $217.8
million as of Dec. 31, 2008, compared
to $14.8 million the year before.
Additionally, CoBank recorded a $55
million provision for credit losses in
2008, compared to a $5 million reversal
of allowances for credit losses in 2007.
“Going forward, we expect that the
credit quality of our lending portfolio
will decline modestly as a result of the
broader economic downturn,” Engel
says.
Smith, Bozick win top honors
at NCFC’s 80th annual meeting
Eddie Smith, chairman of Plains
Cotton Cooperative Association, and
Nicholas Bozick, chairman
of Sunkist Growers, have
been awarded the
prestigious Farmer
Cooperative Director of
the Year Award by the
National Council of
Farmer Cooperatives
(NCFC). Smith received the award for
a director with more than 12 years of
board service, while Bozick was selected
from among directors with 12 or fewer
years of service.
Smith, who has been a cooperative
member since 1973, produces cotton,
cattle and row crops in Floydada, Texas,
in partnership with his son, Eric.
Bozick, of Mecca, Calif., is president of
Richard Bagdasarian Inc., a family-run,
multi-commodity produce growing,
packing and shipping business in the
Coachella Valley. In addition to citrus,
the company also handles table grapes
and several vegetable varieties.
The award was established to
recognize the outstanding achievements
of farmer cooperative directors who
take the lead to help their board of
directors make decisions vital to their
cooperative.
“Both Eddie and Nick have spent
their careers exhibiting outstanding
leadership of their cooperatives and
showing a strong commitment to the
farmer cooperative community in
general,” says NCFC President and
CEO Charles F. Conner. “They are
truly dedicated to the principles of
farmer-ownership and I congratulate
them on being named Director of the
Year.”
Director of the Year nominees were
examined by a panel of judges
representing the NCFC members and
outside experts. In selecting the
winners, judges looked at four broad
criteria: how well the nominee
understands his or her cooperative; the
ability to provide leadership and be a
team player; the possession
of good business judgment;
and the ability to
communicate effectively.
The awards were
presented in February
during NCFC’s 80th
annual meeting.
NCFC is a national
association representing
America’s farmer
cooperatives. There are
nearly 3,000 U.S. farmer
cooperatives, whose
members include a majority of the
nation’s more than 2 million farmers
and ranchers.
Wisconsin economic recovery
plan aims to boost state’s dairy
co-ops
Cooperative Network, the Wisconsin
and Minnesota trade association of
cooperative businesses, is supporting an
economic recovery plan in Wisconsin
that would help dairy cooperatives
modernize. The proposal includes the
creation of two new income tax credits
for the modernization of dairy
manufacturing and meat processing
facilities. The tax credits are aimed at
encouraging the continued growth of
Wisconsin’s agricultural economy and
are nearly identical to legislation
supported by Cooperative Network in
the past.
“Because 85 percent of Wisconsin’s
milk is shipped through dairy cooperatives,
the cooperative community has
pushed for state support of our dairy
plant infrastructure for years,” says Bill
Oemichen, president and CEO of
Cooperative Network. “Modernizing
dairy-manufacturing and meatprocessing
facilities is a good step
toward bolstering Wisconsin’s economy
and will create good jobs.”
According to a 2004 study from the
University of Wisconsin-Madison
Department of Agricultural and Applied
Economics, dairy processing provided
more than 17,000 jobs, and had an
additional indirect impact of 53,000
jobs.
The dairy cooperative investment
credit is identical to Assembly Bill 37,
and the meat processing facility credit
matches Assembly Bill 12.
Global co-op award
competition launched
The dotCoop Global Award for
Cooperative Excellence has been
launched to recognize successful
businesses in any nation that embrace
cooperative principles. The award is
being spearheaded by dotCoop, sponsor
of the “.coop” Internet domain.
Entrants must describe and
document specific processes and
activities they employ to “leverage the
cooperative business model,” such as
using the .coop domain for branding
purposes.
For more information and to submit
entrees, visit: www.globalawards.coop.
The deadline for entries for the
inaugural awards is May 31, 2009.
There is no entry fee for this award.
Cooperatives can compete in one of
three categories based on the size of the
co-op. Winners will be selected by an
international panel of judges in late
summer and will receive funding
towards travel to Geneva, Switzerland,
in November 2009, where they will
accept the award in front of the
International Co-operative Alliance
General Assembly.
Study boosts ethanol status
for environmental quality
A study reported in the Journal of
Industrial Ecology found that ethanol
derived from corn emits an average 51
percent less greenhouse gas than
gasoline. The study was conducted by
the University of Nebraska-Lincoln.
“Critics claim that corn ethanol has
only a small net energy yield and too
little potential for direct reductions in
greenhouse gas emissions compared to
the use of gasoline,” a member of the
research team said in a press release.
“This is the first peer-reviewed study to
document that these claims are not
correct.”
About 30 percent of the U.S. corn
crop in 2009 is expected to be
shipped for ethanol.
In related news, a big
majority of American Farm
Bureau farmer-members say
they believe that ethanol has
been good for the nation’s
agricultural economy,
according to a straw poll
conducted by the Reuters news agency
during the Farm Bureau’s annual
meeting in San Antonio, Texas, during
January. Nearly 80 percent of 820
farmers surveyed said ethanol was good
for agriculture, with only 17 percent
saying that the biofuel did more harm
than good.
Does your co-op rock?
Send videos to NCGA
If your food co-op rocks, let the
world know it. The National
Cooperative Grocers Association
(NCGA) is inviting individuals and
groups to submit videos of up to two
minutes in length to: My Co-op Rocks
Video Contest. Submissions will be
accepted from March 1 until April 17
at: www.MyCoopRocks.coop. Prizes
totaling $3,500 will be awarded to the
best videos in “people’s choice” and
“judges’ choice” categories.
Co-op shoppers may share their
favorite co-op moments, memories and
stories online. NCGA says it is hosting
the contest “in celebration of all the
qualities and quirks that
make co-ops integral parts
of communities.”
“No matter the times
or economic environment,
shoppers remain passionate
about co-op grocers and the
sense of community that
they inspire,” says Robynn
Shrader, chief executive officer for
NCGA. “Everyone loves their local coop
for different reasons; this contest
provides an opportunity for shoppers to
tell us in their own words.”
Whether shooting videos with a cell
phone or in high-definition digital
video, all skill levels are welcome
submit their videos. Participants are
encouraged to unleash their sense of
humor and creativity.
Once posted, videos will be viewed
and voted on by the general public. A
panel of judges will also score entries
based on creativity, theme and overall
appeal, with prizes awarded to the top
three “judges’ choice” entries. The
deadline for submissions and online
voting is 11:59 p.m. CST on April 17.
Suggested themes include: Top 10
reasons I love my co-op; Top 10 foods
at the co-op; Top 10 funniest sights at
my co-op; Top 10 ways to get a date at
the co-op; Top 10 reasons to become a
co-op member, and Top 10 reasons why
shopping at a co-op is just better.
Video focuses on credit unions
The National Cooperative Business
Association (NCBA) and Cabot
Creamery Cooperative have produced
an eight-minute informational video
that features interviews with credit
union members, employees and
industry executives. The video is
designed to educate the media and
general public about the value of credit
unions, how they work and why they
are different from banks. To view the
video, visit: www.thebetterchoice.coop.
An accompanying online resource helps
consumers find credit unions in their
area.
Credit unions are cooperative
businesses guided by democratic
principles that govern all co-ops, which
exist to serve their members who also
act as owners of the business. Credit
unions are routinely rated higher than
banks in customer satisfaction surveys.
Paul Hazen, CEO of NCBA, says
the ongoing world credit crisis has
focused more attention on the
advantages of credit unions. “Credit
unions have stood apart during this
crisis,” Hazen says. “While many banks
have faltered due to high-risk, highreward
investment practices, credit
unions stuck to their tried and true
practice of making responsible loans to
their members.”
Although credit unions have not
been immune to the challenges of the
foreclosure crisis, overall they have
fared better than banks, Hazen notes.
Almost everyone is eligible to join one
of the roughly 9,000 credit unions
operating in the United States, he adds.
Irwin new CEO at Welch’s
Brad Irwin assumed duty on Feb. 16
as president and chief executive officer
of Welch’s, the world’s leading marketer
of Concord and Niagara grape-based
products. Irwin’s goal is to help
Welch’s continue to maximize the
organization’s value while expanding
returns for its grower-owners.
“The opportunity to continue to
grow a company that has a strong,
iconic reputation grounded in a rich
history is very exciting to me,” says
Irwin. “I look forward to this journey
with Welch’s and helping to drive the
growth and profitability of the
company.”
Irwin was most recently president of
Cadbury Adams North America LLC,
the confectionery business unit of
Cadbury Schweppes plc. He joined
Cadbury in 2000 after 20 years with
Procter & Gamble.
“The addition of Brad Irwin as
president and CEO comes during an
important time for Welch’s,” says Joe
Falcone, board chairman and president
of National Grape Cooperative Inc.
“Brad’s experience with other
consumer-based brands and proven
organizational leadership will be crucial
in helping to drive our business forward
successfully.”
Irwin has a Bachelors’ Degree in
economics and political science from
Amherst College. He will be Welch’s
14th president.
Rural Economic Development
funds awarded in 13 states
Agriculture Secretary Tom Vilsack
in January announced that utilities in 13
states have been selected to receive
$18.1 million through USDA Rural
Development’s Rural Economic
Development Loan and Grant program.
“Providing capital to support small
business development and improve the
quality of health care in rural
communities is a key part of USDA
Rural Development’s mission,” Vilsack
said. “By working with our partners,
including utilities, USDA is helping to
fund rural infrastructure improvements
that will support President Obama’s
goal of enhancing the quality of
community life and helping small
businesses compete more effectively.”
Rural Development is awarding
$14.2 million in loans and $3.9 million
in grants to a total of 27 applicants.
Funds are allocated to Rural Utilities
program borrowers, usually rural
telephone or electric cooperatives,
which in turn provide loans to local
rural businesses and communities.
Funding of individual recipients is
contingent upon their meeting the
conditions of the loan or grant
agreement.
The projects are expected to create
or save more than 1,800 jobs in
Alabama, Colorado, Georgia, Illinois,
Iowa, Kansas, Kentucky, Missouri,
Nebraska, North Dakota, South
Carolina, South Dakota and Tennessee.
Among the fund recipients is Se-Ma-
No Electric Cooperative in Mansfield,
Mo., which is receiving a $740,000 loan
to build a rural health clinic and
ambulance base in Mountain Grove,
Mo. The project is expected to create
15 new jobs.
The Coastal Electric Cooperative of
Midway, Ga., will receive a $740,000
loan and a $300,000 grant to help the
McIntosh County Industrial
Development Authority finance
expansion of a local industrial park. The
project is expected to create 183 jobs.
A complete list of loan and grant
recipients is available on the USDA
Rural Development website:
http://www.rurdev.usda.gov. USDA
Rural Development’s mission is to
increase economic opportunity and
improve the quality of life for rural
residents.
Sunkist sales top $1 billion
Sunkist Growers’ 2008 revenue
jumped 8 percent from 2007, to $1.07
billion, thanks to a large crop, strong
demand and efforts by the co-op to
improve its operating efficiency.
Payments to members of $839
million were up 5 percent over the
previous year.
“2008 was another
billion-dollar year for
Sunkist, the 11th in the
past two decades —
which includes four freeze
years,” Sunkist President
and CEO Russ Hanlin
told the more than 500
growers attending
Sunkist’s 115th annual
meeting at the Ventura
County Fairgrounds.
The 2008 results, Hanlin said, are
especially gratifying because they were
achieved while not only dealing with a
record navel orange crop, but also while
transitioning the co-op’s sales
organization to a more centralized
structure.
The record navel crop was followed
by a large crop of Valencia oranges,
presenting more marketing challenges
which were exacerbated by record fuel
prices followed by the nation’s worst
economic downturn in decades.
Lemons, Hanlin noted, were a
different story. “It was another year for
the record books...the highest FOB
[free on board] prices and revenue ever,
exceeding the record set the prior year
by $20 million and a pretty good 2006
by $60 million.”
Helping the bottom line were
ongoing improvements in Sunkist’s
Citrus Juice and Oils operations. In
2008, Sunkist completed the plant
consolidation and now all citrus
byproducts are processed at Sunkist’s
Tipton plant, driving greater economies
of scale and increased efficiencies.
“We are now the leading highquality,
low-cost producer on the West
Coast and a top supplier of value-added
citrus products,” Hanlin added. He
reminded growers that the industry is
changing rapidly.
“Competition is increasing, with
offshore fruit impacting both domestic
and traditional export markets in everexpanding
volumes and with new trade
agreements adding to that competitive
equation. Customers continue to
consolidate, concentrating more and
more purchasing power in fewer and
fewer hands.”
Hal Doran remembered
for dedication to co-ops
Hal Doran, known as “Mr.
Cooperative Education” in
Pennsylvania and the Northeast,
died Feb. 26. “Hal was a mentor to
so many of us and influenced the
lives of so many cooperative
leaders,” says N. Alan Bair,
director of dairy industry relations
for Penn State and Pennsylvania
Dairy Stakeholders, Middleton, Pa.
Even though Doran has been retired
for many years, he continued to stay in
contact with cooperatives and the
people that make them work.
“He was one of the ‘behind the
scenes’ people who are so influential,
but often unrecognized,” Bair says. “He
genuinely understood cooperatives and
their potential — both from the
business and the human side (members
and employees).”
Doran was born in 1920, in Moscow,
Pa., and grew up on Doran Glenn
Farm. He graduated from Penn State in
1942 with a degree in ag education and
earned a Master’s degree from the same
school in 1948.
He worked for Eastern States
Farmers Exchange until 1961, where he
was a district manager. From 1961 to
1966, he served as operations manager
and personnel manager at Agway, then
accepted a position at Penn State as
director of cooperative business
education.
When he retired from Penn State in
1991, the Hal F. Doran Cooperative
Business Education Award fund was
established to recognize an individual
showing leadership and dedication to
cooperatives.
A white oak tree and plaque stand on
Ag Hill at Penn State in honor of Mr.
Dorn’s dedicated service. Among the
many awards he received are the
National Cooperative Business
Education Award and the Distinguished
Agricultural Service Award, the latter
from Eastern Milk Producers.
