Compiled by Patrick Duffey

Utah Co-op Alliance formed
With members that includes such well-established ag cooperatives as turkey marketer Norbest and the Moroni Feed co-op, the new Utah Cooperative Alliance was formed this fall. It will share information, help member co-ops network and generally promote cooperatives operating in Utah. The alliance represents: 77 agricultural cooperatives, 10 rural electric co-ops, 4 telecommunications co-ops, 134 consumer cooperatives and 21 coops affiliated with Associated Foods.

Chris Falco, alliance president, said the fact that cooperatives operate under a “user-benefit” principle means that the customers have more input and control over the business or organization’s operations. At the same time, he said, the cooperative’s design ensures more attention to the needs of members. “They’re formed for a specific purpose, either to market or provide services to its members.”

For Leonard Blackman and his sons, that means a five-decade history of raising turkeys in Moroni, thanks to a pair of cooperatives represented by the new alliance. Utah’s Moroni Feed Co. allows about 100 farmers in Sanpete County and Nebraska to benefit from group purchases of feed, veterinary services, processing and gasoline. Norbest Inc., of Midvale, affords farmer-members the benefits of marketing turkeys and developing new products.

“The only reason we all survive is because of co-ops,” Blackman said of his 100,000-turkey operation and dozens of others scattered around the county. “They enable us to join forces and compete with the big companies.” Associated Foods, another Utah cooperative, serves independent grocery stores and helps them compete with larger grocery chains. Desert Power serves six rural electric power cooperatives which, in turn, serve residents of rural areas.

Scribner CEO at Southern States; SSC, Perdue forge new grain pact
In the midst of spinning off chunks of its Mid-Atlantic operations to stabilize its financial situation, the board of directors of Southern States Cooperative (SSC) at Richmond, Va., has unanimously appointed Tom Scribner as president and chief executive officer (CEO). Scribner has been the co-op’s chief merchandiser. He succeeds Wayne Boutwell who resigned after 5 years at the helm. Boutwell had earlier been CEO of the National Council of Farmer Cooperatives in Washington, D.C.

Scribner joined SSC in 1988 and earlier had worked for Countrymark Inc., in Indianapolis, Ind. In late October, Scribner announced the cutback of about 120 staffers, mostly at Richmond, including 23 positions recently vacated or planned under the budget. Some were offered jobs elsewhere in the cooperative. He advised employees that the combination of drought, lower sales and the troubled agricultural economy made it “essential that we concentrate on our core business activities and in making those operations as efficient as possible.”

SSC sells farm production supplies and services and lawn and garden products through a chain of 1,300 retail stores stretching from Maine to Florida. Last year, the cooperative hired an Arkansas consulting firm to guide a restructuring program and deal with changes in agriculture. Most recently, SSC eliminated its truck fleet, which covered 8 million miles per year but operated only three-fifths full. The cooperative contracted with a Richmond firm to provide its needed transportation services. To further tighten operations, changes were made in the assortment of products, services were improved and sales people trained with better product knowledge. Scribner said SSC was using its buying power to negotiate better prices with venders. In the future, SSC plans to organize its stores around crop centers in a hub-andspoke arrangement that will require every store in a region to carry a full line of products.

Meanwhile, faced with drought conditions in the East this season and a general agricultural malaise among many of its farmer customers, SSC agreed to a long-term lease of its 13 grain elevators in seven states to Perdue Farms, a major poultry producer and marketer based in Salisbury, Md.

SSC also plans to sell its Wetsel seed subsidiary at Harrisonburg, Va., to a subsidiary of The Anderson Group, an investment firm at Bloomfield Hills, Mich. Wetsel was a leading distributor of turf, horticultural and lawn and garden products in the East.

Debt-laden Agway files for Chapter 11, reorganizing
The national agricultural malaise has caught up with the Northeast. Saddled with heavy debts of $478 million and short on cash, Agway Inc., of DeWitt, N.Y., filed for Chapter 11 reorganization Oct. 1. It is seeking protection of the U.S. Bankruptcy Court for the Northern District of New York at Utica while it attempts to continue operations while reorganizing the business. Agway serves 69,000 farmer-members.

Agway’s creditors will meet Dec. 11 to review the cooperative’s assets, liabilities and related matters. The largest creditor, the company’s 401 (k) securities fund, which contains retirees’ retirement investments, is owed about $35 million. Creditors won’t know how much they’ll recoup until the bankruptcy court and creditors approve a reorganization plan.

Agway reported losses of $98.2 million for fiscal 2002, which ended June 30, with $85.4 million directly related to the sale of discontinued operations. Revenue was $899 million, down 21 percent from 2001, due partly to a mild winter and lower petroleum commodity prices.

Agway had net losses of $8.9 million in fiscal 2001 and a $9.4 million loss in 2000. The regional cooperative has already sold some operations and two others should be completed by the end of the year. The 550 independent Agway dealer stores throughout the Northeast were not included in the bankruptcy filing.

The court has approved the cooperative’s request to pay its 3,600 employees and maintain their medical and other benefits after Agway gained access to $125 million debtor-in-possession financing. Also covered were vendors and suppliers of services received since the Oct. 1 bankruptcy action.

Wholly owned subsidiaries exempt from the bankruptcy action include: Agway Energy Products LLC, Agway Energy Services Inc., Agway Energy Services-PA Inc. and Cooperative Milling, a feed mill at Gettysburg, Pa., run as a joint venture with Southern States Cooperative, Richmond, Va. Subsidiaries covered in the bankruptcy are: Agway Feed and Nutrition, Agway Agronomy, Seedway, Feed Commodities International, Country Best Produce, CPG Nutrients, Agway CPG Technologies and Agway General Agency. Earlier this year Indiana Farm Bureau purchased Agway’s insurance business.

NCUA, USDA in rural pact
An agreement has been signed between the National Credit Union Association and USDA to make rural economic development funds available through the nation’s 3,300 state-chartered credit unions for business, home and community projects. Thomas C. Dorr, USDA under secretary for rural development, said the opening of new markets “will bring credit unions more flexibility in developing lending strategies and stimulating further economic development in historically underserved areas. USDA and NCUA will promote accessibility of resources through USDA to assist the lowincome population in communities served by credit unions,” Dorr said.

Reeves elected Gold Kist chairman
Douglas Reeves Sr., a poultry producer from Reevesville, S.C., is the new chairman of Atlanta-based Gold Kist Inc., a farmer-owned co-op that is the nation’s second largest processor of poultry products. Reeves, first appointed to the board in 2000, is also chairman of the Edisto Electric Cooperative, vice chairman of the Central Electric Cooperative and chairman of the South Carolina Bank and Trust.

Three new directors have been elected to the board, including Christopher Fannon, a cattle and broiler producer from Geraldine, Ala., who defeated Dan Smalley, chairman of the board and a director for 16 years. The other new directors are Frederick W. Gretsch Jr. of Crawford, Ga., and Billy G. Meeks of Cullman, Ala.

“Successful Farming” magazine reports that five of nine directors have now been replaced on the board in the past 3 years, which it attribute to growers being “fed up with low returns and demands to upgrade buildings.” In what it says may have been the largest write-in campaign in the regional cooperative’s 69-year history, members voted 169-161 for Fannon.

AGP stretching its scope to West Coast, Texas Panhandle
From the West Coast to the Texas Panhandle, Ag Processing Inc. (AGP), of Omaha, the nation’s leading cooperative soybean processor is expanding its scope. Construction has started on a new deep-water-vessel loading facility at the Port of Grays Harbor at Aberdeen, Wash., to facilitate trade with Pacific Rim markets. It should be ready for shipping by the end of next summer. It will be supplied by grain rail cars originating at Midwest local cooperatives affiliated with AGP. The facility will be served not only by the Puget Sound and Pacific Railroad but also have customized access to the Burlington Northern Santa Fe and Union Pacific Railroads.

Meanwhile, at 10 locations across the Texas Panhandle, AGP Grain Cooperative is increasing its presence and outlets for Midwest grain by purchasing grain elevators from Sherley-Anderson Grain Co. The elevators represent a combined storage capacity of 24 million bushels. All have access to major highways and are served by the Burlington Northern Santa Fe Railroad. Mike Knobbe, group vice president for grain, cited the growth of livestock feeding and dairy production in the area. “The Texas Panhandle is a key domestic designation market and fits our strategic growth plan to serve our members,” he said. Marty Reagan, AGP’s CEO, said the link between the facilities and customers they serve with AGP members, as “enhancing our ability to add value to Midwest grain production.”

Major upgrades and expansions also were underway this summer at AGP facilities in Sheldon and Mason City, Iowa, and Hastings, Neb., with the aim of making AGP the least-cost producer in the industry.

Farmland tops Co-op 100 list
Farmland Industries, with revenue of $11.8 billion, was the nation’s largest cooperative in 2001, according the annual Co-op 100 report issued by the National Cooperative Bank (NCB), Washington, D.C. Farmland, which is currently seeking to restructure its business under a Chapter 11 Bankruptcy Court filing, was one of 40 agricultural cooperatives to make the Co-op 100 list. Those 40 ag co-ops had aggregate 2001 revenue of $60 billion, or just under 60 percent of the nation’s total ag co-op business volume (see related item, page 32).

The list also includes 20 grocery coops with a total of $28.9 billion in 2001 revenue, 13 finance co-ops with $11.6 billion in revenue, 6 hardware and lumber co-ops with $8.8 billion of revenue, 14 energy and telecommunications co-ops with $8.1 billion of revenue and seven miscellaneous co-ops with $5.9 billion in revenue.

Three other agricultural cooperatives Dairy Farmers of America, CHS Cooperatives and Land O’Lakes are included in the top 10. For the second consecutive year, cooperatives in the list earned more than $130 billion in combined revenue, demonstrating the important role cooperatives play in the nation’s economy.

“When I look at the revenues reflected in this year’s NCB Co-op 100, I can’t help but be impressed by the growth of U.S. cooperatives,” said Charles Snyder, NCB president. “From their beginnings more than 100 years ago, American cooperatives have not only survived, but also flourished. They have prevailed through adversity and economic downturns and have brought economic stability and prosperity to millions of people,” Snyder said.

The entire list and related information is available on the Internet at , or via e-mail at, or fax at 202- 336-7730.

Thiara new Sunsweet chairman
Gary Thiara, a member since 1980 of Sunsweet Growers at Yuba City, Calif., has been elected its new chairman. Before returning to the farm, he served 5 years as an agricultural banker and now manages a fruit orchard with his brother. He also grows almonds. Sunsweet is the nation’s leading marketer of dried plums.

Swiss Valley to relocate to new Davenport site
The Iowa-based dairy cooperative Swiss Valley plans to move its headquarters from Mount Joy to a new facility on a three-acre site at north Davenport. The cooperative will spend about $5 million to build a two-story, 37,000- square-foot office. Financial and training incentives are pending from city, state and community college sources. Construction could begin this year with completion expected by next fall.

Eugene Quast, the cooperative’s chief executive officer, said it plans to add 30 employees to tie in with anticipated growth of 15 percent annually during the next 5 years. The cooperative is owned by 3,600 dairy farmers in Iowa, Illinois, Wisconsin and Minnesota. It employs 800 people in the making of cheese, dips, milk and other dairy products. Annual sales are about $500 million.

Quast said future growth was expected partly from increased sales of its award-winning cheeses to a large retail store chain. The cooperative recently paid members $1.1 million in 1993 deferred allocated earnings. Adding this to earlier payments this year brings the total to $4.1 million. It marked the 38th year of continuous patronage revolvement payments to members.

In another futuristic move looking at the teenage market, Swiss Valley Farms is participating in a national pilot test by installing and using vending machines to promote milk, cheese and yogurt in 19 Iowa and Illinois middle and high schools in the Quad Cities area (where the two states meet). The cooperative is participating with Midwest Dairy Association and Dairy Management Inc.

This is the first test using dairy products other than milk in the vending machines. During the school year, data will be collected to measure the effectiveness of the campaign with an eye toward expanding the program nationwide. A five-month, milk-only vending test completed last year indicated a strong interest from students. The biggest obstacle Swiss Valley encountered was in obtaining enough vending machines, which have been in high demand nationwide.

“We’re excited to be involved in this pioneering test that provides a healthy vending alternative in schools,” said Quant. “We hope healthy, dairy vending will become a way of life at these and other schools across the nation.” Like other dairy cooperatives nationwide, Swiss Valley has been a longtime provider of milk for school districts in its trade territory.

California Dairies joins NMPF
The newest cooperative to join National Milk Producers Federation (NMPF) is California Dairies Inc., headquartered at Artesia, Calif. The cooperative, with nearly 700 member dairy producers, ranks second in the nation for milk volume. It is also a major processor of butter and nonfat dry milk. The cooperative also is a member of the Alliance of Western Milk Producers, a trade association headed by Jim Tillison, who will now become vice president for special projects and will report to Jerry Kozak, NMPF president.

Five dairy co-ops form Southeast Marketing agency
The new Southeast Marketing Agency (SMA) has been formed by five dairy cooperatives serving the Southeast. Members include Dairy Farmers of America (DFA), Maryland and Virginia Milk Producers, Lone Star Milk Producers, Southeast Milk Inc. and Arkansas Dairy Cooperative Association.

SMA is marketing 8.9 billion pounds of milk annually for 6,500 dairy producers. It is one of 11 marketing agencies-in-common operating in the United States. Administrator Jeff Sims said after its first quarter of operation, SMA had “already witnessed cost savings from driving efficiencies into the marketing process and working together to supply common customers.”

Calcot’s Tom Smith departs
In his swan song annual meeting, marking the cooperative’s 75th anniversary, Calcot President Tom Smith said the co-op returned nearly $450 million to its cotton growers despite a difficult year. Smith retired Oct. 1 after 25 years at the helm and 45 years with Calcot, Bakersfield, Calif. David Farley, Australian cotton executive who has succeeded Smith, praised him for his integrity on selling premium cotton and the fairness by which he treated the cooperative’s members.

Chairman Bruce Heiden, a grower from Buckeye, Ariz., described the cooperative as “good and getting better.” He said a thorny issue facing the cooperative was repayment of $25.3 million in advances to growers. He said it was time for a different look and different structure. Officials said the new season would be improved in part by the financial support to growers contained in the new farm bill.

Marketing Resource Center Website eyes value-added ag
The Agricultural Marketing Resource Center, a three-state university effort to enhance value-added agriculture, has launched a new website to provide education and research to producers about related business development and marketing. The site,, contains contacts and directories, as well as new business development and commodity-specific information designed to help build successful value-added agricultural enterprises. The center works with leading agricultural economists and business professionals across the United States to provide applicable research and analysis on marketing and economic issues facing value-added business ventures. Co-directors are Mary Holz- Clause and Don Hofstrand.

“Beginning a new farming venture was overwhelming for our 24-member farmer cooperative,” said Chris Henning- Cooke of the Greene Bean project at Jefferson, Iowa. “We wanted to grow specialty beans and needed product and market and production information. This value-added site was invaluable to us in our information search. They also provided training and outreach to producer groups like ours in communicating information about marketing our products and honing our communication skills,” she said. The center is funded through a grant to Iowa State University, Kansas State University and the University of California from USDA’s Rural Business-Cooperative Service. The center also may be a contacted toll free at 866-277-5567 or by email at

Court gives Farmland brief breather on reorganization
The deadline for a bankruptcy reorganization plan due from Farmland Industries in September has been extended to late November by U.S. Bankruptcy Judge Jerry Venters. Meanwhile, the cooperative in trying to restructure its fertilizer assets, the primary component of its crops production division, which lost $57.6 million in fiscal 2001 on sales of $745 million. The division represented 6.3 percent of Farmland’s total sales of $11.8 billion.

CEO Robert Terry said selling or repositioning the fertilizer business would allow Farmland to significantly reduce its debt “and reduce or eliminate the cyclical business risk inherent in the fertilizer industry” so that the cooperative could concentrate more resources on its successful processed food business. Farmland owns 7 nitrogen fertilizer manufacturing plants and 19 fertilizer distribution terminals and has 531 employees in its crops sector. Additionally, the cooperative is a partner in phosphate manufacturing ventures in Wyoming and Utah. It is also joint owner (with Mississippi Chemical Corp.) of a nitrogen fertilizer manufacturing plant in Trinidad and Tobago.

The court has approved Farmland’s request to sell its half interest in Farmland Hydro LP to Cargill Fertilizer Inc. in Florida. Farmland’s financial plight and the drought were on the minds of more than 330 cooperative managers, directors, their tax lawyers and accountants attending a recent symposium on “Strategies for Handling Losses,” sponsored by the Arthur Capper Cooperative Center of Kansas State University at Hutchinson. The conference was considered the largest cooperative educational meeting in the state in at least 25 years. Local cooperatives in Kansas are said to hold $572 million in Farmland equity and represent the largest group of nonsecured creditors in the bankruptcy.

Due to many variables, such as fiscal year ending dates, taxes and equity redemption policies, it’s difficult to measure the impact of Farmland’s condition on local cooperatives. “This is the worst year for local or operational earnings in the past 20 years,” said Dave Barton, director of the Capper Center. His survey of local co-ops seems to confirm that half the cooperatives in Kansas would lose money this year. Kansas Farmers Service Association encouraged local cooperatives to be prepared for the worst-case scenario, namely total write down of Farmland equities.

Official notice of the tax loss, however, won’t come until next year. Some cooperatives have suspended equity redemption payments to retirees and are pondering how to handle estates. The heaviest burden may fall on local cooperative boards of directors facing unpopular decisions, said Barton. “Whatever you do or however you handle the situation, it won’t be popular with some members.”

Former Countrymark CEO faces $4 million fines, prison
David Swanson, 60, former chief executive officer of the former Countrymark Cooperative in Indianapolis, was convicted Oct. 11 of 19 counts of wire fraud, theft, money laundering and tax evasion. Swanson was charged with bilking Countrymark of $2.7 million through a series of transactions during the 20 months he headed the cooperative from 1995-97. He was accused of diverting money from Countrymark’s 1996 purchase of Buckeye Feed Company of Dalton, Ohio, and Mexico-based Malta Clayton feed company. He later repaid the cooperative $450,000 of the $2.6 million it wanted in a settlement over allegedly improper expenses. At the time, Countrymark served farmers in Indiana, Ohio and Michigan.

Tree Top notches decade of profits
Despite a reduced apple crop, Tree Top Inc., the apple processing cooperative based at Selah, Wash., distributed $10 million as the final payment to members for the 2001-2 crop. The payment marked the 10th consecutive year of profitable operations. Tree Top processed 452,000 tons of fruit in fiscal 2002 vs. 533,000 tons in 2001. Sales were essentially flat at $295.7 million, compared with $297.5 million the previous year. Net proceeds were $28 million on apple and pear processing.

American Crystal Co-op pays $34 million for sugar plants
Three sugar processing plants in Torrington, Wyo., Sidney, Mont. and Hereford, Texas, have been purchased by American Crystal Sugar Co. of Moorehead, Minn., for $34 million from Imperial Sugar Co. The Torrington plant will be leased to Western Sugar Cooperative of Denver. American Crystal will operate the Sidney plant, while the Hereford factory, idled since 1998, will not be immediately reopened. Jim Horvath, American Crystal president, said the additional acreage and processing capacity at Sidney “will add value to our cooperative’s customers, shareholders and the Sidney community alike.” About 11,800 acres are being harvested for the Torrington plant this year vs. 30,000 acres 2 years ago. American Crystal has two plants in North Dakota and three in Minnesota.

Montgomery to FC Leasing
Steven Montgomery, executive vice president and head of Co-Bank’s agribusiness banking group, has been named chief executive officer of Farm Credit Leasing Services Corporation (FCL) based in Minneapolis. The firm provides leasing services to agriculture and rural America and last year had more than $12 billion in leases outstanding. AgFirst Farm Credit Bank and CoBank own FCL and all three are part of the $101 billion Farm Credit System. Montgomery has 30 years experience in the system and served on the FCL board for 15 years, including several years as chairman.

November/December Table of Contents