NEWSLINE

GROWMARK sets sales, income records
GROWMARK had record sales of $4.4 billion and record net income of $151 million, before patronage and dividends, for fiscal 2006-07 (which ended Aug. 31). The federated co-op will also be returning record amounts of patronage to its member co-ops.

“Our wholesale businesses that provide seed, plant food, crop protection products, grain systems and energy products and services all produced strong results,” Vice President of Finance Jeff Solberg said.

More than $105 million in patronage refunds will be returned to GROWMARK member cooperatives. “This is the first time in nearly three decades that we have distributed patronage refunds from all of our major product divisions. It will be the largest amount of cash returned to members in the history of the GROWMARK System, and is a tribute to the unity of the System,” Solberg said.

Highlights of the co-ops’ recordbreaking year include: Study: CWT boosted milk
checks 75 cents per HW
The return this year on dairy farmers’ investment in Cooperatives Working Together (CWT) will be at least 75 cents per hundredweight (HW), according to an independent economic analysis of the voluntary dairy farmer-funded and managed self-help program.

The analysis was performed by Dr. Scott Brown of the University of Missouri, a nationally-known farm policy expert who is regularly called on by the U.S. Congress to assess agricultural economic issues. Brown evaluated the impact of CWT’s 2007 herd retirement and export assistance program activities during the first half of 2007, in addition to reviewing the effects of CWT’s past activities.

Meanwhile, CWT officials say it is getting commitments from its members to continue their support for the program in 2008. In June, the CWT Program Committee voted to renew the program in 2008 to maintain the current 10 cent assessment level. Current membership in CWT includes cooperatives and farmers producing 69.1 percent of the nation’s milk supply.

“Not a single cooperative that has been part of CWT this year has notified me that they won’t be part of the program in 2008,” said Jerry Kozak, president and CEO of the National Milk Producers Federation, which manages CWT. Even with the record high farm prices of this summer, “producers recognize that we will need CWT in the future to help stabilize prices,” he added.

Earlier this year, CWT’s fourth herd retirement program removed 53,000 cows, representing 1 billion pounds of milk production. In the first half of 2007, CWT’s export assistance program facilitated the sale of 930 million pounds (milk equivalent) of butter, milkfat and cheese. CWT has also raised its target price benchmarks from $14 to $16 per HW.

AGP rejects second
takeover bid
An investor group pursuing a hostile takeover bid of Ag Processing Inc. has made a second bid for the Omaha, Neb.-based soybean processing co-op, upping its offer from $850 million to $910 million. But AGP’s board has again rejected the unsolicited offer from Ag Processors Alliance (APA) LLC.

“Contrary to APA’s representations, our members have overwhelmingly expressed support for the AGP board’s decision in rejecting this hostile takeover attempt,” Mike Maranell, AGP’s senior vice president for corporate and member relations, said in response to the offer. “In fact, AGP members’ strong and consistent message to the board of directors has been that their company — a valuable piece of the cooperative system — is not for sale.”

AGP is the world’s largest cooperative soybean processor, a vegetable oil refiner, and a participant in the biofuels industry. AGP is owned by 203 local and six regional co-ops representing 250,000 farmers in 16 states.

Green Power EMC now serves
1.6 million Georgia households
Georgia’s first renewable energy program, Green Power Electric Membership Corporation (EMC), recently welcomed Okefenoke REMC, in Nahunta, Ga., as its newest member, bringing to 36 the total number of participating electric cooperatives throughout Georgia. This adds another 33,000 consumers to Green Power EMC, a nonprofit cooperative founded in 2001 that offers green energy to more than 1.6 million Georgia households.

“Based on the resources available to us, Georgia ranks among the top five in the nation, from a cooperative standpoint, in terms of renewable energy programs,” says Green Power President/CEO Michael Whiteside. Landfill gas, poultry litter and lowimpact hydro projects are keys to Green Power EMC's success, he notes. “And we continue to look for other resources.”

Green Power EMC plans to purchase 20 megawatts of electricity from the first poultry litter-to-energy operation in Georgia. The electricity will be provided by Earth Resources Inc., which is constructing a chicken litter-to-electricity plant near Carnesville, about 70 miles northeast of Atlanta. Green Power EMC also operates Sun Power for Schools, the first statewide school program to showcase the benefits of solar energy.

PCCA to pay members $25.7 million
Cash payments of $25.7 million to members were announced during the 54th annual stockholders meeting of Plains Cotton Cooperative Association (PCCA) in Lubbock, Texas. The payments consist of $12.1 million in cash dividends, $4.8 million in stock retirements and $8.8 million in retirement of per-unit capital retains.

“Fiscal 2007 was another very successful year, with record performance in several areas,” reported PCCA President and CEO Wally Darneille. “Although drought hurt cotton production prospects in several areas, we still reported net margins of $20.5 million from ongoing operations.”

Among the year’s highlights were record direct export sales, record net margins in the Marketing Division, record cotton receipts from PCCA members in Taylor, Texas, Northern Oklahoma and Kansas, and a record number of textile mill customers.

“The combination of successful marketing efforts, a third consecutive record year in our TELMARK subsidiary and some extraordinary gains led to record net margins of $5.6 million in the Marketing Division,” Darneille said. PCCA’s Pool Divisions reported combined net margins of almost $14 million.

PCCA’s Warehouse Divisions reported good earnings despite intense drought in portions of Texas and Oklahoma that resulted in lower yields on irrigated land and a significant number of abandoned dry-land acres. However, thanks to bumper crops in northern Oklahoma and Kansas, the Oklahoma Cotton Cooperative Association warehouse facilities received the third largest crop in the division’s history, with earnings of $3.7 million.

Adverse weather resulted in a smaller than average crop in the rolling plains area of Texas, but the Rolling Plains Cooperative Compress facility reported earnings of $2.1 million.

Fiscal 2007 was a challenging year for PCCA’s Textile Division as it continued the transition to increased production of value-added fabric styles while facing price pressures from denim imports. The division reported a net allocable loss of $2.6 million at year-end, but working capital increased $3.5 million, to $31.4 million, and cash flow from operations made a $1.4 million turnaround.

Walnut growers may sue
Diamond over payments
A group of California walnut growers have hired a Modesto attorney to press claims that Diamond Foods Inc. has paid them millions of dollars below market prices for their crop. Diamond converted from a cooperative in 2005.

According to a report in the Stockton Record, the Growers Committee for a Fair Price from Diamond estimates Diamond underpaid growers $23 million for 2005 walnuts and $29 million for 2006 walnuts. That’s about 8 cents per pound less for their 2005 crop and 10 cents a pound less for the 2006 crop. The newspaper quotes some of the unhappy growers as saying they believe the company is underpaying them to pay for expensive advertising for its Emerald nut line.

Sam Keiper, Diamond vice president of corporate affairs, told the Record that the claims are unfounded and that the growers pursuing the lawsuit represent a small minority of the company’s growers. Other published reports indicate that the company is for sale.

NCGA to help detect
organic food fraud
The National Cooperative Grocers Association (NCGA) is partnering with Hanover Co-op Food Stores, PCC Natural Markets and Unified Grocers on a pilot program exploring the implementation of the organic industry's first system-wide, retailerbased organic fraud detection and prevention program.

As part of this initiative, NCGA has contracted with the nonprofit International Organic Accreditation Service (IOAS) to determine appropriate methods retailers can use to limit the incidence of fraudulently traded organic products and to increase the chances of early detection when it takes place within the retail supply chain.

“Our program will not change how organic products are certified,” says Robynn Shrader, CEO of NCGA, a business services cooperative for 110 U.S. consumer-owned food co-ops. “Rather, we're seeking to add a very critical safety checkpoint in the supply chain that will empower retailers and provide peace of mind for organic customers.”

IOAS will conduct testing measures with NCGA grocers and suppliers over the coming months. Based on the pilot's findings, a recommended retailer-based fraud prevention program will be developed, which will be offered not only to NCGA's members, but all organic retailers nationwide and worldwide as early as mid-2008.

In another area, NCGA is calling on its member co-ops’ suppliers and vendors nationwide to raise funds for family farmers who produce organic crops in the Upper Midwest and were impacted by the floods that devastated portions of the area in August. NCGA will match the first $50,000 raised for family farmers. For more information, visit: www.sowtheseedsfund.org.

Small and minority producer
co-ops receive USDA grants
Acting Agriculture Secretary Chuck Conner has announced the awarding of recipients in seven states for $1.2 million through the Small Minority Producer Grant program. “The grants will help small, minority producers develop and market new products,” Conner said. “USDA is providing technical assistance for projects ranging from renewable energy development to livestock production.”

For example, Heritage Farm Cooperative in Auburn, Wash., will receive $150,000 for technical assistance to produce sunflower oil seeds and nonester renewable fuel and animal feed. In Rapid City, S.D., the InterTribal Bison Cooperative will use a $175,000 technical assistance grant to help 57 tribes understand the dynamics and best practices in formulating improvement protocols in the bison industry.

Small Minority Producer Grants are provided to cooperatives or associations of cooperatives to assist small minority producers with 75 percent minority memberships and/or governing boards. Funding of individual recipients will be contingent upon their meeting the conditions of the grant agreement. For a list of receipients and more information on this and other USDA Rural Development programs, visit: www.rurdev.usda.gov.

Dakota Beef buys Kansas co-op
Hurt by drought and grain storage problems, Quinter, Kansas-based Midwest Cooperative members have voted overwhelmingly to sell their operations to Dakota Beef, the nation’s biggest organic beef producer. The Hays, Kan., Daily News reports that coop members voted 300 to 23 to sell the cooperative’s 12 elevators to Dakota Beef, which has an organic beef processing plant in Howard, S.D.

Midwest Manager Rob Thompson told the Daily News he was a bit surprised by the overwhelming vote, and said people turned out from throughout the cooperative’s trade area. In addition to Quinter, the co-op has elevators in Collyer, Park, Grainfield, WaKeeney, Ogallah, Voda, Bogue, Hill City, Morland, Penokee and Studley. The $7.6 million price is on target with an appraisal required by CoBank, the co-op’s lender.

POET, DOE in agreement
for cellulosic ethanol project
POET, formerly known as Broin, and the U.S. Department of Energy (DOE) have signed a cooperative agreement for a commercial cellulosic ethanol project in Emmetsburg, Iowa. The agreement finalizes the first phase of a DOE award that was announced in February and will govern all aspects of the project, leading up to construction.



Co-op Hall of Fame picks
five “heroic” inductees

Five cooperative business leaders will be recognized at the annual Cooperative Hall of Fame dinner and induction ceremony at Washington’s National Press Club on April 30, an event that annually draws a standing-roomonly crowd.

The Hall of Fame, the cooperative community’s highest honor, recognizes those who have made “heroic” contributions to cooperative enterprise. “The profiles of these individuals reflect lifetimes of achievement as business and community leaders, public policy advisors, innovators, and advocates for cooperative development, both here and around the world,” says Elizabeth Bailey, executive director of the Cooperative Development Foundation, which administers the Hall of Fame.

The 2008 inductees are:

Gary Hanman — Hanman retired in 2005 as president and CEO of Dairy Farmers of America. His career in co-op dairy marketing spanned 42 years and involved many leadership positions. He is credited with the visionary leadership that brought about the merger of four diverse cooperatives to create DFA in 1998. Today, DFA is the nation’s largest dairy cooperative, representing more than 20,000 dairy farmers and marketing more than one-third of the nation’s milk supply.

Terry Lewis — Vice President for Cooperative Development with NCB, Lewis is an expert on cooperative law, with a deep belief in cooperatives. She has been a passionate advocate for co-op housing as the best model for affordable home ownership. With her legal and tax expertise, Lewis has devoted her career to helping shape public policy related to cooperative housing development and has been a key player in efforts to protect cooperative housing from unfavorable tax treatment.

Douglas D. Sims — Sims retired as CEO of CoBank in 2006, where he played a prominent role in helping the Farm Credit System (FCS) survive the downturn in the farm economy in the early 1980s. Sims is also credited with playing a key role in the subsequent reorganization of the FCS, including the creation of CoBank in 1989. Sims devoted his career to promoting the cooperative form of enterprise in the national and international arena and to encouraging co-op leaders to embrace change.

Walden Swanson and Kate Sumberg — Swanson and Sumberg are respected for their vision, innovation and dynamic leadership as business consultants to the global cooperative community. Their influence extends across co-op sectors, with their most extensive work being with food co-ops. Among their many accomplishments was the creation of CoopMetrics, a financial benchmarking and data warehouse services cooperative. Its mission is to empower cooperatives and community development organizations through the use of technology and management best practices.





November/December Table of Contents