NEWS LINE

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Record earnings, returns
for Countrymark members
Regional fuel refiner Countrymark Co-op, Indianapolis, Ind., announced record earnings and returns to member co-ops at its annual meeting in Indianapolis, delivering on its fundamental promise: to exist to supply the members it serves. The co-op said $25.86 million will be distributed back to its member-owners, with a majority paid as member patronage refunds and revolved equity. Of the total, $18.86 million will be returned in cash and $7 million as equity credits. Countrymark closed fiscal year 2005 with record after-tax earnings of $40.5 million.

Improved operating efficiency, changes in production and an emphasis on positive commercial relationships helped the refinery, CEO Charlie Smith said. Referring to the devastating 2005 hurricane season, Smith said:

“Throughout that crisis, not one co-op customer went without product. Last fall, nature unleashed circumstances where local ownership and cooperative membership immediately differentiated us from every other supplier. Our operations team, marketing staff and delivery professionals out in the field truly proved the advantage — and the commitment — they bring to co-op customers.”

Countrymark has invested in a $40-million clean-fuel complex to deliver ultra-low sulfur diesel, and was one of the first refiners in the nation to promote soy biodiesel and ethanol blends, Smith said. “Last year, approximately 85 percent of all biodiesel marketed in this state was through co-op members. In renewable fuel leadership, as in all areas, action is how the co-op adds value for member owners.”

Countrymark Co-op is owned and controlled by approximately 60 member cooperatives, and serves the energy needs of agricultural, industrial and commercial customers in Indiana, Illinois, Michigan and Ohio. It is the largest buyer of premium American crude oil from the Illinois Basin, and “proudly markets co-op-refined fuels that are 100 percent American made,” Smith said.

Ocean Spray, Pepsi
form strategic alliance
Ocean Spray and PepsiCo have announced a long-term strategic alliance in which Pepsi-Cola North America will market, bottle and distribute single-serve cranberry juice products in the United States and Canada under the Ocean Spray name. The agreement also includes opportunities for the development of new product innovations across multiple trade channels in the future.

“As the Ocean Spray cooperative moves to build its brand, we are seeking alliances to reach consumers more broadly and powerfully than ever before,” says Ocean Spray President and CEO Randy Papadellis. “We’re thrilled to re-establish our partnership with Pepsi and begin a fruitful, longlived relationship.”

Integration of single-serve juices into the Pepsi system will begin in 2007.

“This is a chance for both PepsiCo and Ocean Spray to turn up the dialogue on the health benefits of cranberries,” said Dawn Hudson, president and CEO, Pepsi-Cola North America. “Over the past several years, we’ve built successful, mutually beneficial partnerships with strong brands like Lipton and Starbucks, and now we plan to work side-by-side with Ocean Spray to create a major healthy refreshment business focused on cranberries. When people think of cranberries, they think of Ocean Spray.”

Pepsi distributed Ocean Spray products during the 1990s, which helped the co-op gain access to the single-serve, convenience store market. But that arrangement began to unravel after Pepsi bought the Tropicana juice brand in 1998. In 2004, Ocean Spray members voted down a proposed joint venture with Pepsi, under which the soda giant would have essentially taken over the co-op’s beverage business, reducing the co-op to the role of raw-product supplier.

According to the New York Times, at the high point of their previous relationship, Ocean Spray had $250 million in annual sales of single-serve products distributed by Pepsi. Last year, it sold less than half that amount in the singleserve market. The cranberry market has been a roller coaster ride for the past decade, with sales of $60 a barrel in 1996, but falling to $15 a barrel by 1999. This year Ocean Spray expects to pay about $40 a barrel. Ocean Spray posted fiscal 2005 gross sales of about $1.4 billion.

New pension law helps
50,000 co-op workers
Provisions included in the Pension Protection Act of 2006 (HR 4), signed by President Bush in August, will help preserve retirement benefits for more than 50,000 workers across the country employed by farmer-owned cooperative businesses.

The National Council of Farmer Cooperatives (NCFC) says the action helps to ensure that farmer cooperatives can continue to meet their obligations to their employees while not unduly stressing the financial health of the cooperative.

Provisions of the law, which were strongly supported by NCFC, put in place special transition rules for rural cooperatives, including farmer cooperatives that are part of multiple-employer plans. Much like a cooperative allows farmers to join together to purchase supplies or market their crops, multipleemployer plans allow individual cooperatives and related associations to pool their experience and reduce their cost to offer retirement benefits to their members.

“I would like to commend the House and Senate for passing this legislation, and President Bush for signing it,” says NCFC President Jean-Mari Peltier. “Over 750 farmer cooperatives across the country will be able to keep their pension costs in check because of this new law. This is important because, as farmer-owned businesses, an increase in costs means a reduction in resources to allow farmers to capitalize on new marketplace opportunities and derive more of their income from beyond the farm gate.”

NCFC is a national association representing America’s farmer cooperatives. There are nearly 3,000 farmer cooperatives across the United States whose members include a majority of the nation’s more than 2 million farmers, ranchers and growers. Additional information about NCFC can be found at http://www.ncfc.org.

WLF selects Utah site
for new processing plant
West Liberty Foods LLC, of which the Iowa Turkey Growers Cooperative is the majority owner, has announced construction of a new facility in Tremonton, Utah, which will become the fourth plant for the Iowa-based meat processor and marketer. The complex will continue to emphasize food safety through its state-of-the-art design. WLF is a leading co-packer, private label manufacturer and food service supplier of sliced, processed meat and poultry products.

The new facility is expected to create more than 500 new jobs in Tremonton and the Box Elder County area. Production should begin in July 2007.

The new complex will consist of a 93,000-sqaure-foot fabrication facility and a 74,000-square-foot slicing facility. At full capacity, the plant will be able to further process more than 100 million pounds of protein products per year, in addition to 36 million pounds of chicken. These facilities will be the first of their kind in North America to cook and slice 120-inch-long slicing logs. No slaughter will take place on the premises.

I couldn’t be more pleased about West Liberty Foods’ decision to make this very significant investment and expand its operations in Utah,” said Utah Governor Jon M. Huntsman, Jr.

“This is an exciting time for our company as we branch out to the western marketplace,” said Ed Garrett, WLF president and CEO. “The readyto- eat chicken line will provide us the opportunity to introduce and service new product lines to our current customers.” Garrett praised local and state leaders for their support of the project.

ACE honors Margaret Bau
for her work with cooperatives
The Association of Cooperative Educators (ACE) has presented Margaret Bau, cooperative development specialist with USDA Rural Development in Wisconsin, with the ACE Award for Outstanding Contribution to Cooperative Education and Training. The award recognizes long-term or continuing contributions to cooperative education, such as the development of training materials, publications or leadership within the cooperative movement.

One of her many projects, Cooperative Care in Waushara County, Wis., was named the 2003 top rural initiative by Wisconsin Rural Partners and was named one of 15 finalists out of 1,000 in the prestigious, 2004 Innovations in American Government award, presented by Harvard University.

Cooperative Care is a workerowned, home-care cooperative of 88 home-care providers who help the elderly and disabled live independently by offering them dependable and cost-effective care while at the same time assuring the workers’ earn living wages and have access to benefits.

As a USDA cooperative development specialist for the past six years, Bau has helped incorporate many other new cooperative businesses across Wisconsin. She provides technical assistance statewide to communities interested in organizing new cooperatives. While working to make individual cooperatives successful, she has also focused on developing and promoting cooperative business models that can be used across the country. To further this goal, she has spoken to diverse groups within Wisconsin and nationally, and has published numerous articles.

Prior to joining USDA, Bau was a research fellow with the Humphrey Institute of Public Affairs at the University of Minnesota who examined regional economies and industry clusters in rural Minnesota. She developed an interest in cooperatives while organizing a rural women’s income-generating project as a Peace Corps volunteer in Costa Rica from 1988 to 1992.

The Association of Cooperative Educators (ACE) recognized five other individuals and organizations that have made significant contributions to cooperative education at its Aug. 4 awards banquet. The awards program was a highlight of the ACE Institute, held August 2–5 in San Juan, Puerto Rico.

ACE is an international membership organization that brings together educators and cooperators across cooperative sectors and national boundaries. Additional information about ACE can be found at: http://www.uwcc.wisc.edu/ ace/ace.html.

Birds Eye to sell
frozen-food plants
In order to concentrate more on its higher margin branded lines of frozen foods, Birds Eye Foods Inc. has announced plans to sell most of its non-branded frozen foods business. It will sell or close five food-production facilities during the next 18 months. The plants are located in Brockport, Oakfield and Bergen, N.Y., in Fairwater, Wis., and in Montezuma, Ga. These five facilities employ about 740 full-time workers.

Any facility not sold after its current production season will be closed between October 2006 and June 2007. Birds Eye also announced plans to close a food facility in Watsonville, Calif., which employs 550 workers, at the end of 2006.

Pro-Fac Cooperative Inc. — an agricultural marketing cooperative of about 500 fruit and vegetable growers — has been looking for a way to keep the Bergen and Oakfield operations open. Pro-Fac is a minority owner of Birds Eye, and was the majority owner until a few years ago.

“Any opportunity must be economically beneficial to growers and consider the well-being of the communities where these facilities are located,” said Batavia, N.Y., resident and Pro-Fac Board President Peter Call. “Pro-Fac’s expertise lies in producing raw products, not in operating processing facilities,” Call added. “So a partnership between the cooperative and an operating entity is an option that will be actively pursued.”

Steve Wright, Pro-Fac general manager and CEO, added, “Once these opportunities and business options can be more fully investigated we will communicate additional details to our member/ growers and other stakeholders. We see this as being a ‘fast track’ discovery process.”

Birds Eye Foods is the largest company in the branded frozen vegetable category, but is the only remaining branded manufacturing company having a significant non-branded presence. Birds Eye Foods says it has received a number of unsolicited inquiries about the facilities. The decision to exit the non-branded business will also affect a number of administrative positions in offices in Rochester, N.Y., and Green Bay.

CHS to invest in
Brazilian grain firm
CHS Inc. announced it is investing in a newly created Brazilian grain handling and merchandising company, Multigrain S.A. The new company will be jointly owned with Multigrain Comercio, a Sao Paulo, Brazil-based agricultural commodities business.

“We have continually increased our working partnership with Multigrain ever since opening our own marketing offices in Brazil three years ago,” said John Johnson, CHS president and chief executive officer. “We are excited to formalize our business relationship even further with this knowledgeable and experienced Brazilian agribusiness. Our investment in Multigrain S.A. will bring CHS valuable competitive advantages and a significant opportunity for growth in our South American grain operations.”

Founded in 1998, Multigrain Comercio’s core business is origination of commodities in the central and northern regions of Brazil, the country’s fastest growing agricultural areas. The company has some 390 employees at 18 locations. With a majority focus on exporting soybeans sourced from Brazil cooperatives and producers, Multigrain is also a leading importer of wheat and operates a small flour mill in Jundiai, Brazil.

Canada funding biofuels;
supports role of co-ops
Canada is providing $11 million in initiatives designed to ensure farmers and rural communities have opportunities to participate in and benefit from increased Canadian biofuels production. The Biofuels Opportunities for Producers Initiative (BOPI) provides $10 million this fiscal year to help agricultural producers develop sound business proposals, as well as undertake feasibility or other studies to support the creation and expansion of biofuel production. The industry councils in each province and territory that administer Advancing Canadian Agriculture and Agri-Food (ACAAF) will be invited to deliver this new federal funding.

The government is also supporting biofuels opportunities through a onetime, $1 million addition to the existing Cooperative Development Initiative (CDI). This funding will provide support to individuals, groups and communities wishing to develop cooperatives as a way to take advantage of opportunities associated with biofuels and other value-added activities.

These initiatives flow from the 2006 budget, in which Canada invested an additional $1.5 billion in Canada’s agriculture sector, tripling original commitments to the agriculture sector. Canada is committed to requiring an average of 5 percent renewable fuel content in transport fuel by 2010. AAFC wants to ensure that the 5-percent target is implemented in ways that result in the greatest possible benefit to the agriculture sector, including ownership of biofuels production facilities by agricultural producers.

Co-op leader Elroy Webster dies
Nationally recognized cooperative and agricultural leader Elroy Webster, a Minnesota farmer who helped drive historic joint ventures and mergers of U.S. agricultural cooperatives, died July 18 in Mankato, Minn., at age 72 following a lengthy illness. Webster, of Nicollet, Minn., retired as a director and former chairman of CHS Inc., in 2003 after five decades of involvement in cooperatives on the local, regional, national and global levels. In 1998, he was instrumental in uniting the former Cenex Inc. and Harvest States Cooperatives to form today’s CHS Inc., the nation’s largest cooperative and a Fortune 200 company. Webster also helped lead the 1987 establishment of a landmark joint venture involving the agricultural supply businesses of Cenex and Land O’Lakes, Inc.

“Agriculture, cooperatives and rural America have lost a visionary, an unparalleled leader and a tireless advocate,” said CHS Chairman Michael Toelle. “Elroy Webster clearly stands out as one of the most influential figures in these sectors over the last half century.”

GROWMARK sales, income climb;
record patronage going to members
GROWMARK Inc. had sales of $3.4 billion for the 2005-06 fiscal year, up more than $700 million from the previous year. The co-op had net income of $73.5 million, compared to $73.2 million in 2004-05. “While volume increases in seed and fuels have increased sales, energy price inflation drove much of the increase,” Vice President of Finance Jeff Solberg said.

More than $49 million in patronage and refunds will be returned to GROWMARK member-cooperatives. In addition, a special redemption of preferred stock has been authorized. In total, more than $60 million in cash will be distributed to members. This will be the largest amount of cash returned to members in the history of the GROWMARK System.

The Energy Division had a record year, with 1 billion gallons of refined fuel sold as a result of new supply sources, an expanded customer base and improved distribution. Propane volume in 2006 was hurt by another warm winter, but margins improved, with timely purchasing decisions and good pricerisk management.

The co-op revamped its lubricants business with the acquisition of McCollister & Co., a lubricant-blending facility in Council Bluffs, Iowa, which will now blend the FS line of lubricants. Also acquired were the Archer and United lubricant brands. “The GROWMARK System will now go to market with three quality brands in a greatly expanded geography,” Solberg says.

UPI Inc., the Ontario-based energy company jointly owned by GROWMARK and Suncor Energy Products Inc., is a major fuel supplier in the province. GROWMARK projects a dividend from UPI of $1 million for 2006, according to Solberg.

Plant food experienced a very difficult year, with historically high prices affecting demand and significant price depreciation adversely affecting inventory values. The Seed Division had an excellent year, topping $130 million in sales, an increase of $20 million from last year. “

Organic Valley reaches milestone
With the addition of its 800th organic farmer-member, the Organic Valley/CROPP cooperative now represents 10 percent of the nation’s organic farmers, and 40 percent of the U.S. organic milk supply. Of its 800 members, 600 are dairy farmers. “Our steady growth shows that the marriage of organic agriculture and the cooperative model is a winning formula for family farmers who want to stay on the land, consumers who want delicious organic food and future generations who want a healthy environment,” said George Siemon, CEO and founder of the co-op.

USDA announces $9.4 million
in development loans, grants
Agriculture Secretary Mike Johanns has announced 25 loans and grants totaling more than $9.4 million to assist rural communities and businesses in 11 states. “These funds will help stimulate the economy, support renewable energy, promote business development and improve medical services in rural communities,” said Johanns. “The projects funded will help to create or save an estimated 1,400 jobs, underscoring the Bush administration’s commitment to strengthening our nation’s economy.”

The funds are being provided through USDA Rural Development’s Rural Economic Development loan and grant program. Under the program, Rural Development provides loans and grants to USDA Rural Utilities Program borrowers, usually rural telephone or electrical cooperatives, which in turn provide loans to rural businesses and communities in their service areas. Rural Development will provide $4.1 million in grants and $5.32 million in loans to the successful applicants.

Projects being funded include a $450,000 loan to help construct and operate a farmer-owned, 40-milliongallon fuel-grade ethanol plant in Dunn County, Wis., which will create 35 new jobs. Another $300,000 will be provided to an electric association to provide a loan to Eden Valley, Minn., for construction of a new fire and rescue hall.

A complete list of the loan and grant recipients is available by going to: http://www.rurdev.usda.gov.

Co-ops & renewable energy
theme of Minnesota conference
Development of bioenergy and other renewable energy resources, and the adoption of new environmental management practices, create tremendous opportunities — and challenges — in agriculture. What do these developments mean for new and existing farmer cooperatives? How can cooperatives better position themselves for future success in these key areas?

To explore and promote an understanding of these issues, the 9th annual Farmer Cooperatives Conference has been organized around the theme: Opportunities for Cooperatives:

Renewable Energy and Environmental Management. The conference will be held Nov. 1–2 at the Sheraton/ Minneapolis South in Bloomington, Minn. Conference attendees will hear presentations address such issues as: Updates on the conference and registration information will be posted at: www.uwcc.wisc.edu/farmercoops06.



Johanns, Bodman to address renewable energy conference

Agriculture Secretary Mike Johanns and Energy Secretary Samuel Bodman will be among the speakers at Advancing Renewable Energy: An American Rural Renaissance, a conference to be held Oct. 10-12 at America’s Center in St. Louis. The conference is being hosted by USDA and the U.S. Department of Energy (DOE). The conference is designed to help create and strengthen partnerships and strategies necessary to accelerate commercialization of renewable energy industries and distribution systems, the crux of the President’s Advanced Energy Initiative.

Leaders from government and industry will address renewable energy topics such as Building Supply and Distribution, Encouraging Demand, Adapting and Building Infrastructure and Creating Effective Market Models and Partnerships. Other speakers will include: Vinod Khosla, founder of Khosla Ventures and cofounder of Sun Microsystems; Robert W. Lane, chairman and CEO of Deere and Co.; Patricia A Woertz, president and CEO of Archer Daniels Midland Co.; James R. Woolsey, vice president of Booz Allen Hamilton and former director of the Central Intelligence Agency.

Attendance is open to the public. Anyone involved with renewable energy is encouraged to attend, including transportation, finance and investment officials, other federal and state government officials and elected officials. All attendees must register for the conference, including press, who may attend without charge. Attendees and press can register online at: www.technologyforums.com/6EN/.


Farm Credit System
celebrates 90th

Rural America’s customer-owned financial partner, the Farm Credit System, celebrated its 90th anniversary of service on July 17, the date when President Woodrow Wilson signed the Federal Farm Loan Act in 1916. Today, with more than $106 billion in loans financing agriculture and its related cooperatives, rural homebuyers, small community infrastructure and the export of U.S. farm commodities, the Farm Credit System is the oldest and largest financial cooperative in the nation.

“For 90 years, the Farm Credit System has been rural America’s customer- owned partner, and we look forward to a bright future for U.S. agriculture and America’s rural communities,” said Wayne Lambertson, a Maryland farmer who currently serves as Chairman of the Farm Credit Council, the System’s trade association.

The legislation President Wilson signed into law in 1916 created a system of 12 regional Farm Loan Banks that would grant loans to farm cooperative associations, allowing farmers to borrow from their local institution, using their land and improvements as collateral.

Today, the Farm Credit System is a network of 101 borrower-owned lending institutions and related service organizations serving U.S. agriculture and rural America. These institutions specialize in providing credit and related services to farmers, ranchers and producers or harvesters of aquatic products. In addition, the Farm Credit System provides financing for the processing and marketing activities of these borrowers as well as to rural homeowners, certain farmrelated businesses and agricultural, aquatic and public utility cooperatives.

Unlike commercial banks, Farm Credit institutions do not take deposits. The System raises its funds through the sale of bonds in the nation’s securities markets. As the System’s customer-owners repay their loans, the bonds are retired and Farm Credit investors are repaid. The System’s lending institutions are subject to full examination and regulation by an independent federal agency, the Farm Credit Administration.

“America’s farmers, ranchers and rural communities have benefited greatly from the vision and foresight that went into establishing the customer- owned Farm Credit System,” Lambertson said.



September/October Table of Contents