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Co-op developments, coast to coast

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Prairie Pride biodiesel plant
fully operational
Prairie Pride Inc., a new-generation cooperative, held a grand opening ceremony in August at its $80 million, 210-acre soybean-crushing and biodiesel plant near Deerfield, in westcentral Missouri. The plant, the first phase of which began operating last fall, will eventually convert 21 million bushels of soybeans annually into soy oil, which will then be processed into 30 million gallons of biodiesel fuel.

With the opening of the soybeancrushing portion of the facility (which had been using purchased soy oil), the plant is now fully operational. In addition to biodiesel, it will produce about 486,000 tons of soybean meal for livestock feed.

Missouri Congressman Ike Skelton and representatives for Kansas Senator Sam Brownback and Missouri Senator Kit Bond joined local officials for the celebration. “Renewable fuels like biodiesel and ethanol are good for rural economic development, and renewable fuels help ease our dependence on foreign oil — which is a must for our country,” Skelton said.

More than 1,000 producers from Missouri and several nearby states share in the ownership and profits of the operation. The co-op’s equity drive in 2005 raised more than $36 million in less than four months. The average perproducer investment was about $36,000.

USDA Rural Development provided a Value Added Producers Grant of $100,000 in 2005 to help advance the project.

The plant employs about 40 people and is expected to generate more than $250 million in sales annually.

Co-op General Manager John Nelson says the co-op has three primary goals: Ocean Spray opens world’s
largest cranberry-processing
facility
Ocean Spray has completed the expansion of its facility at Wisconsin Rapids, Wis., doubling the plant’s size to 440,000 square feet, making it the largest cranberry processing plant in the world.

“Ocean Spray is exactly the kind of company we are excited to have here in Wisconsin,” Governor Jim Doyle said at an event celebrating the completion. “I am pleased the state is able to partner with Ocean Spray to expand their facility in Wisconsin Rapids, and create 100 jobs for hardworking Wisconsin families.”

“The Ocean Spray brand is stronger than ever,” added Randy Papadellis, president and CEO of Ocean Spray. “As we commemorate the expansion of the Wisconsin Rapids sweetened dried cranberry production plant, we reinforce Ocean Spray’s partnership with the state of Wisconsin and our dedication to growing more cranberries and creating additional jobs in the Badger State. If we can build on this partnership and add more cranberries, there could be even more added expansion and jobs at this facility in the future…but we need the fruit.”

Ocean Spray invested $75 million, the largest capital investment the company has made in a manufacturing facility, to add two sweetened dried cranberry production lines to the Wisconsin Rapids plant. The facility incorporates some of the latest technologies in energy and environmental efficiency, bringing the total incremental investment in the facility to over $90 million during the past three years.

These additions include a wastewater treatment facility, energy-efficient lighting and an expansion of the system that converts methane from the Veolia Cranberry Creek Landfill into clean energy to power the plant. A fullyracked warehouse for both ingredients and finished goods allows increased storage on a smaller footprint.

Global demand for Ocean Spray sweetened dried cranberries has doubled during the past three years and is expected to double again over the next three years. Currently, Ocean Spray sweetened dried cranberries are featured as ingredients in more than 1,000 different grocery, bakery and dairy products internationally.

AMPI names new CEO
Associated Milk Producers Inc. (AMPI) has named Ed Welch as the cooperative’s president and chief executive officer (CEO). He succeeded Mark Furth, who is retiring after 38 years with AMPI, the last 19 as president and CEO, on Oct. 1.

Welch, the current AMPI chief operating officer (COO), has held various leadership positions during his 25 years with the Midwest milk marketing cooperative. He managed AMPI cheese manufacturing plants and member services in western Wisconsin before being named the cooperative’s COO. In that role, he has led AMPI dairy manufacturing and marketing efforts.

“The AMPI board of directors searched for an effective leader to take the helm of AMPI. We found that leader in longtime AMPI employee Ed Welch,” says AMPI Chairman Paul Toft, a dairy producer from Rice Lake, Wis. “AMPI’s dedication to dairy farmers and our reputation in the dairy industry will continue to grow under Ed’s leadership. He understands the AMPI vision and the cooperative foundation on which we are built.”

Welch, a graduate of the University of Minnesota, is currently a member of the American Dairy Products Institute board and a past president of the Wisconsin Dairy Products Association.

Oglethorpe Power to build
biomass power plants
Oglethorpe Power Corporation (OPC), the nation’s largest power supply cooperative, has announced plans to build as many as three 100- megawatt (MW) biomass electric generating facilities in Georgia. Designed as carbon-neutral, the plants will use woody biomass — one of the state’s most abundant renewable resources — and provide power to OPC’s 38 member co-ops, which supply electricity to nearly half of Georgia’s population.

“With our abundant biomass resources, Georgia has the unique opportunity to expand our use of alternative energy, grow our economy and transform the way we provide energy to our citizens,” says Georgia Governor Sonny Perdue. “Oglethorpe Power’s pioneering investment in alternative energy is consistent with our goal to grow, convert, and use biomass energy to power our homes and businesses.”

OPC has secured options for five potential sites in Appling, Echols, Warren and Washington counties. The first two biomass power plants are scheduled to be built and placed into operation in 2014 and 2015. A third unit could also be completed and placed into service in 2015.

Capital investment in the biomass plants will range from $400 million to $500 million per facility, with each providing about 40 full-time jobs. In addition, each plant will require an annual investment of more than $30 million for fuel stock alone and will create a need for potentially hundreds of new jobs in the state’s forestry industry.

The power plants will be steamelectric generation stations using conventional fluidized bed boiler/steam turbine technology. Fuel for the plants will consist of a woody biomass mixture, including processed roundwood (chipped pulpwood), primary manufacturing residue (wood waste from sawmills) and harvest residue (wood remaining in forests after clearing). The plants will be designed to allow for the co-firing of other types of biomass, such as pecan hulls and peanut shells. There are no plans to use any fossil fuels.

“With 12 million people expected to call Georgia home by the year 2030, we will need more energy to meet the demand of our growing population,” said Chris Clark, executive director of the Georgia Environmental Facilities Authority.

USDA funds co-op centers
Agriculture Secretary Ed Schafer has announced that more than $4.5 million in grants will go to 23 Rural Cooperative Development Centers to improve rural economic conditions in 22 states. Schafer announced the funding investment during remarks at the 41st annual meeting of the Federation of Southern Cooperatives/Land Assistance Fund (Federation) in Epes, Ala.

“Rural Cooperative Development Centers work closely to mentor entrepreneurs and grow local business with technical advice and research,” said Schafer. “This hometown support, close at hand, strengthens jobs and opportunities throughout rural communities.”

The 23 nonprofit groups and institutions of higher education selected may receive grants to finance up to 75 percent of the cost to establish and operate centers for cooperative development. For example, with a $200,000 grant, the Federation will fund the Cooperative Development, Training and Research Center in Sumter County, Ala. This grant is expected to create and save more than 400 jobs, including those for 250 family farmers and 100 fishermen.

In addition, two new rural cooperative development centers will be established with the funds announced by Schafer: the Resource Center for Value Added and Alternative Agriculture at North Carolina State University, and the Appalachian Forest Resource Center in Clarke County, Ohio.

USDA Rural Development helps rural residents form cooperative businesses and improve the operations of existing cooperatives. It provides technical assistance, conducts cooperative-related research and produces informational materials (including this magazine) to promote public understanding of cooperatives.

Funding for individual recipients is contingent upon their meeting the conditions of the grant agreement. For a full list of the grants awarded, visit the “News/Information room” at: www.rurdev.usda.gov.

Minnesota dairy farmer
to chair Foremost Farms
David Scheevel, a dairy producer from Preston, Minn., has been elected chairman of Foremost Farms USA. Scheevel has been on the board for more than 10 years, holding a variety of leadership positions, including second vice chair and secretary/treasurer. He has also been a member of the board’s personnel committee.

Former chairman Edward Brooks indicated he would not seek another term as chairman after winning the Republican primary race for Wisconsin’s 50th Assembly District. Brooks has been chairman of Foremost Farms and its predecessor, Wisconsin Dairies Cooperative, for 18 years. Brooks has been involved in the leadership of cooperatives for more 30 years and has advocated cooperative and farm issues at the state and federal levels. He continues to serve on the Foremost board and its executive committee.

“Ed has been instrumental in the formation and success of Foremost Farms USA,” says Dave Fuhrmann, Foremost Farms president. “His contribution to this cooperative is nothing short of remarkable.”

Scheevel, a graduate of the University of Wisconsin-River Falls, is chairman of the Minnesota Dairy Leaders Roundtable and a member of the Southeast Minnesota Ag Alliance, the Minnesota Council of the Wisconsin Federation of Cooperatives and Minnesota Association of Cooperatives (WFC-MAC).

“These are challenging times in the dairy industry with escalating costs and uncertainty,” says Scheevel. “At the same time, they are exciting times with the emergence of international markets, milk supply growth in the Midwest and Mideast, and growth in demand for finished products from this part of the U.S. I believe Foremost Farms USA is in an excellent position to both meet and be a major player in these changing markets.”

DFA adds Farm Services
Division; expanding plant
capacity in Colorado
Dairy Farmers of America (DFA) has formed a new Farm Services Division, consolidating oversight of several member service programs, including risk management, health insurance, financial services and bulk buying programs. Greg Wickham will serve as president of the division. He currently serves as CEO of DFA-member cooperative Dairylea and oversees Dairylea’s extensive agricultural services businesses, including several that are currently in partnership with DFA.

“Under Greg’s leadership of the Farm Services Division, we expect further collaborations between Dairylea and DFA in the farm services area that will benefit members of both cooperatives,” says Rick Smith, president and CEO of DFA.

Wickham will also continue in his current role as CEO of Dairylea and chief operating officer of DFA’s Northeast Area. Wickham has managed the Northeast Area’s farm services team for the past 10 years and was key to the formation of partnerships between DFA and Agri-Max Financial Services and Agri-Services health insurance.

Agri-Max Financial Services, of which DFA is half owner, allows members to access complete dairy loan packages for cattle, equipment and operating expenses. Members also may buy farm supplies in bulk through DFA, saving them money and time.

DFA has also announced plans for a $21 million expansion of a plant in Fort Morgan, Colo. Eastern Colorado’s milk production is growing rapidly, with 120 DFA member dairy farmers there producing 144 million pounds of milk per month. The expansion will create seven new jobs and increase capacity by 2 million pounds per day.

The Fort Morgan plant makes sweet cream, condensed milk and nonfat dry milk, all ingredients used to make cheese, yogurt and ice cream.

Farm Credit System banks
purchase $60 million of Farmer
Mac stock
The Farm Credit System in October announced it was making a $60 million investment in the Federal Agricultural Mortgage Corporation (Farmer Mac), which provides a secondary market for agricultural real estate loans, rural home mortgages and rural utility loans. Buying the senior cumulative perpetual preferred stock of Farmer Mac are: AgFirst FCB, AgriBank FCB, CoBank ACB, Farm Credit Bank of Texas and U.S. AgBank.

An additional $5 million of Farmer Mac senior cumulative perpetual preferred stock has been purchased by Zions Bancorporation of Salt Lake City.

The $65 million in total financing will enable Farmer Mac to strengthen its capital position and comply with its minimum regulatory capital requirements.

“Farmer Mac enhances the availability of agricultural mortgages and, more recently, rural utility loans, thereby assisting in the steady and dependable flow of capital to American farmers and ranchers and rural America,” says Robert B. Engel, president and CEO of CoBank, speaking on behalf of his fellow System Bank presidents. “In that regard, Farmer Mac has been a valued partner to the Farm Credit System, insurance companies, commercial banks and the National Rural Utilities Cooperative Finance Corporation

“Given the unprecedented turmoil in the broader financial services industry, at a time when so many institutions are struggling to maintain adequate levels of capital and liquidity, we’re extremely pleased that the Farm Credit System is favorably positioned to support Farmer Mac through this new investment,” Engel adds. “Agriculture is a key economic driver in our economy, providing food, thousands of jobs and biofuels that help make our nation more energy-independent.”

Jamie B. Stewart Jr., president and CEO of the Federal Farm Credit Banks Funding Corporation, noted that the FCS continues to experience strong overall financial performance. The System reported combined net income of over $1.5 billion in the first six months of 2008. As of June 30, 2008, credit quality in its $162 billion loan portfolio remained generally favorable, and liquidity and capital levels were in excess of all regulatory minimums, with the System’s combined assets totaled $208 billion.

Midwest local co-ops
buy fuel business
Effingham-Clay Service Co., Illini FS and Lanman Oil Co. have announced an agreement under which the two agricultural cooperatives will purchase Lanman Oil’s farm fuel delivery, lube oil and non-branded transport fuel businesses. Details of the transaction were not disclosed.

Randy Handel, Effingham-Clay general manager, says the deal allows Effingham-Clay and Illini FS an opportunity to continue a long tradition of service to rural east-central Illinois residents. “We have a strong tradition of reliably supplying quality fuel and lube oil products that today’s customers demand,” Handel says.

Effingham-Clay, founded in 1944, provides farm-related inputs, including feed, seed, plant food, crop protection, fuel, lubricants and grain marketing services to farmers and rural residents in seven counties in east-central Illinois. Illini FS provides ag-related products and services to farmers and rural residents in east-central Illinois. Illini FS, a division of GROWMARK Inc., has offices in five counties.

Lanman Oil, founded in 1948, provides service to east-central Illinois and western Indiana.

CountryMark drilling for oil
across Illinois Basin region
The Indiana-based CountryMark cooperative has announced plans to drill for oil in the Illinois Basin. The Illinois Basin is a 53,000-square-mile depression under southern Illinois, western Indiana and western Kentucky. According to CountryMark President and CEO Charlie Smith, it is one of the most plentiful sources of domestic crude oil in the Midwest.

The Indiana-based CountryMark cooperative has announced plans to drill for oil in the Illinois Basin. The Illinois Basin is a 53,000-square-mile depression under southern Illinois, western Indiana and western Kentucky. According to CountryMark President and CEO Charlie Smith, it is one of the most plentiful sources of domestic crude oil in the Midwest.

“Approximately 40,000 barrels of crude oil are produced daily from this region,” says Smith. “This is an extremely dependable, secure supply of energy for Indiana and surrounding states.” CountryMark is the largest buyer of Illinois Basin crude and refines the sweet crude at its Mt. Vernon Indiana refinery.

“As the productivity of old wells declines, it’s important that CountryMark do its part to invest the necessary capital for newer, high tech recovery methods to maintain, or even increase, the production of vital energy right here in our own backyard,” Smith says.

To meet the needs of Indiana businesses and growing world demand for energy, Smith says the co-op has elected to move from strictly purchasing and refining American crude oil to becoming actively involved in drilling. “We will also continue to purchase Illinois Basin crude, all of which will be refined at our plant in southwest Indiana.”

The company will invest in both vertical and horizontal oil wells.

Wisconsin co-ops
approve merger
Members of Country Horizons Cooperative and Valders Cooperative in eastern Wisconsin have approved a merger, which was effective Oct. 1. The new cooperative will have eight locations and 200 employees, with projected sales of more than $85 million annually. The combined operations will be 40 percent ag services, 30 percent retail-based and 30 percent energy.

About 75 percent of Valders Cooperative members approved the merger, while 68 percent of Country Horizons Cooperative members approved it. Voting was done both by mail and at a membership meeting.

The co-op, which is working with a third-party advisor to determine its new name and some related issues, will be governed by a nine-person board, with five directors from Country Horizons and four from Valders Cooperative. Robert Lowe, general manager of Country Horizons, has been named CEO/general manager of the combined company. He has more than 30 years of experience as a cooperative general manager.

Lowe says members grasp the need for competitive buying and financing that only comes with combined resources. “Cooperatives are unique in that decisions like these are made as part of a collective group, the members and its board of directors,” Lowe says. “Management and employees are here to help member-owned organizations remain competitive and profitable so the cooperative can continue to return earnings to members.”

“Our combined boards believed it was the right time to merge, and I’m glad our members supported that vision,” says Joe Holschbach, board chair at Country Horizons and a producer in the Manitowoc area.

“Part of our past success has been around partnering with others,” says Paul Sorenson, board chair of Valders Cooperative. “Our two cooperatives have worked together on numerous ventures, including the successful CP Feeds.”

The stock or equity held by members in each cooperative was transferred Oct. 1 for equal value for equity in the new cooperative.

Illinois co-op to
build wind farm
Plans have been announced by Prairie Power Cooperative to build a 20-turbine wind farm in Pike County in western Illinois. The wind farm, representing an investment of more than $65 million, will generate enough power to supply 16,000 homes.

This will be the first wind-power project for Prairie Power, which currently operates electrical plants powered by natural gas and coal. The co-op says it will sell clean-energy bonds to finance the project.

The member-owned generation and transmission co-op produces, purchases and delivers more than 1.5 million megawatt-hours of electricity annually to its 11 member-owned electric distribution cooperatives. These co-ops provide retail electric service to more than 83,000 consumer-members throughout central Illinois.

USDA’s James Baarda retires
Dr. James Baarda, an agricultural economist with the Cooperative Programs of USDA Rural Development in Washington D.C., retired Oct. 31. Baarda worked on a wide variety of cooperative legal and economic issues during the past 30 years and is considered by many to be one of the finest cooperative minds and speakers in the nation.

His work in recent years has focused on the legal, economic, financial and business characteristics of cooperatives that distinguish them from other forms of business in a dynamic, global economy. Baarda is the recipient of USDA’s Superior Service Award and the American Agricultural Law Association’s Distinguished Service Award for his contributions to cooperatives.

Baarda made numerous trips overseas to promote cooperatives and advise govern-ments on cooperative laws, and has regularly taught a course on cooperative law at the University of Arkansas’ Master of Laws program in Fayetteville, Ark.

Baarda, who grew up on a small farm in Iowa, earned a BS degree (chemistry, physics and zoology) from Iowa State University, a law degree from the University of Denver School of Law, and a PhD in economics from the University of Florida.

He worked with what was then called USDA’s Farmer Cooperative Service in Washington, D.C., for more than 16 years, and then spent four years as vice president of education for the National Council of Farmer Cooperatives. After domestic and international consulting in Eastern Europe and Former Soviet Union republics, he joined a law firm in Washington engaged in complex nationwide class action as well as other litigation.

In 2001, Baarda returned to USDA, where he conducted research, writing, training and speaking activities.

USDA awards $1.8 billion in electric loans Agriculture Secretary Ed Schafer has announced the selection of 33 rural utilities and cooperatives in 26 states to receive $1.8 billion in loans to build and repair 7,600 miles of distribution and transmission lines serving more than 90,000 rural customers.

“USDA partners with utilities across the country to ensure the delivery of affordable, reliable electrical power to rural communities,” Schafer says. “These loans are investments that will spur or expand development opportunities and enhance the economic competitiveness for rural areas as good places to live and work.”

The funding is being provided through USDA Rural Development’s Utilities Programs.




Washington farmers grow their own fuel

With the high energy demands of operating their vehicles and equipment, farmers suffer from high fuel prices even more than most Americans. But a few producers in the Yakima Valley of Washington may have found a way to beat the system by growing their own fuel.

The Heritage Farm Cooperative is a small group of ethnic-minority farmers — mostly fruit, dairy and hops producers — who run their diesel engines on sunflower oil pressed from a crop grown on their own farms. The co-op, in association with Flower Power USA, an engineering firm, provides technical assistance, business planning, conversion technology and crop-pressing services.

Ion Manea, a sunflower farmer, founded the cooperative and Flower Power. He’s originally from Romania, where sunflowers have long been an important crop. Manea points out that using sunflower oil for diesel engines is an accepted practice in Germany, where the majority of U.S.-made tractors now run on it.

A farm with 12 percent of its cropland planted with sunflowers can produce all its own fuel and save substantial amounts of money, Manea adds. The sunflower meal left over from crushing makes good cattle feed, and sunflowers fit well into crop rotation with the wheat and corn grown for feed in the valley.

The sunflower oil is not catalyzed into biodiesel, but is burned directly in engines using an inexpensive conversion kit. It can be burned straight or blended with regular petroleum diesel. The oil obtained from special sunflower varieties (with an oleic acid content of 80 percent) provided by the co-op is ideal for this purpose, says Manea. The high oleic content means it burns cleanly and doesn’t gum up in diesel engines, unlike other kinds of straight vegetable oil.

The cooperative brings crushing services to each member using a mobile plant mounted on a 40-foot semitrailer. The oil is treated with ultrasound to remove partially-dissolved gases that can cause problems in engines. Filters made with a special paper medium are necessary on engines burning the fuel.

Flower Power USA has won a USDA Rural Development Value-Added grant to develop this technology. The firm has partnered with Heritage University, an institution in Toppenish on the Yakima Indian reservation, to bring technical assistance to local small farmers.

Manea says they are also considering using sunflower oil in the smudge pots used to protect orchard crops from early freezes. “These tip over sometimes, and farmers don’t like having petroleum spilled around their trees,” he says. “Our oil is harmless and biodegradable, as well as cheap.”

By Stephen Thompson, Assistant Editor







November/December Table of Contents