RuralCoop July/Aug07 draft4 - USDA Rural Development · PDF fileI want to urge you to continue to work aggressively to ... have planted 90.5 million acres of corn this year, 15 percent

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COOPERATIVESCOOPERATIVESUSDA / Rural Development July/August 2007

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USDA / Rural Development July/August 2007

Editor’s note: the following remarks are excerpted from a talkAgriculture Secretary Mike Johanns gave during a reception hostedby the National Council of Farmer Cooperatives at USDAheadquarters in Washington, D.C., in June.

The public’s appetite for renewable energy and thePresident's renewable energy goal are both pulling us to anew era. Today, the market is driving more of the decisionsthat farmers make about what crops they plant. It’s shapingthe choices that your cooperatives are making about how toorganize your businesses and where to invest your equity.

Cooperatives are a vital part of the economic well-being ofrural America. For more than 80 years, you've been deliveringcollective purchasing and marketing power to our farmers,and you have often been the first to see and act on newopportunities, such as renewable energy and the opportunitythat it presents today.

I want to urge you to continue to work aggressively tomake sure your members’ equity is invested wisely and that itremains transparent and that it benefits the future generationsas you have benefited in the past.

We are fortunate today that we have a very strongeconomy. Except for cotton, prices for major commoditycrops are relatively high and in some areas historically high.We are showing great strength in agricultural exports as well.We expect them to top $77 billion this year. This is shapingup to be our fourth record year in a row and the eighthstraight year of growth.

What all this means is that more farmers are working forthemselves, and that’s a good thing. Farmers tell me that’s agood thing. In March, U.S. farmers reported to us that theyhave planted 90.5 million acres of corn this year, 15 percentmore than last year, and the most corn we have seen in theground since 1944. That means we hope for a record crop of12.5 billion bushels in 2007, 2 billion more than last year. Sofarmers are responding to the marketplace, and then some. But we know that to break our dependence on foreign oil, wecan’t solely rely on ethanol from corn. We must also supportthe market as it seeks out alternative feedstocks to meet ourpresent energy needs and the energy needs of the future.That’s why we propose $1.6 billion in new spending for thisyear's Farm Bill to speed up the development and theproduction of renewable fuels.

The focus of our research effort will be relative tocellulosic ethanol, a practical and cost-effective alternativefuel. But we also want to see progress in other areas, includingmaking more use of methane to generate electric power.

I know many dairy cooperatives are already working in thisarea, and I applaud them for their efforts. Part of ourrenewable energy proposal calls for an additional $500 millionin funding for a grant program that funds energy efficiencyand alternative energy projects. This program has alreadyhelped fund more than 90 methane-to-energy projects aroundthis country.

In fact, since 2002, USDA Rural Development hasprovided a total of $37 million to support methane-to-energyprojects. That investment has leveraged more than $122million in other funds.

These types of investments made by USDA, and the typemany of your co-ops are making, will help reduce ourdependence on foreign oil.

We appreciate the great work you do out there forAmerican agriculture. We appreciate all you do, and I lookforward to working with you as your Secretary of Agriculture.

— Mike Johanns, U.S. Secretary of Agriculture ■

C O M M E N T A R Y

Co-ops’ role in renewable energy economy

2 July/August 2007 / Rural Cooperatives

Agriculture Secretary Mike Johanns (left) greets NCFCChairman and CHS Inc. CEO John Johnson and NCFC PresidentJean-Mari Peltier during a co-op reception at USDAheadquarters in Washington, D.C. USDA photo by Alice Welch

Rural Cooperatives / July/August 2007 3

Rural COOPERATIVES (1088-8845) is publishedbimonthly by Rural Business–Cooperative Service,U.S. Department of Agriculture, 1400 IndependenceAve. SW, Stop 0705, Washington, DC. 20250-0705.The Secretary of Agriculture has determined thatpublication of this periodical is necessary in thetransaction of public business required by law of the Department. Periodicals postage paid atWashington, DC. and additional mailing offices.Copies may be obtained from the Superintendent ofDocuments, Government Printing Office, Washington,DC, 20402, at $23 per year. Postmaster: send addresschange to: Rural Cooperatives, USDA/RBS, Stop3255, Wash., DC 20250-3255.

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Unless otherwise stated, contents of this publicationare not copyrighted and may be reprinted freely. Fornoncopyrighted articles, mention of source will beappreciated but is not required.

The U.S. Department of Agriculture (USDA) prohibitsdiscrimination in all its programs and activities onthe basis of race, color, national origin, age, disabili-ty, and where applicable, sex, marital status, familialstatus, parental status, religion, sexual orientation,genetic information, political beliefs, reprisal, orbecause all or part of an individual’s income isderived from any public assistance program. (Not all prohibited bases apply to all programs.) Personswith disabilities who require alternative means forcommunication of program information (Braille,large print, audiotape, etc.) should contact USDA’sTARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA,Director, Office of Civil Rights, 1400 IndependenceAvenue, S.W., Washington, D.C. 20250-9410, or call(800) 795-3272 (voice), or (202) 720-6382 (TDD). USDAis an equal opportunity provider and employer.

Mike Johanns, Secretary of Agriculture

Thomas C. Dorr, Under Secretary,USDA Rural Development

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?Call (202) 720-6483, orFax (202) 720-4641

This publication was printed with vegetable oil-based ink.

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COOPERATIVESCOOPERATIVESJuly/August 2007 Volume 74 Number 4

p. 4

p. 12

p. 18

p. 30

O n t h e C o v e r :

The Southern Plains Cooperative elevator in Greensburg, Kan., wasone of the few structures still standing after the town was hit by a1.7-mile-wide tornado on May 4. See page 4 for a look at how the co-op and town are striving to recover from the tragedy. USDA photo byStephen Thompson

F E A T U R E S

4 Co-op salvages hope amid ruins Southern Plains takes a licking, but keeps on ticking By Stephen Thompson

12 Upstate Niagara Goes Uptown Team effort provides financing for modern, $35 million dairy plant

18 Wired for SuccessBroadband co-op helping southern Virginia attract new information technology jobs

By Dan Campbell

29 Mica, Abernathy, Ditsch named top co-opcommunicators

30 Evolving technology may generate profit frombiodiesel glycerin glutBy Anthony Crooks

D E P A R T M E N T S2 COMMENTARY

15 IN THE SPOTLIGHT17 FOCUS ON.. .22 CO-OP DEVELOPMENT ACTION24 UTILITY CO-OP CONNECTION26 VALUE-ADDED CORNER 33 NEWSLINE38 PAGE FROM THE PAST

Greensburg, Kansas, was a thriving farming town of 1,500 souls prior to May 4. It had aco-op grain elevator, a successful farm equipment dealership, grocery and hardware stores, and just about

everything else a rural community needs to be a good place to live. But after

that day, the town resembled nothing so much as the aftermath of a nuclear blast. A monster of a tornado raged through Greensburg’s pleasant tree-lined streets at 10 p.m., killing

14 people. The tornado’s funnel was 1.7 miles wide, with winds exceeding 200 miles per hour. Itsmashed most of the town to matchsticks, crumpled cars and trucks like soda cans and ripped theleaves, branches and even bark from hundreds of trees. “Rural Cooperatives” visited Greensburg sixweeks after the disaster to see how the recovery was progressing.

“The house shook,the earth shook,and we could hearGreensburgdisappearing...”


By Stephen Thompson,

Assistant editor

[email protected]

e’re still here!” saysDanny McLarty,manager of SouthernPlains Co-op’sGreensburg operation,

when asked how things are going.“We’re serving our customers,” he adds,with pride in his voice.

The May 4 Greensburg mega-tornado did its best to put SouthernPlains, a local grain and farm

supply/service cooperative, out ofbusiness. The co-op lost ten vehicles,including two expensive fertilizerapplicators and its dry fertilizer facility.The twister also destroyed the co-op’sfeed mill and a 60’ x 100’ steelmaintenance shed. Its office buildingwas destroyed, its grain drier shreddedand a retail outlet flattened. One of itssteel buildings was picked up andwrapped around a grove of trees. Onlythe concrete elevator, the truck scaleand the liquid fertilizer facility could besalvaged.

Still, says McLarty, “We were up and

running in a week.”That was good news for co-op

members who were preparing for thewheat harvest when Rural Cooperativesvisited. “In an agricultural community,we’ve got to take care of the growers,”says McLarty. “Because the rest of thecommunity depends on their revenue.”

The cooperative is one of the largestand most important business in thesmall agricultural town of Greensburg.With most of the town having to startagain from scratch, the co-op’scontinued operation may make thedifference between the community’s

“W

Co-opSalvages

Hope AmidRuins

Southern Plains takes a licking, but keeps on ticking


future prosperity or a painful decline.

Employees rise to occasionThe co-op’s resurrection was due in

large part to the efforts of cooperativeemployees, some of whom had losttheir own homes in the storm.

Alan Allison, who runs the elevator,saw his own house and his parents’home destroyed. But soon after thestorm was over, he was at the co-op site,working to contain the damage. Threeother co-op employees also lost theirhouses. Workers from the co-op’s otherfacility, in nearby Lewis, hurried over tohelp without any prompting. Theyworked from 11 p.m. until about 6:30the next morning, and then returnedafter only an hour of rest.

Of immediate concern were leaksfrom anhydrous ammonia and propanegas tanks, which had valves knocked offby flying debris. The propane leak wasdealt with fairly quickly, but the

ammonia leak was another story:workers were unable to get closeenough to effect repairs.

Luckily, the wind was blowing thedangerous gas away from the town.Before they could seal the leak, saysMcLarty, “We just had to wait until thepressure drop froze the ammonia in thetank.”

Co-op workers spent the weekendpicking through the ruins of the office.The roof of the small, one-storybuilding was gone and its wallscollapsed, but the crew was able torecover vital records and someequipment. A portable building wasordered to serve as a temporaryreplacement, and plans to replace thedestroyed facilities were set in motion.

By Wednesday (five days after thestorm), the temporary office buildinghad been installed and the vital truckscale was back in operation. Thesalvaged customer records are now

neatly filed in cardboard boxes. It tookanother day to obtain and set up aportable generator to power theelevator machinery. In the interim, theelevator’s windows and doors — blownout in the storm — had to be replaced,as well as some of its heavy steelinspection hatches that had been suckedaway by the twister. One of the legs, orchutes, of the elevator also needed to bereplaced, having been mangled when anairborne car apparently hit it 120 feetabove the ground.

Once the power was on, the contentsof the bins were turned over to ensureagainst moisture damage. The liquidfertilizer facility, consisting mostly ofwind-resistant steel tanks and pipes, wasquickly restored to working order, aswell.

Merger brought critical resourcesLuck played a part in the facility’s

revival. With the Kansas wheat harvestonly weeks away, the survival of theelevator and the truck scale meant thatthey would be ready to handlemembers’ grain on schedule. Andmember farmers need access to suppliesof liquid fertilizer to avoid damage tothe irrigated corn prevalent in the area.The other facilities aren’t as critical.

Another stroke of good fortune, itturned out, was the decision two yearsbefore to merge the Greensburgcooperative, then called Farmers Grainand Supply Inc., with the larger LewisCooperative, 25 miles away. Boardmember Scott Brown believes theresources made available by the mergermay well make the difference betweenfailure and recovery. “If the mergerhadn’t gone through, it could have beenthe last nail in our coffin,” he declares.

Brown says that the cooperativespirit governs the relationship betweenthe members of the two branches of theco-op. “The merged co-op was run as asingle family from the beginning,” hesays, which removed a potentiallyserious source of conflict. With suchextensive damage and a majority of thedirectors from the other location, theycould have chosen to cut their lossesand shut the damaged facility down.

Co-op Manager Danny McLarty, far right, discusses plans for repairs with employeesin the co-op’s temporary office in Greensburg. Opposite page: Denuded tree trunks areall that remain of what was once a residential neighborhood. USDA photos by StephenThompson


“It would have been easy to just takethe insurance check and moveeverything to Lewis,” says Brown. “Butthe board voted unanimously to replaceand upgrade. There wasn’t anyhesitation.”

Workers from the Lewis branch ofthe co-op have also been a great help ingetting things back together, saysMcLarty. “Whenever things are a littleslow over there, they come over here tosee if there’s anything they can do.”

Co-op president Ron Gruber joinsMcLarty in having nothing but praisefor the efforts of the co-op’s employees.“They really went all out, day andnight, to put us back in business,” hesays. He also praises their suppliers.“They’ve all been excellent. They

deserve a lot of credit for helping us getback on our feet. The companyproviding the replacement chemicalbuilding, for example, usually takeseight to ten weeks to deliver an order.But for us they moved it up to six.”

Gruber is especially complimentaryof the Julian Lumber Co. of Antlers,Okla., which, he says, besides theirresponsiveness to the co-op’s needs,sent up truckloads of fence posts andmade them available free of charge toanyone who needed them. Even someneighboring cooperatives, normallycompetitors, sent help, which Grubersaid is also greatly appreciated.

Long way to goThe work won’t be finished for quite

a while. The office building is alreadyframed and roofed, but it won’t beready for use until about Sept. 1. Thechemical warehouse was scheduled forcompletion July 15, and the dryfertilizer building was scheduled forcompletion by the end of August. Theco-op’s “Crop Shop,” a retail outlet, willnot be completed until sometime nextwinter. The feed mill will not be rebuiltdue to high costs imposed by newbuilding codes.

Some debris still needed to beremoved or salvaged when RuralCooperatives visited the town six weeksafter the storm. Facilities andequipment such as the elevator’s graindrier, destroyed vehicles and dozens ofsmaller, less critical items still needed to

The night the tornado came to Greensburg, Tom Dohertyand his wife took refuge in their basement minutes before ithit. As the wind built up to a deafening shriek, the basementwindows blew open, letting in a blast of rain. “I tried to closethem, but they blew back in my face,” he remembers.

That may have saved their lives, because if the windowshad been closed, the twister’s terrific suction might haveripped away the floor above their heads. As it was, the drop inair pressure was so strong, he says, “It felt like your headwas just going to split!”

When the terrifying roar of the storm tapered off, Doherty,a long-time employee of Farmers Cooperative Co. in nearbyHaviland, looked up to find that the outside entrance to hisbasement had been ripped away. He stuck his head outside tofind most of his house destroyed as well. But he had little timeto think about it: this tornado was so huge — later determinedto be 1.7 miles wide — that it had a calm center, like the eyeof a hurricane. So it wasn’t long before the wind began toblow again as the leeward side of the storm slammed throughtown.

When it was finally over, almost everything Tom Dohertyowned — house, vehicles, and the personal mementos andpossessions accumulated in 62 years of life — had beendestroyed or simply vanished.

Hard rain, wall of blackA few miles west of Greensburg, Southern Plains Coopera-

tive board member Scott Brown was driving toward townwhen he heard the tornado warning on the radio. He pulledover about three-quarters of a mile out of town and peeredthrough the rain and hail hammering his windshield, lookingfor the telltale funnel cloud.

“Everything was just black,” he recalls. “But every nowand then there was a flash of lightning.” The flashes illuminat-

ed what looked like a broadwall of rain passing in front ofhim. Brown thought he waswitnessing only a ratherheavy thunderstorm. In fact,he was looking at the tornadoitself.

After the rain and hail hadended, Brown drove intotown, completely unpreparedfor the devastation he found.“It was the worst ‘rain’ I’dever seen,” he says wryly.

With all electric powergone and a thick layer ofcloud cover, the night waspitch black. An eerie silencehung over the town, as peo-ple began to emerge fromtheir basements and storm

Co-op people weather the storm

Haviland Co-op memberKenny Keen lost his home tothe storm.


shelters. Most were in a state of shock. Says another witness:“It was like one of those zombie movies. People were juststumbling around with this blank look on their faces.”

Doherty tells of one victim who ran up to people pleading forhelp to get his family out of their basement. When rescuershurried to the scene, they found the door to the shelter openedeasily, the interior was intact, and those inside were safe andsound.

Other people sobbed quietly or picked listlessly through therubble. Southern Plains employee Alan Allison remembers thatthe emergency flashers of many of the smashed and crumpledcars were blinking silently, adding to the creepy atmosphere.

Brown picked his way through the rubble to the house of hisfriend Norman Voltz, to find that Voltz and his wife, Bev, hadbeen injured when their house collapsed. Bev was seriouslyhurt; they used duct tape to strap her to a door, put her in theback of a pickup and went looking for one of the ambulancesthey were told was waiting in the center of town.

On the way, they picked up two young men, who helped holdthe injured woman and cleared rubble for the vehicle’s pas-

sage. The ambulance took Mrs. Voltz to a hospital in DodgeCity, 50 miles away. Unfortunately, her injuries were too severe,and she died soon afterward.

Along its 22-mile path of destruction, the tornado took 14lives. But its toll could have been much worse. It hit at about 10p.m. on a Friday night, and most people were home watchingtelevision when the warning sirens sounded, thus receivingplenty of notice that the storm was about to hit and giving themtime to seek shelter. If the tornado had hit earlier in the day,with people out and about, or, especially, later at night, witheverybody sleeping, deaths might have numbered in the hun-dreds.

Heeding the alarmIn his farmhouse several miles north of town, 70-year-old

Kenny Keen, a member of Haviland’s Farmers Cooperative Co.,heard the tornado warnings on TV. He sought refuge with hiswife in the basement at 10:15, after predictions that the tornadowould pass nearby at 10:34. “By 10:34 it wasn’t here,” heremembers. “And every time another minute went by, I’d say‘It’s gonna miss us.’”

After a while, Keen decided it was a false alarm. “I’m gonnago to bed!” he told his wife. But she was more cautious. “Shesaid, ‘Don’t you go up there ‘til 11… wait a minute. My ears arepopping!” He shakes his head. “Then, boom! The roof came off.”

The twister destroyed the house, a horse stable and uproot-

Amid piles of building rubble, traffic again flows through the main road intersection in Greensburg.

continued on page 10

The drop in air pressurewas so severe that it “feltlike your head was justgoing to split!”


be replaced or repaired. Luckily, saysMcLarty, the grain received by the co-op usually has a low moisture contentand doesn’t need drying. Alan Allisonsays salvaging equipment can bediscouraging. “You look at somethingand think, ‘Maybe we can save this.’ Butyou look at it again and, nope, it’s bent.”

Meanwhile, income is down due tolost feed and fuel sales, and grainrevenue has been affected by theinconvenience of making deliveries bytruck through streets often blocked bycleanup efforts. Gruber has beendiscussing the shortfalls with the co-op’s

insurance provider.Some problems are more frustrating

than others, Gruber says. “Theinfrastructure here is just a wreck,” hesays. Water service was finally restoredto the co-op a month and a half afterthe storm, and electrical service was stillpending. Gruber notes that themunicipal power company required theco-op to purchase its own transformer.The electric cooperatives it deals withat other locations supply transformersas part of their service. The co-opwants municipal power so it can reopenits service station, now being rebuilt,

ed or destroyed a number of trees. Keen’s two horses, howev-er, survived unscathed. Three weeks later, as he was saddlingone of the horses, he looked down and spotted a brand-new,$100 bill he had put under his wife’s jewelry box, intended as agift for his grandson’s high-school graduation. “If the horsehadn’t backed up, I’d never have seen it,” he chuckles.

A little closer to town, Southern Plains member Ki Gamble,his wife Kim and their two small children had a stroke of luck.“The house shook, the earth shook and we could hearGreensburg disappearing,” he says. However, their 100-year-old farm house — built with extra reinforcement against highwinds — survived the storm almost intact.

The rest of their durable assets didn’t do so well. Theirgrain bins, outbuildings — including a large barn — two pick-ups, two semi-tractors, two trailers and a bull wagon were alltotaled. Ironically, their combine, which was being serviced intown, survived the devastation. “It’s ugly, but it still runs,”says Gamble.

“This was shaping up to be a good year,” muses Gamble.Corn prices were high, and the wheat crop was looking good.Then came the storm, which not only damaged buildings andequipment, but was part of a weather pattern bringing toomuch rain. The excess moisture has made it difficult cultivatecorn and delayed the wheat harvest, in some cases leading todegradation of the crop.

The tornado also knocked over or destroyed 420 irrigationpivots, each costing about $50,000. Gamble says the one goodthing about the wet weather was that it has kept corn from

suffering from lack of water, giving farmers time to get theirirrigation systems repaired.

Gamble is grateful that he didn’t lose more. “I don’t want toseem like I’m complaining,” he’s quick to say, “especiallywhen some people lost everything.” He also praises the helphe has received from the Kansas Farm Bureau, with which hewas insured.

Helping each otherAround the area, people quickly and generously came to

each other’s aid. About 10 miles east of Greensburg in Haviland, employees

Ki and Kim Gamble lost their barn, outbuildings andequipment, but their 100-year-old house survived the storm.

Co-op peoplecontinued from page 9

Southern Plains President Ron Grubersays neighboring co-ops have beengenerous with their support.


providing a much-needed fuel source tothe community.

Ironically, one of the biggestpotential problems facing thecooperative stems from the rebuildingeffort. Government officials want to usethe opportunity to improve the trafficpattern through the town.Unfortunately, the proposed traffic planwould cause serious difficulties fortrucks using the elevator and truckscales, forcing them to make longdetours and making it difficult for themto make turns entering and exiting thefacility. Gruber has been conferring

with state and local governmentofficials, and is working to make surethe co-op’s needs are accommodated.

The co-op differenceThe decision to rebuild and improve

the Greensburg facility illustrates animportant difference between the ruralcooperative culture and that of manyother businesses. A business run solelyfor the profit of investors, faced withthe same circumstances, might wellhave decided to cut costs by shuttingdown its damaged facility andconsolidating its operations.

Southern Plains instead chose torenew its commitment to a communitythat will need many years to recoverfrom a crippling disaster, because itsdirectors see serving that community aspart of its mission.

That commitment will meanspending about $1 million over andabove the insurance payout, leaving theco-op with a substantial debt. “But thefarmers are still going to be here,” saysBrown. “We knew we’d be serving thesame number of acres we always served.That made the decision easier.”■

of Farmers Coopera-tive Co. jumped intoaction. Some immedi-ately drove to the siteof the disaster to helpany way they could.The manager of theco-op’s newlyacquired service sta-tion opened the facili-ty at midnight, readyto serve any vehiclesthat might need fuel.The co-op also loadedand sent a tankertrunk to Greensburg toprovide fuel for vehi-

cles involved in the rescue effort.A friend of the Keens offered them an empty furnished

house, saying they could stay there as long as they liked.Many others in the area have taken storm victims into theirhomes, in many cases people they’d never met. Local churchgroups have organized much of the aid, offering shelter andfood to whoever needs it, and the Kansas Cooperative Coun-cil set up an emergency aid fund.

Scott Brown owns a real estate and auction business onthe eastern edge of town, in a narrow strip that wasuntouched by the tornado. He’s put in 20 new telephone linesand offered free space to any local business that needs it.Two young children play in his office. They belong to one ofhis employees, who has nowhere else to keep them duringworking hours.

Brown was preparing to move into his “dream house” inGreensburg, bought only days before the storm. “I lost it,” hesays, “but at least I had my other house to go home to.” Thathouse, in a nearby village, is also temporarily sheltering twofamilies put out by the storm.

People in Greensburg are especially complimentary oforganizations such as the Red Cross and Salvation Army,both of which were quickly on the scene and are still provid-ing vital services. And a number of smaller groups haveshowed up to help with the gargantuan cleanup effort, whichwill take many months. Many of their members stand outbecause of the brightly colored tee shirts they wear.

Some doubt that the town can make a full recovery fromthe damage. Brown points out that most of the low-incomehousing won’t be available even after rebuilding, although aUSDA Rural Development-funded multi-family housing facilitysurvived the storm and was repaired with agency funds. “Wemight lose half our population because of that,” he says.“And then, would the grocery store come back?”

Doherty now stays with his son in Bucklin, about 20 milesto the west. He says the co-op he works for “has been won-derful,” with financial and other help. But, he says, “theworst thing is not knowing what I’m going to do.” His wifeworked at the local ALCO variety store, which was destroyedby the storm, and it’s not known if it will be rebuilt.

Worst of all, he says, his house insurance covered onlywhat he owed on the mortgage, and plans to put in a trafficbypass call for his property to be condemned. “I guess I’lljust have to take whatever they’ll give me for it,” he says rue-fully. “I’m starting all over again with nothing. I’m back at 18years old, only I’m 62.■

Alan Allison recalls the eerie sight ofemergency flashers still blinking oncrumpled cars.


hen Upstate Niagara Cooperative Inc.decided in 2004 to build a new dairyprocessing plant to replace its century-oldfacility in Buffalo, N.Y., hundreds of memberdairy farmers and the local community

welcomed the news. Building a larger, more modern dairy plant in West

Seneca, N.Y., about 20 minutes outside of Buffalo, promisedto position the prominent Northeast co-op for greaterproduction and market growth. It would keep one of the co-op’s processing operations in the area, giving local dairies ahome — and added value — for their milk. And it wouldboost the employment base.

But the plant’s estimated $35 million cost meantsignificant capital expansion in costly New York State, posinga “big risk” for the cooperative, says Ed Luongo, UpstateNiagara’s chief financial officer. While the co-op’s 430 dairyproducer-members do a stellar job of producing milk — tothe tune of 1.6 billion pounds annually — they weren’t in aposition to write checks to cover the multi-million-dollarprice tag for the new plant’s construction.

“We needed financial partners who could either lend usthe money or reduce our costs,” Luongo remembers. “Andwe found both.”

Financing partnersChief among Upstate Niagara’s financing partners were

three Farm Credit System institutions: CoBank, which servedas the lead bank, and two Farm Credit associations, FarmCredit of Western New York and First Pioneer Farm Credit.In addition, much of the new plant’s equipment is leasedthrough Farm Credit Leasing, a CoBank subsidiary.

CoBank specializes in financing U.S. agribusinesses(particularly cooperatives), as well as rural communicationsand energy systems and agricultural exports. Although it’sbased in Denver, Colo., CoBank has other offices around thecountry, including the Springfield, Mass., banking center thatworked with Upstate Niagara.

“CoBank really stepped up to the plate and was willing totake the risk with us,” Luongo says.

To help fund the $30 million that Upstate Niagara soughtto borrow, CoBank turned to the two Farm Credit affiliates

W

Upstate Niagara Goes UptownTeam effort provides financing for modern, $35 million dairy plant


with New York branches and decades of experience incapitalizing agricultural businesses. Farm Credit of WesternNew York is based in Batavia, N.Y., about an hour’s drive eastof Buffalo. First Pioneer Farm Credit has nine branch officesin New York State.

The funding partnership among the three reflects agrowing trend in the nationwide, federally chartered FarmCredit System, which has been around since 1916.Increasingly, System members like CoBank are partneringwith other Farm Credit institutions, and even withcommercial banks, to provide the sizable funding that today’sagribusinesses need.

“Some might say that combining three lending institutionson a single transaction might have been easier not to do,”says Tom Cosgrove, the CoBank relationship manager whoworked closely on the Upstate Niagara deal. “But we allworked hard to make it happen.”

To meet Upstate Niagara’s funding need, CoBank lent $20million, with the two Farm Credit affiliates each adding $5million. The resulting $30 million meant Upstate Niagara was onits way to building its new plant. But the co-op didn’t stop there.

Adding tax breaks to the dealBesides borrowing money outright, Upstate Niagara

looked for ways to reduce the costs of its new capitalexpansion. Community support for the plant investmentseemed feasible. After all, not many $35 million projects popup in Western New York. In West Seneca (population about45,000), the Upstate Niagara plant would bolster theemployment base and generate additional property taxes tohelp pay for schools and other public services.

As hoped, Upstate Niagara soon found a cost-savingopportunity through the Erie County IndustrialDevelopment Agency (ECIDA).

ECIDA is the economic development corporation for ErieCounty. The New York State Legislature created the agencyin 1970 to provide economic incentives, such as taxabatements and grants, to private-sector companiesundertaking capital expansion in Erie County. The agency isself-funded; 90 percent of its budget comes from fees.

“Upstate Niagara was considering other sites for its newplant, and we wanted to make Erie County as attractive aspossible,” says ECIDA’s Dave Kerchoff.

“By creating a more efficient facility, we’re a tougher competitor,” says Upstate Niagara’s CFO Ed Luongo (above, right) with Dan Dunn, theplant manager (center) and Lawrence Webster, the co-op's chief operating officer. Opposite page: Dave Tillotson is one of the co-op’s 430dairy producer-members who generate 1.6 billion pounds of milk annually. About 665 million pounds of member milk is processed by UpstateNiagara annually. Photos by Larry Laszlo


Because of Upstate Niagara’s“significant capital investment inWest Seneca,” Kerchoff says,ECIDA provided the co-op witha package of tax incentives andabatements that will save the co-op $6 million over 15 years.

The package included a sales-tax reduction on buildingmaterials and non-processingequipment, such as forklifts andcomputers. A property taxabatement, worth $3.5 million,was also part of the overallpackage.

Upstate Niagara foundanother financing partner in theNew York State Energy Researchand Development Authority. Theagency provided a subsidizedloan to the co-op for installingenergy-saving equipment in theplant.

As promised, UpstateNiagara’s manufacturinginvestment empowered the WestSeneca community, using localvendors and companies to build the plant. The co-op’s oldplant even took on a new life when it was sold as a local carmuseum.

Delivering the goodsSince the new plant produced its first container of yogurt

in May 2006, it has more than met Upstate Niagara’sexpectations. The facility processes 110 million pounds ofraw milk annually, twice the old plant’s capacity. As a result,the co-op has nearly doubled the capacity of its culturedproducts line, jumping from 50 million pounds to 90 millionpounds a year. Sales rose to almost $500 million last year, upby about 9 percent.

“By creating a more efficient facility, we’re a toughercompetitor,” says Luongo.

A post-plant merger with neighboring Niagara MilkCooperative also helped Upstate Farms strengthen its marketposition. Upstate Niagara now ranks among the top 20 U.S.dairy cooperatives.

At 205,000 square feet, the new plant is twice the size ofthe old facility, which stood three stories tall. The newfacility stands only one story tall, but its high ceiling allowsfor “better utilization of space,” Luongo says. In the plant’smodern cooler warehouse, workers can stack five pallets offinished products atop each other to reach 35 feet high.

A computerized inventory system helps with stocking anddistribution of the plant’s 275 products. Trucks can unload330 gallons of milk per minute at two bays. Two robots can

stack 50 cases per minute forshipping. New technology in theplant has allowed the co-op toextend the shelf life of its yogurtproducts from 45 days to 90 days.

The plant’s efficiencies andnewly increased product lines“will pay for the plant over thenext eight years,” says Luongo.

Sold on the plantThat’s good news to co-op

members such as Dan Wolf,chairman of the board of UpstateNiagara. His 300-cow Holsteindairy near Lyons, N.Y., hasproduced milk for the co-op fordecades.

“We decided to moveforward with the new plantbecause we saw an exciting,bright future for our products,”says Wolf. “We also knew that ifyou’re going to grow, you canexpect an increase in debt. Youjust have to concentrate onmaking the business work.”

What sold the project, Wolf says, was a series of meetingswith members to explain the process of building the $35million plant and marketing its new products. “Not onemember voiced opposition to the plan,” he recalls.

The new plant “is performing beyond expectations,” bothfinancially and with the products it creates, says Wolf.

Today, the plant’s 142 employees produce the qualityyogurt, cottage cheese, sour cream and dips that have earnedthe co-op strong brand recognition in the market.

At its three other plants in Niagara Falls, Buffalo andRochester, the co-op processes fluid milk and produces juice,iced tea, lemonade and eggnog. The co-op also owns 86percent of the O-AT-KA processing plant in nearby Batavia.In all, Upstate Niagara markets its dairy products andbeverages to all 50 states under its Upstate Farms, Bison andIntense brands.

As Wolf and Luongo see it, Upstate Niagara’s major plantundertaking proved to be a win-win situation for the co-opand the region it calls home. “By strengthening ourcompetitive position, we’ve helped ensure that jobs stay inwestern New York,” Luongo says. Moreover, he adds, “thenew plant will allow us to capture our next generation ofcustomers.” ■

Editor’s note: This article is an expanded version of one whichoriginally appeared in CoBank’s 2006 annual report. Learn moreabout Upstate Niagara at: www.upstatefarms.com.

Upstate Niagara processesand packages 275 productsand markets its brandedfoods in all 50 states.


im Erickson is directorof corporatecommunications,member relations andpublic affairs at

Southern States Cooperative, a regionalfarm supply and services operationbased in Richmond, Va. Ericksonrecently announced plans to retire,ending a nearly four-decade careerworking with a number of co-opsinvolved in activities ranging from grainand milk marketing to food processingand farm credit. He’s a recipient of theCooperative CommunicatorsAssociation’s Klinefelter Award forcareer achievement.

After his Aug. 31 retirement,Erickson plans to return to the Midwestand will live in the St. Louis, Mo., area.He plans to remain active in thecooperative and agribusiness arenasbecause, as he puts it, “After all theseyears, I can’t imagine walking awayfrom co-ops cold turkey.”.Q. How did you first become aware ofcooperatives and start working withthem?A. A friend from my days of working ata daily newspaper in Illinois called meone day in 1969 to ask if I wasinterested in taking his place as directorof information at Michigan MilkProducers Association (MMPA), a milkmarketing co-op based in the Detroitarea. He was planning to leave, and thepeople there had asked him forrecommendations on a successor. Myresponse was I knew very little aboutdairy farming and nothing about milkmarketing and cooperatives. He said if Iwere interested and willing to learn,

MMPA had great people who wouldteach me whatever I needed and wantedto know. I ultimately took that job andlearned he was absolutely right. JackBarnes and Glenn Lake, then thegeneral manager and board president,respectively, were the best teachers andmentors anyone could ever hope tohave.

Q. What positions have you heldduring your co-op career?A. In addition to member and corporatecommunications, I’ve worked ingovernmental affairs and memberrelations. I’ve had those responsibilitiesat several different types of co-ops –including MMPA, the Farm CreditSystem, what is now CHS, Inc., andSouthern States. As a result, I’velearned a lot more about co-ops andagriculture than I ever would haveimagined growing up as a city kid.Although never part of my formal

responsibilities, the workshops inboard-management relations I’veconducted for co-op directors, businesswriting classes for co-op employees, andmanager seminars on workplacecommunications have been equallyenjoyable.

Q. Why did you choose to devote somuch of your life to working with co-ops?A. That’s easy: the people. First,farmers are absolutely great people towork with. In addition, people whowork with cooperatives and enjoyworking with farmers have a lot incommon. I’ve also enjoyed the mentalchallenge. Agriculture is technology-driven and changes occur regularly.Staying current with all that, along withall the complexities of businessoperations in general, keeps you onyour toes.

J

I N T H E S P O T L I G H T

J im Er icksonSouthern States Cooperative, Richmond, Va.

“An organization earns credibility and the support of stakeholders by how itcommunicates when the times are bad, not when they’re good,” says Jim Erickson(right), checking the inventory at a Southern States co-op store. Photo courtesySouthern States


Q. How have co-ops changed duringyour career and how has thecommunicator’s job adjusted to thosechanges?A. As with most businesses, co-opoperations have become much morecomplex. The pace of those operationsalso has increased considerably, andthere’s much more riding on everydecision made. Those general trendshave affected everyone in cooperativesto a greater or lesser extent. But I can’tthink of anyone whose job has changedmore than the communicator’s.Consider the impact of the personalcomputer on the communicator’s dailywork activities, for example. Myprimary tools for getting the job donemore than 38 years ago were a phoneand an electric typewriter.

The phone still is important but myphone today is linked to my computer.That computer also has software for e-mail, word processing, graphic designand publication layout, photo editing,producing and using visual aids, makingand keeping track of my departmentalbudget, keeping a data base of namesand addresses, and on and on. In short,today’s communicator is much moreproductive because of the technologyavailable. That’s good news when youconsider the greater contributions acommunicator can make to anyorganization. But, depending on thecommunicator’s career goals, it can be amixed blessing. If communicators havethe interest and abilities to take onother management roles, they may findsuch opportunities limited if they’reviewed primarily as “techies.”

Q. What’s your most memorableexperience working for co-ops?A. It’s hard to limit a response to one.Let me list several: Most stressful — Dealing withcommunications, member relations andpublic policy issues associated with thedairy feed contamination disaster thathit the Michigan dairy industry in the1970s. Funniest — The dark, cold Decemberevening in southern Kansas when mycolleague Jim Brownlee and I were

getting what we hoped would bedramatic nighttime farm photos for anintroduction to an audiovisualpresentation. Trying to get the bestangle for a shot of new dairy facilities atthe farm, I jumped from a largeconcrete pad (where cattle were heldbefore milking) into what I thought wasa grassy area. The lights from the newbuilding didn’t enable me to see theground, but I knew it wasn’t more thantwo or three feet down.

I was right about that…but insteadof landing in a grassy area, I went up tomy knees in manure. One of my shoescame off as I struggled to get out and Iopted not to go digging for it. When Ifinally climbed out, Jim and the farmowner took me into the milk house andhosed me off, which wasn’t easy,because they were laughing hystericallyat the time.

The hosing down did a decent jobbut couldn’t remove all the remnants(read, odor) of my plight. In self-defense, Jim had his head out the carwindow in the frigid air during much ofthe 90-mile trip home.Most rewarding – The successSouthern States had last year in gettingthe Kentucky legislature to exemptcooperatives from a new alternativeminimum tax, a levy that eliminated thelong-held principle of taxing co-opearnings only at the member level. Thatimpact on co-ops was an unintendedconsequence of a major tax/budgetpackage, and we were lucky even tospot it in what was a lengthy bill. Hadwe not been successful, the tax wouldhave affected the bottom line andpatronage returns of all co-ops doingbusiness in Kentucky. More importantwas the fact the tax concept easily couldhave spread to other states and affectedmany other co-ops.Most thought-provoking — Meetingand getting well acquainted with thelate Jerry Litton, the U.S. represent-ative from northwest Missouri, whoconvinced me early in my career of thebenefits the FFA organization providesto young people. He was anextraordinary example of those benefits.Had he and his family not been killed in

a plane crash the night he won hisparty’s primary election to run for theU.S. Senate in 1976, I’m convinced heone day would have been a presidentialcandidate. Most challenging — Those involvingmember, employee and news mediacommunications when the co-op isfacing a major issue, especially financialproblems. My personal philosophy isthat an organization earns credibility,and ultimately the support of itsstakeholders, by how it communicateswhen times are bad, not when they’regood.

Q. What is the greatest opportunity co-ops are missing when it comes tocommunications?A. As I just mentioned, anyorganization, including a co-op, canreact in different ways when facing atough problem or issue. One is tobatten down the communicationshatches in the belief that what we don’tsay can’t hurt us. If the problem isfinancial and costs must be cut, anotherreaction is to consider communicationsexpendable. I would argue thatcommunications take on addedimportance and value when the co-ophas problems. Failure to communicatewhen the issue or problem is difficultleaves a vacuum that somethinginevitably will fill. If the organizationdirectly involved — co-op or otherwise— isn’t proactive in its communications,it’s a safe bet that rumors, innuendo andother negative information will fill thevacuum. That’s not only harmful in theshort term, it also chips away at theorganization’s credibility. Longer term,loss of credibility is even more serious.

Q. Any advice for co-op communicatorsthat would help them do their jobbetter?A. Build your own credibility not onlyby communicating in a professionalmanner, but also by learning the ins andouts of the co-op and its members.Communicators are in a uniqueposition to be a “go-to” person in a co-op if they prepare properly for thatrole. ■


F O C U S O N . . .

H igh Deser t Mi lk Inc .Burley, Idaho

hat is High DesertMilk Inc.?High Desert Milk is aproducer-ownedcooperative formed in

2001 by six progressive dairymen whohad a desire to increase the return ontheir milk and create a more stable milkmarket. The co-op owners milk 22,000cows and farm 30,000 acres in Cassiaand Twin Falls counties in southernIdaho. Burley is close to the SnakeRiver, about 150 miles from Boise.Another goal of the co-op owners is tomake Burley a better community inwhich to raise their children andgrandchildren, says co-op PresidentDan Ward, who farms with his father,Glenn Ward.

Profile of a typical member:All co-op members are second-generation farmers and dairyman. Allgraduated from a local high school andreturned to the Burley area to dairyfarm and raise their families. Thelargest co-op owner milks 10,000 cowsand farms 10,000 acres. The smallestowner milks 700 cows and farms 1,000acres.

Major project now before the co-op:Simplot closed a potato processingplant here in 2003, costing the areaabout 700 jobs, and a Kraft plant alsoclosed earlier this year (althoughanother company has since opened asmaller operation in that plant). “Butthis has been making all farmersnervous about their future markets,”says High Desert Milk GeneralManager Karl Nelson. So the co-op isbuilding a new milk plant to help create

a reliable, local market for members’milk. Ground breaking was held June 4for the multi-million-dollar milkprocessing plant at 1033 Idaho Street inBurley. The plant should be completedby April 2008, and will process 2million pounds of milk daily, with anannual output of 65 million pounds ofdried milk. The product will be soldunder the co-op’s own High DesertMilk label. The plant will hire 30workers in its first phase, with more tobe hired as two subsequent phases ofplant expansion are completed on theco-op’s vertically integrated business.

“Because this was considered a

historic day for the dairy industry insouthern Idaho, and even the entirestate, the event was turned into acommunity celebration,” says PresidentDan Ward. Attendees included IdahoGov. C.L. “Butch” Otter, among manyother state and community leaders.Afterwards, United Dairymen of Idahosponsored an old-fashioned ice creamsocial for the entire community.

How is the plant being financed?Owners of High Desert Milk are using

their own money for a 20 percent downpayment, with the balance beingfinanced by Northwest Farm Credit.The co-op has also received grants fromthe state of Idaho.

Overview of co-op operations andmarketing:About 80 percent of High Desert milkwill be marketed domestically, while theother 20 percent will be sold on foreignmarkets. High Desert Milk will operatewith four separate divisions:

• Pharmaceutical and Supplies —will sell supplies needed for dairyand livestock operations.

• Milk Marketing — the co-opmarkets milk to various processingplants in the area.

• Plant Manufacturing and MilkProcessing — the co-op willprocess milk at its own plant, nowunder construction.

• Organic Milk Production andMarketing — Currently, onemember is producing organic milkin one barn, with two more organicbarns under construction.Thousands of acres have beencertified for raising organic feed.

What has been the biggest challengefacing the co-op?“The biggest challenge was deciding tobuild a plant on our own without thehelp of outside investors,” says Ward.“The second main challenge isdeveloping a management team to makeour dreams come true.”

Contact: Karl Nelson, GeneralManager, at: (208) 878-6455, [email protected] ■

W

Plant manager Karl Nelson (left) iscongratulated by Roger Madsen, Idaho’sdirector of labor, at the groundbreaking.


By Dan Campbell, Editor

s David Hudgins looked at the 22 other facesgathered around the conference table,someone said: “Anyone who has a better idea,put it on the table.” The response was deadsilence.

None of the federal, state and local governmentrepresentatives or economic development officers who hadgathered that day seven years ago in Chatham, Va., couldthink of anything more important than building a broadbandnetwork to bring new jobs to southern Virginia. New jobswere desperately needed to help offset a wave of layoffs thathad swept over the largely rural region of Virginia along theNorth Carolina border (often referred to as SouthsideVirginia).

Any doubt that the region was being battered by theeconomic tsunami of globalization had been laid to restduring the three months before the meeting, says Hudgins,director of economic development for Old DominionElectric Cooperative (ODEC). A rash of textile and furnituremanufacturing plant closures had thrown at least 10,000southern Virginians out on the street. And the region’s othermainstay industries — tobacco and coal — were followingtextiles and furniture manufacturing down the slippery slope.

“The whole underpinning of the natural resources-basedeconomy of Southern Virginia was collapsing,” says Hudgins.“Every one of those industries had been dramaticallyimpacted by government action, whether it was anti-tobaccolegislation or trade agreements that hastened the loss of ourtextile and furniture industries. These were the pillars of oureconomy; without them, our whole way of life in southernVirginia was changing.”

Building a backboneThe conclusion reached that day was that the lost

industries were not coming back. The challenge, then, was tospeed the evolution of the region from a resource-basedeconomy to a knowledge-based economy.

“The question was: how could we help Southside Virginiabecome part of the new economy?” says Tad Deriso, now thegeneral manager of the Mid-Atlantic Broadband Cooperativebut at the time a consultant to ODEC. “We needed to showthat we were open and ready for new, technologicallyadvanced business.”

To attract these new industries, it was agreed that theregion must have access to fiber-optic broadband service(although at the time, the talk was of “high-speedconnectivity,” rather than “broadband,” Hudgins recalls).

The Regional Backbone Initiative for Southside Virginiawas launched as a marketing effort to “re-brand” southernVirginia to the business community.

But as is often the case in rural America, the big telecomsweren’t interested in the high overhead cost and relativelysmall profits that would be generated from building abroadband network to serve a low-density rural region. Theywere not of a mind to “build it and see if they would come.”

So Old Dominion Electric Cooperative, a generating andtransmission co-op headquartered in Glen Allen, Va., tookthe lead role in the effort, first pursuing it as a for-profitsubsidiary of the co-op. “But then the telecom market fellapart,” says Hudgins. So the effort shifted to Richmond and aproposal to create a Rural Broadband Authority. But thatdrew protest from the telecom industry, and the effort failedin the state’s General Assembly.

It was then that Hudgins started thinking co-op, and hesoon got the support of ODEC’s CEO Jack Reasor and the

A

Wired fo r SuccessBroadband co-op helping southern Virginia

attract new information technology jobs


senior management team to pursue creation of a broadbandcooperative. “It seemed that a bottom-up, grassroots co-opwould be the only way to cut across the rivalries of workingwith all of these local political jurisdictions: 20 counties, fourcities and two towns,” he says.

ODEC gave Hudgins approval to have its attorneys startworking up the legal papers needed to set up an independentbroadband co-op. In November 2003, the Mid-AtlanticBroadband Cooperative (MBC) was born, with offices inDanville and Richmond. Hudgins now serves as vicechairman.

“ODEC got the various partners involved and convincedthem of the feasibility and necessity for it,” says Deriso.“They said ‘you must put aside your petty politicaldifferences and work together in this co-op if you want to getit done.’ They got everyone looking at the big picture,realizing that now was the time to get it built. Otherwise, wewould all still be squabbling for the next 10 years and would

never be able to dig ourselves out of this economic hole.”

Co-op builds 700-mile networkThe goal for the new co-op was to build 700 miles of

broadband cable through southern Virginia, providing serviceto businesses that need a large amount of bandwidth andwhich create a lot of jobs. “With Tad Deriso’s guidance andcommitment, we installed a 144-fiber, world-class fiber-opticcable,” says Hudgins. “The core is OC-192 capable, withredundancy and self-healing rings and with all Nortel carrier-grade electronics.”

As a broadband wholesaler, MBC’s membership isprimarily made up of telecom and Internet service providersand phone co-ops. These members, in turn, serve the retailbroadband business market.

“The users are the type of companies that often hire

hundreds of people and are willing to spend $800 to $1,000per month for service,” Hudgins says. The network was notdesigned for residential or very small businesses.

“As a co-op, our telecom members will share in oursuccess in the form of capital credits,” Deriso says. But theconcept of a co-op drew funny looks at first from some of thelarger businesses approached about becoming members.

“New York attorneys would say, ‘what the heck is a co-op?’Deriso recalls. “So we talked about becoming a member andhow you paid a one-time, $500 membership fee [for a Class Amembership; there are four other classes of membershiprequiring higher fees] and about capital credits. ‘What’s thecatch?’ they asked. We told them there was no catch, andexplained how a co-op has a different mindset than a for-profit company — how we’re not trying to make millions ofdollars for stockholders, but rather to serve our members,create jobs and boost the region’s economy.”

Today, MBC has more than 30 private-sector telecomproviders as members and has been adding an average of twomembers per month since the network went into operationlast October. These members range from large, internationalbusinesses, such as Hibernia Atlantic (a Dublin, Ireland-basedfirm that provides European and U.S. customers with direct,trans-Atlantic connectivity and support services) to relativelysmall, local Internet service providers.

Financing the co-opRaising the money to launch the network proved

challenging, although ultimately MBC got the spark itneeded via a $6 million grant from the U.S. Department ofCommerce’s Economic Development Administration (EDA).Hudgins felt he was getting nowhere at first with EDA, butone of its directors eventually handed him three or four pagesof questions about the project, telling Hudgins to “go doyour homework, then come back and see me.”

Hudgins soon answered every question, describing boththe need and the practicality of the proposed broadband co-op. That was the turning point, and EDA awarded the co-opthe $6 million grant, which was soon matched by the VirginiaTobacco Commission (VTC). The Commission, whichawards funds received from tobacco litigation for economicstimulus projects, eventually invested $34 million in the co-op. Hudgins says leadership came from State Senator andVTC Chairman Charles Hawkins and State Delegate ClarkHogan, chairman of the VTC technology committee.

The network was built on time and under budget, using acontractor (the co-op itself operates with only threeemployees). Hudgins says the co-op is on track to beginbreaking even in the spring of 2008, and is expanding thenetwork with new laterals. “It’s a mile here, three miles there– like a spider web that just keeps growing incrementally,”says Hudgins.

Long-haul cable routes are also being built, connectingsouthern Virginia to Atlanta, D.C. and the HamptonRoads/Norfolk area. “Those aren’t rural markets. But from

an economic development perspective, it allows us toprovision circuits from major research and development hubsand connect them with Southside Virginia,” says Hudgins.

“Our customers can now open an office in SouthsideVirginia — with its lower taxes, affordable housing and amotivated workforce — and still connect to a broadbandnetwork as good or better as they would get in metro-D.C.or most other metro areas, and using Infiniria” says Deriso.

New businesses openingThere are signs that the strategy is working. In Russell

County, two new data centers have opened, representinginvestment in excess of $23 million and 300 jobs. NorthropGrumman Corp. is building a backup data center in theRussell County community of Lebanon, a $30 million projectthat will create about 433 jobs. “Overall, that’s a combinedinvestment of more than $50 million and more than 700 jobscreated,” notes Hudgins.

Larry Carr, executive director with Cumberland PlateauCo., a nonprofit dedicated to business and economicdevelopment in southwest Virginia, says broadbandavailability was essential to attracting Northrop Grummanand CGI, a software engineering firm with 375 jobs. “Therewould have been no way to attract businesses like thatwithout broadband,” he says.

Lebanon has traditionally been dependent on the coalindustry and manufacturing jobs associated with coal. Andwhile the coal industry has made something of a comebackthere in recent years, it still creates far fewer jobs than in thepast. Carr says five Fortune 500 companies will now havefacilities in the town, and the new, Southwest TechnologicalDevelopment Center is also being established in arefurbished strip mall, where it will be used by several highereducation institutions to help train software engineers.

The furniture industry has even bounced back a bit, with anew 2-million-square-foot Ikea furniture manufacturing plantbeing built in Danville, the first such plant built in theUnited States for the giant Swedish furniture maker/retailer.

In South Boston, Va., Lindstrand Industries has opened aplant that makes helium dirigibles and military surveillanceequipment under contract to the Department of Defense.

Before the development of a broadband backbone insouthern Virginia, “we weren’t even getting a second lookfrom business,” says Neal Noyes, an EDA director who notonly helped secure the initial grant for MBC, but also helpeddirect a previous $1.5 million grant to develop broadband insouthwest Virginia and who has supported many otherinvestments for industrial parks and utilities in the region.

Promoting distance learningThe new broadband backbone also links to educational

institutions, making distance learning more readily availableto support both higher education endeavors and the needs ofindustry. Even doctoral and masters degrees can now bepursued via distance learning without leaving southern

Virginia, Noyes says. “There is nothing more important than workforce

initiatives that build the skills and knowledge workers need tocompete on a level field with metro areas,” he says. Noyescredits Virginia Tech for providing research on theimportance of broadband for economic diversification of theregion, and for technical guidance in how to get it done.

“Connectivity is an essential part of the long-termstrategy for the economic revitalization of southern Virginia,”

says Noyes, a member of the Virginia Tobacco Commission.The new jobs coming to the region “would not have beenpossible absent very-high capacity, redundant broadband,” hesays, citing the example of Holston Medical Group, whichperforms record management for hospitals and clinics, and isbuilding a facility in Duffield in Scott County.

While the network was not built to serve the residentialmarket, some large new residential developments are tappinginto it. Just outside South Boston, the first 18 units of aplanned, 100-unit, “smart-wired” town home developmenthave been built by general contractor John Cannon. Eachhome has state-of-the-art broadband service that willespecially appeal to anyone who wants to work out of a homeoffice, Cannon says.

With gasoline prices soaring and the roads in many majorcities facing rush-hour gridlock, Cannon believes the “homesourcing” movement is going to grow rapidly in the yearsahead. For example, he points to a major U.S. airline thatnow allows all of its reservation clerks to work out of theirhomes.

Cannon worked with MBC and his local Internet serviceprovider, Gamewood in Danville, to bring high-speedconnectivity to his Edgewood Town Homes development.The work paid off, and each of his town homes boasts CAT-5E telephone cable (going in and out), as well as RG-6coaxial cable to each outlet, all of which are connected to asmart-wire panel, and from there to the MBC fiber-opticcable.

The monthly homeowner’s association dues include 1megabit of service, which Cannon says is more than enoughfor most people. But for an extra fee they can increase theircapacity as much as they want.


“MBC is the type of partner rural Virginia needs tocompete in the 21st century.” Cannon says.

Fast train to ClarksvilleHopes were also high as of this writing (in late June) that

Clarksville, Va., will be selected this summer for a $600million data center to be operated by Electronic DataSystems (EDS), of Plano, Texas, which provides data servicesto the federal government. The facility would create 125 jobs

in the next two years. “The EDS guys from Northern Virginia didn’t even know

where Clarksville was, but when they saw the plant site, theyloved it,” Hudgins says. However, EDS said it had to have afiber-optic connection, and made plans for a formal siteinspection two months later.

So the race was on to get it connected. One major telecomfirm was contacted, but it required a two-year servicecontract and wanted money up front to extend fiber into theClarksville facility, Hudgins recalls. “So the contractor cameto us, and 37 days later we had a mile and half of fiber builtfrom our closest access point to the plant,” Hudgins says.“That included getting railroad crossing permits, which alonecan normally take six months. We got them 10 megabits ofEthernet access in 37 days. We blew their socks off!”

The broadband connection is just one of many reasonsClarksville is being considered by EDS, Hudgins stresses.The Commonwealth of Virginia, Virginia TobaccoCommission, Mecklenburg County and the Town ofClarksville have gone all out to offer a plethora of incentives,and Mecklenburg Electric Co-op, with the cooperation ofDominion Virginia Power, will provide a direct feed from apower station. This is needed so that in the event of acatastrophic, total power grid failure, the EDS facility isguaranteed to have power.

Concept spreadingThe broadband concept is spreading to Maryland, where

another broadband co-op is being formed. MBC was recentlycontacted by a group in southern Ohio interested in forminga broadband co-op.

No surprise then that Deriso says he is more convincedthan ever that the co-op business model is ideal for bringingbroadband to rural America. “At the end of the day, the co-op model fit us best because of the co-op principles of localownership and having concern for your community. It is allabout bringing a metro pricing structure to rural areas tolevel the playing field between metro and rural.”

“I don’t see any other way for rural America to survive in aglobal economy,” adds Hudgins.

Looking back over the seven years of work to make thebroadband co-op a reality, Deriso says he is glad he jumpedwhen offered the chance to manage the co-op. “To take anidea from the concept stage to a business plan, and then get itbuilt and to make it work – and to be held accountable if itdoesn’t work – that’s fun,” Deriso says, crediting Hudgins asthe “guy who made it all happen.”

The biggest frustration has been “dealing with thepolitics – local, state and federal,” Hudgins says. And therehave been many headaches over who gets to claim credit forwhat. “As they say, failure is an orphan, but success has manymothers.”

His experiences working to make southern Virginia moreeconomically viable have also brought home to Hudgins theneed for a clearer national broadband policy and strategy, anda commitment to invest more in it.

“Korea is the most wired country in the world. We rank18th in the world for broadband penetration, and we aredropping another spot or two every year,” Hudgins says witha note of chagrin in his voice.

“To make this project happen took a combined effort atevery level of government, the private sector and educationalinstitutions. Fiber is the way to get your economy movingforward. But too many old-style politicians still just don’t getthat globalization is here and it is very real. There is no goingback to the good old days of doing business with the sametools and strategies and hope it all works out. Failure issimply not an option.” ■


“We got them 10megabits of Ethernetaccess in 37 days. Weblew their socks off!”

The availability of broadband service helped Clarksville, Va.,become a finalist for a $600 million data center. Seen here at thefacility in Clarksville are MBC General Manager Tad Deriso (left)and David Hudgins of Old Dominion Electric Cooperative. Photoby Valerie Garrison


By Jane Livingston,

CooperationWorks!

he last supermarket moved out of the city ofChester, Pa., 16 years ago, after industrialflight led to a decline in the town’sprosperity. That means residents have had totravel, often by public transportation, to find

the food they want. Even then, the best quality, locallyproduced food is often out of their price range.

In 2006, a group of Chester residents who had lived,worked, worshipped and volunteered alongside one anotherfor many years decided toaddress the situation byforming a steeringcommittee to createChester's CommunityGrocery Co-op.

From the outset, thisgroup was dedicated toproviding food at fair prices,with a strong focus onlinking food to health andcatering to the needs andtastes of communitymembers, four-fifths ofwhom are AfricanAmerican. In addition toopening a grocery store,plans include establishing abusiness incubator-demonstration kitchen andspace for other community-support endeavors.

The project was already under way when Chester nativeTina Johnson attended a Sustainable Business Networkmeeting, where she met Kate Smith, executive director of theKeystone Development Center (KDC).

"Meeting Kate was like finding a goldmine because sheprovided us with insights into the co-op development processthat were essential for us to set the tone and pace we wantedto move our efforts in," Johnson says.

KDC's Smith elaborates: "Our work with the Chester co-

op is part of an overall market development effort toaggregate the 'local eaters' for the local farmers and foodprocessors." Cooperative specialists helped the Chestersteering committee learn how to develop a successfulconsumer-owned cooperative enterprise, assisting them withstrategic planning, marketing and feasibility studies, businessplan development and obtaining funding.

Co-op expanding inventoryThe co-op incorporated and has 170 members, who have

each paid $250 to join ($200 is refundable if they leave theco-op). Local produce isbeing sold twice a week at amid-city, outdoor marketsite. The co-op plans toexpand its inventory thissummer to include otherlocally produced items,such as bakery products. Under the direction of anewly elected board, theco-op is negotiating for astore site and organizing anequity drive. The goal is toopen a full-service, 8,000-10,000 square-footsupermarket by the end ofthe year.

Johnsonemphasizes that the co-opoffers area producers whatthey most need to move

away from selling primarily to the wealthiest consumers atthe highest prices they can get: the security of numbers."They have to pull in the needs of the urban communities tocreate a sustainable system," she says, but admits this is adifficult conversation to have. "We want to support ourfamily farmers, they are the linchpin in the sustainable foodnetwork model."

Johnson, who spoke at last year's Farm Aid gathering,acknowledges that family farmers are faced with enormouschallenges as commercial agricultural operations continue to

Future o f Loca l Food

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C O - O P D E V E L O P M E N T A C T I O N

The Chester Community Grocery Co-op is holding twice-weekly outdoor markets while its board works to establish thefirst full-service grocery store in Chester in 16 years.


Street Sense wasn't the only winner at the 133rd Ken-tucky Derby this year. When Chef Gil Logan, official catererto Churchill Downs, was asked what he would be servingQueen Elizabeth when she attended the nation's mostfamous horse race, he replied, "The Queen has requestedan authentic Derby menu, which means she will enjoy manyof the same foods as everyone else… The beef will be fromthe Green River Cattle Co. [along with] all the other greatlocal and organic Kentucky Proud products that are farmraised."

Despite this majesticmoment, Green River Cat-tle Co. (GRCC) co-ownerDavid Givens marks 2006,not 2007, as the turningpoint in the life of thissmall LLC which operateson cooperative principles.That's the year GRCCstarted working with theKentucky Center for Agri-cultural and Rural Devel-opment (KCARD).

"Working with KCARDhas been a wonderfulexperience," Givenssays. The six-year-oldcompany, owned by asmall group of beef andtobacco farmers lookingfor alternatives to tobac-co production, was floundering when Givens had a chanceencounter with KCARD's Larry Snell.

Going the distanceA couple of years prior to this, GRCC had undertaken a

marketing study that indicated they should develop a brandaround locally grown and finished beef products. But asthey moved toward this goal, they found themselves ham-pered by a lack of staff as well as other resources. The

pressures of — and changes within —their industry wereenormous. Tensions within the group, and constant chal-lenges from without, threatened its future.

By the summer of 2005, "The train was coming into thestation and it was time for the people who wanted to get offto take the opportunity,” Givens says. “So they did, and wehad new members come on board." This transition infusedthe group with new energy and optimism. Shortly after that,Givens and Snell met.

As a result of their meeting, KCARD conducted a busi-ness management andoperations audit for theproducers. Brent Lack-ey recalls, "We workedwith the owners andmanagement for twoweeks and made sever-al recommendations,most of them centeredon the co-op's need formore planning, espe-cially with respect tomarketing."

In addition, KCARDhelped GRCC's man-agers create threeteams to address costreductions, marketingimprovements andpricing strategy. Lack-ey says the new mar-

keting strategy will increase the value of their co-op’s beefby 20 percent.

Followthrough has included helping GRCC forge relation-ships with the likes of Foothills Country Meats and AlliedFood Marketer. The latter is a connection that led them allthe way to the winner's circle at Churchill Downs. (Formore on this story see Kara Keeton's article in The Farmer’sPride, May 16, 2007.) ■

Kentucky co-op feeds the Queen

grow ever larger. Yet, as the demand for natural and organicfoods keeps racing up the charts, so does the price for thefood itself.

That is not the way to develop and maintain sustainablefood systems. It's not the way supply and demand is supposedto work, she gently points out.

"The farmers need to know we think their commodity isvaluable, but it can't be out of reach or they'll never create asustainable food network," she says. "I may buy an heirloom

tomato once for nine dollars, but I won't go back to thatvendor."

But by forming a consumers' cooperative, Johnsonexplains, "We can create the market. We can create the linesof distribution. We can even come to pick up the food fromthe farm. I know that farmers' time is so expensive. But thefarmers also need to integrate our efforts – to bring localfood into the city at fair prices – into their farm operations."■

When Britain’s Queen Elizabeth II attended the Kentucky Derby thisyear, she was served beef supplied by Green River Cattle Co., aproducer-owned LLC. Flanked by the famous steeples of ChurchillDowns, Chef Gil Logan (right) meets with the beef producers.

By Anne Mayberry

USDA Rural DevelopmentUtilities Programs [email protected]

ombine four partsleftover wood scrapswith one part chickenlitter, add equipmentand chemistry, and you

have one of the most innovative sourcesof alternative energy in the nation.

That’s the idea behind Plant Carl,which will convert poultry litter andwood waste into electricity.Construction on Plant Carl is scheduledto begin this summer, with the help of a$28 million loan from USDA RuralDevelopment’s Utilities Program officeto Earth Resources Inc., located nearCarnesville, Ga. Designed to generateclean energy by converting poultrylitter and woody biomass intoelectricity, the plant is viewed as apotential state-of-the art model that canbe duplicated in other areas.

Plant Carl is named in memory ofCarl Dinsmore of Dinsmore Grading, asite development company that hasworked with Georgia Power andAtlanta Gas Light on projects in Northand South Carolina and Alabama.

“We want to be part of Plant Carl’sexciting and unique concept,” says JimAndrew, administrator of USDA’s RuralDevelopment Utilities Programs,which is providing the loan for the newfacility.

Andrew says funding morerenewable energy projects is a majorgoal of USDA. “The impact of climate

change, the price of oil and the cost ofbuilding new plants to meet thegrowing demands for electricity meanthat alternative sources of energy show

great promise. If these new sources ofpower can help meet our power needswhile making contributions to clean upthe environment, we want to see these


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U T I L I T Y C O - O P C O N N E C T I O N

Georg ia a l te rnat ive energy p lantto be fue led by wood & pou l t ry waste

“There is plenty of fuel for this plant, with more than 3,600 poultry houses withina 20-mile radius of the site. Plant Carl will require litter from only one-half ofthose,” says Michael Whiteside, president of Green Power EMC and CEO ofCowetta-Fayette EMC. Photo courtesy Cowetta Fayette EMC


operations expand to other places.”The fact that Plant Carl is

generating interest is in part because itdeviates from traditional sources ofpower generation. It supports PresidentGeorge W. Bush’s renewable energyinitiatives, meeting new policies offinding alternatives to fossil fuels.

Georgia EMCs support projectThe support of Georgia’s rural

electric cooperatives and the growth ofits poultry industry have also been key

factors that have helped Plant Carlmove from a pilot project five years agoto where it is today.

Michael Whiteside is president ofGeorgia’s first renewable energyprogram, Green Power ElectricMembership Corporation (EMC), andpresident and CEO of Cowetta-FayetteEMC, an electric cooperative utilitythat has been serving members since1945, and one of the participants inGreen Power. Georgia’s rural electriccooperative utilities are interested inPlant Carl.

“Green Power EMC supportsdevelopment of renewables,” Whitesidesays. “Because forecasts anticipate thatour energy requirements will doubleover the next 12 years, renewables areexpected to play a small part in ourenergy portfolio. The good news is thatthere is plenty of fuel for this plant,

with over 3,600 poultry houses within a20-mile radius of the site. Plant Carlwill require litter from only one-half ofthose. Hopefully, we will be a partner inreplicating similar plants acrossGeorgia.”

Besides supplying 20 megawatts ofelectrical power, Plant Carl willmitigate the impact of poultry farms onthe environment. “Plant Carl is a goodaddition to Green Power,” Whitesidesays.

Billy Jones, operations manager for

Plant Carl, emphasized that extensiveenvironmental review was among therequirements he and plant ownerCharles “Sonny” Dinsmore (Carl’s son)had to meet to qualify for the loan fromUSDA. Other requirements includedprivate equity capital to support theoperations, use of commercialtechnologies and a viable businessmodel to support the servicing of theloan.

Meeting growing demandGeorgia EMCs became aware of the

pilot project and liked what it saw,according to Jones. “They knew energywas there, and they knew they wouldneed to act to meet growing demands.More homes are being built in Georgia.Rural electric cooperatives wanted toentertain the use of renewables, so theywill purchase power for 20 years.” Not

only did the rural electric cooperativeutilities show strong interest inrenewable energy, but recommendedfederal financing, Jones notes.

“It was through the EMCs that welearned about USDA RuralDevelopment’s long-term financingprocess,” says Jones. “Have you evertried to get a loan for nearly $30million? It’s breathtaking.” Jones creditsRural Development Utilities Programsexpertise with “guiding us through thedetailed process.”

Plant operations will benefit thepoultry industry. “This year, Georgia isexperiencing the longest drought everrecorded,” Jones says. “Under theseconditions, chicken litter will burn land.Several years ago we had too much rain,and the runoff from the rain presentsother environmental challenges.” Use

of woody biomass will keep additionaldebris from moving to Georgia’slandfills.

Chicken production is a $17billion industry, currently growing at 3percent. This growth explains thereaction from the community to PlantCarl. “We have the support of thecommunity — this is chicken country,”Jones says. “About 90 percent of thepeople in this area are in the chickenbusiness. They’re looking at the longterm. Plant Carl is an advantage.”■

Electrical plants in Georgia (above)and Kansas are being disassembledand moved to Carnesville, Ga., wherethe parts will be used to build PlantCarl. Photo by Billy Jones

Poultry wastes will be one of the primary fuels used in Plant Carl. USDA Photo


V A L U E - A D D E D C O R N E R

O l ive O i l Counc i l expanding marketswi th he lp o f VAPG

By Anne Todd,

USDA Rural Development

[email protected]

Editor’s note: For more information aboutthe Value-Added Producer Grant program,visit the USDA Rural Development Website: http://www.rurdev.usda.gov/.

he olive first arrived inCalifornia in the late1700s when Spanishmissionaries settled in

21 areas between San Diego andSonoma, planting olive trees at eachlocation. By the mid 1800s, the olive oilindustry in California was thriving.

The industry stalled, however, andstruggled to right itself throughoutmost of the 20th century. It was onlyrecently that a new generation ofhealth-conscious Americansrediscovered the flavor and benefits ofolive oil. Many older olive orchardshave been rejuvenated and neworchards are again being planted,signaling a rebirth of the Californiaolive oil industry.

Today, the California industry isagain a vital part of the global olive oilarena. California oils are produced froma large number of olive varieties, using

a wide range of methods: fromtraditional, labor-intensive hand-harvesting to new methods that rely onhighly mechanized harvesting.

Olive producers in CentralCalifornia are using new techniquesthat help control production costs,improving their ability to compete inthe global marketplace. Some growersare planting “super high-density”orchards, in which trees are plantedcloser to one another and heavilypruned. Mechanized harvesting cuts thecosts of labor. Because more trees areplanted on less acreage than wastraditionally required, the land costs arealso reduced.

VAPG helps expand demand The California Olive Oil Council

(COOC) is using a $241,000 Value-Added Producer Grant for marketingactivities that will increase demand forthis healthy food. Value-AddedProducer Grants (or VAPG) areawarded annually by USDA RuralDevelopment to eligible cooperativesand other agricultural organizations andindividual producers for use in planningactivities and for working capital to helpmarket value-added products madefrom crops or livestock they raise.

“The funds we received from USDARural Development have been great forour growers,” says COOC ExecutiveDirector Patricia Darragh. “We havebeen able to put forth a comprehensivemarketing campaign, something wewould not have been able to accomplishwithout the VAPG.”

The mission of COOC, a nonprofittrade and marketing associationfounded in 1992, is to promote growingolives and the production of olive oil inCalifornia. It provides education togrowers, producers and consumers.

The Council takes part in meetingsand trade events that focus oneverything from marketing olive oil tomanaging orchards. Membership isextended to all olive oil producers whoagree to abide by COOC’s quality andlabeling standards, regardless of the sizeof their operation or amount of sales.

Web site key to marketing effort Thanks to the grant and matching

funds provided by COOC, the Councilhas been able to completely redesign itsWeb site to better meet the needs of itsmembers, consumers and retailers. Forconsumers, the site contains all-newinformation about the health benefits ofolive oil in their diet, recipes and lists

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California olive trees are producing fruit for olive oil that now equals the quality of European olive oils. Photos courtesy Gail Della Nina

retail outlets that sell olive oil. It alsoprovides locations where groups cantaste different varieties and tour olive

groves and mills. For producers, the site has contact

information for California growers,comprehensive resources to help themas they cultivate their crop, informationabout COOC’s certification standardsand a secure site for members thatprovides access to exclusive marketingopportunities and other members-onlyinformation. The redesigned site nowdraws 5,000 to 6,000 visitors eachmonth.

COOC also has produced newpromotional materials, including aneducational DVD (it comes in 10-minute and three-minute versions),which members can use at trade showsor while meeting with retailers.

The grant has also allowed COOCto take part in more trade events toshowcase the California industry and itsmembers’ products. These include theNational Association for the SpecialtyFood Trade (NASFT) Specialty FoodShow in Chicago and the South BeachWine and Food Festival in Miami. Themost recent Miami trade show markedthe first time the Council staff had beenable to tap into the southeasternmarket. As a result, COOC had anopportunity to market California oliveoils to major industry leaders. During

the three-day Miami event, COOC hadabout 3,000 visitors to its booth.

On par with Europe’s finestCOOC supports certified olive oil

standards and administers a certifiedquality control program that exceedsthe strict international standards forextra virgin olive oil. Under COOC’sseal-certification requirements, olive oilsmust:

• Be mechanically extracted withoutchemicals or excessive heat;

• Contain less than one-half percentfree eleic acid;

• Contain positive taste elements andno taste defects, as determined duringa blind tasting. Through the seal-certification

program, Darragh says COOC helpseveryone, from home cooks toprofessional chefs, find guaranteedextra virgin olive oils for their kitchens.

U.S. olive industry expandingNinety-nine percent of the olive oil

produced in the United States comesfrom California, and 10,000 acres ofCalifornia farmland is dedicated to olivegroves. Currently, less than half of thatacreage is in production, the mainreason being that trees require aboutthree years to mature and bear viablefruit. However, over the next couple ofyears, more and more acreage isexpected to go into production. By2008, it is estimated that U.S. olive oilproduction will outpace that of France.

Domestic sales of olive oil haveincreased well over 20 percent each yearfor the last five years. In addition to theguaranteed quality of olive oil producedby COOC members/growers and thevarieties available, another key benefitfor consumers is its freshness. COOCgrowers can bring olive oils to U.S.customers immediately after harvest, atthe peak of freshness. For these reasons,the popularity of California olive oiland growth in sales is expected tocontinue.

This fall, COOC will beparticipating in many more events topromote the benefits of California olive


oil. For instance, in September COOCwill take part in a tasting seminar inSacramento. In October COOCrepresentatives will attend the SanDiego Chefs Association conference.

Although COOC is a smallorganization in terms of the size of itssupport staff, its mission is large.

COOC represents more than 200growers/producers and, includingsupporting members, has more than350 members, and membership isgrowing.

The Council plans to pursue asecond VAPG in hope of furtherboosting the industry through

marketing.To learn more about the Council’s

mission and activities, visit:http://www.cooc.com, or e-mail:[email protected]. The Council canalso be contacted at: (888) 718-9830.■

Gail Della Nina and her husband Don wanted to getaway from the stresses of urban life and live in a rural area.So, in 1984, they bought a small farm and relocated toByron, Calif., known for its famous hot springs and resort.Although Don’s family is involved in agricultural production,neither he nor Gail had any direct farming experience whenthey started out.

Working with a local crop advisor and staff at the Uni-

versity of California at Davis, their farm beganto take shape. Because their soil had high lev-els of boron, they were encouraged to grow alfalfa to helpreplenish the soil with needed nutrients. They producedalfalfa for their first five years on the farm.

In 2003, because of low yields, it was clear that the alfal-fa’s development cycle had waned, and it was time to starta new crop. Gail and Don knew that olive trees fared well inthe region and were suited to their farm’s boron-rich soil.Don’s Italian-American heritage also influenced their deci-sion to grow olives.

Support and guidance from then-COOC Board PresidentBruce Golino helped the Della Ninas kick-start their opera-tion. Golino, owner of the Santa Cruz Olive Tree nursery inWatsonville, introduced them to olive production tech-niques and helped them acquire starter trees. Gail and Donopted for young Mediterranean varietals (two- to three-year-old trees) that were shipped from a nursery in Tus-cany, Italy.

The Della Ninas planted the trees in September 2003and, although the trees were young, they produced olivesthat same October. The Della Ninas harvested and pressed10 gallons of olives that season. The “Olio Bello d’Olivo”(which translates as “beautiful oil from the olive”) brandwas born.

Gail and Don have been members of the California OliveOil Council (COOC) since they started their orchard and saythey have reaped many benefits from that association.“Anyone who’s a serious olive oil producer would be a foolnot to use them [COOC],” says Gail.

COOC alerts the Della Ninas about every upcomingevent where they can mar-ket their olive oil. Additional-ly, when Council staff attenda marketing event, theybring samples of Olio Bellod’Olivo for people to taste.Gail reports that member-ship in COOC has broughtthem many new customersfrom all over the country.

Olives from theirorchard, the only one in

Byron, are hand picked and cold pressed into both filteredand unfiltered extra virgin olive oil. In 2006, their orchardproduced 500 gallons of oil, which carries the COOC seal.

Olio Bello d’Olivo has won many awards. In 2006 alone, itwon five awards, including two silver medals and a bronzemedal at the International Olive Oils of the World competi-tion. It won two gold medals at the San Diego Wine andFood Festival.

— By Anne Todd ■

California growers champion Tuscan olives

Olives are harvested at the Della Nina orchard.Olive oil tasting in gourmet food shops (right) isone marketing tool being used to expanddemand. Photos courtesy Gail Della Nina


hree of the nation’stop practitioners inthe art of cooperativecommunications —including the leader

of the nation’s credit union sector, aveteran co-op editor and a dynamicyoung communicator — werepresented in June with the top awardsof the Cooperative CommunicatorsAssociation (CCA).

For his dedication to co-opcommunications, Daniel A. Mica,president since 1996 of Credit UnionNational Association (CUNA), whichserves nearly one third of the nation’sconsumers, was named CEOCommunicator of the Year at theCCA Communications Institute inWilliamsburg, Va.

CCA News editor Donna FosterAbernathy’s more than two decades ofexcellence in cooperativecommunications earned her the 49thannual H.E. Klinefelter Award, whichrecognizes career achievement and“dedication to improving thestandards of cooperative commun-ication.” Teri Ditsch, communicationsdirector for AMAROK, an Arizona-based building supply purchasingcooperative, took home the GraznakAward, recognizing her as one of thenation’s outstanding young (under theage of 36) co-op communicators.

Mica, a former Floridacongressman, was saluted for being “avisible and effective voice for creditunions and cooperatives in thenational media.” Under hisleadership, CUNA has launched astrategic communications plan to“change the conversation” onCapitol Hill about credit unions.The campaign emphasizes howcredit unions “look out for the little

guy.” It involves innovativemessaging, “guerilla-marketing”techniques, social media (such asYouTube), traditional advertisingand direct communication withlawmakers.

Mica has supported CUNA’sfull-day national advocacy trainingprogram for credit union leaders,half of which focuses on workingwith the media to deliver keymessages about cooperatives andcredit unions. CUNA is the nation’slargest credit union trade group,representing more than 90 percentof the country’s 8,300 state andfederally chartered credit unionswhich together serve some 90million Americans.

Media savvy winner Abernathy began her

cooperative career with TennesseeFarmers Cooperative, moved intoadvertising and later started herown freelance marketingcommunications business, DLFCommunication Services, from herhome in Murfreesboro, Tenn.Abernathy became CCA News editorin 2000, moving the publication toa Web- and e-mail-baseddistribution.

She was described as “highlycreative, professional and savvy inco-op and media realities – anexceptional communicator whoemploys only the best writing,photography, graphic and editingskills.” As editor of CCA News,Abernathy has made the newslettera must read for those seeking to beon the cutting edge of cooperativecommunications practices.

Ditsch was praised for her

Mica, Abernathy, Di tsch namedtop co-op communicators

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CUNA’s Daniel A. Mica was named CEOCommunicator of the Year; Donna FosterAbernathy (bottom photo, left) won theKlinefelter Award for career achievement, andTeri Ditsch won the Graznak Award, recognizingher as one of the nation’s outstanding young co-op communicators. Photos courtesy CCA



By Anthony Crooks, Ag Economist

USDA Rural Development

lycerin (glycerin,glycerol) is the mainco-product resultingfrom biodieselproduction. The name

comes from the Greek word glykys,meaning sweet. It is a colorless,

odorless, viscous and nontoxic liquidwith a sweet taste and literallythousands of uses – at least for pureglycerin. The biodiesel glycerin co-product is in crude form. Onceseparated from the soaps, lye and otherbyproducts, however, this glycerin hassignificant market value.

Every gallon of biodiesel producedgenerates 1.05 pounds of glycerin. So a

30-million-gallon-per-year plant willgenerate about 12,700 tons annually of99.9 percent pure glycerin. Along withthe 600 million gallons of biodieselsoon to be added to the nation’sproduction capacity will come about315,000 tons of glycerin. With anexpected U.S. production of 1.4 billionpounds of glycerin between 2006 and2015, North American glycerin markets

G

Evolv ing technologymay generate p ro f i tf rom b iod iese lg lycer ing lu t


will be significantly affected by industrygrowth.

A glutted glycerin market is morethan a concern for the farmer-ownedco-ops and limited liability corporations(LLC) and other producers of biodiesel.The European glycerin supply isalready in over supply. When combinedwith fatty acid production from palmkernel oil and coconut oil in Southeast

Asia, all are adding to the world'sglycerin surplus. Biodiesel production isnow the most important determinate inthe supply of glycerin.

The nation’s synthetic glycerinmarket has also felt the effects. DowChemical, once the only syntheticproducer of glycerin in the UnitedStates, recently closed its Freeport,Texas, plant, saying that the flood ofglycerin from U.S. biodiesel plants wasat least partially responsible.

Like biodiesel itself, glycerin qualityis a concern for refiners. Crude glycerinquality may be as varied as the processtechnology used to produce biodiesel.Typically, the large, professionallyengineered plants have a moreconsistent glycerin because moreattention is paid to refining the co-product. Smaller, self-designed facilitiesare more often just trying to getbiodiesel produced and pay lessattention to glycerin quality.

Useful moleculeWhile some community-based

biodiesel producers tout soap-makingor aerobic composting as potentialsolutions, that’s hardly sufficient forcommercial-scale operations. The mostlikely use for glycerin will be to replacepetroleum-based chemicals. Within fiveyears, glycerin is expected to become adevelopmental platform from which anarray of chemical applications willspring as a replacement of apetrochemical equivalent.

An often discussed idea is to convertglycerin to antifreeze. Researchers atthe University of Missouri and theColumbia, Mo.-based RenewableAlternatives LLC have completed thefirst phase of a project usinghydrogenation to convert glycerin topropylene glycol. The process turnsglycerin and hydrogen into equal partspropylene glycol and water. Plans areunderway to scale-up the process forcommercialization.

Researchers at Washington StateUniversity's Biological SystemsEngineering Department are studyinghow to develop omega-3 fatty acids,succinic acid and succinate salts from

glycerol. The U.S. Department ofEnergy recently identified succinic acidas one of the top 12 biorefinerychemicals to be derived from biomass.

The USDA Agricultural ResearchService's Environmental QualityLaboratory in Beltsville, Md.,discovered that glycerin from biodieselproduction and citric acid can bechemically combined to producebiodegradable polymers, which could beused to produce packaging and otherproducts. An important feature of theprocess is the use of unrefined glycerolspecifically from biodiesel production.

Citric acid is reacted with variousalcohols, or hydroxyl-containingmaterials such as glycerol, to obtain apolyester polymer that is biodegradable,edible, biocompatible and useful in themaking of films, sheets, plastics and gel-like coatings. Because it isbiodegradable, the material holdssignificant promise for use in packagingmaterials.

Soy Oil-glycerin products explored The Ohio Soybean Council and the

Battelle Memorial Institute are workingtogether to pioneer new uses forsoybean oil and glycerin in thedevelopment of polyols, which are usedto make polyurethane foams, polyester,adhesives and other goods. Glycerinand soybean oil can be chemicallymodified (using ozone treatment and/orselective oxidation) to make soya-polyols that are competitive with thepetroleum-based products.

The U.S. polyol market is nearly 1billion pounds and represents asignificant value-added opportunity forthe biodiesel co-ops and otherproducers to pursue. Because of what iscalled “low reactivity,” however, soy-based polyols need to be blended withpetroleum counterparts, just asbiodiesel is blended with petroleumdiesel, to make specialty products.

Battelle’s business strategy is tolicense technology to interestedcompanies. Ideally, the new technologywill alter a biodiesel plant into a multi-faceted biorefinery with multipleproduct streams, just as with a

USDA photo illustration by Stephen Thompson


petroleum refinery. A 100-million-gallon biodiesel refinery generates from60 to 75 million pounds of glycerin, orabout 200 million pounds of polyols peryear. At the current price of about $1per pound, polyols can add another$200 million in revenue to a biodieselplant’s bottom line.

Battelle’s vision is for these refineries

to produce biodiesel for transportationfuel, and to invest in the process tomanufacture polyols for the plastics andpolymers industries as a springboard tomultiple processes, products andrevenue streams. Ultimately, everyproduct stream from the plant willbecome a value-added revenue source.

Battelle isn’t alone in thedevelopment of polyols. Cargill Inc.recently announced that it had won atechnology award from the Alliance forthe Polyurethanes Industry for itsBiOH bio-based brand of polyols.ADM plans to produce propyleneglycol and other “large-volume”chemicals from glycerin. Many peopleare aware that propylene glycol is usedfor antifreeze/deicer, but it is also usedfor fiberglass resins, personal careproducts and cosmetics.

Alternative energy sourceThe “floor value” of any material,

including glycerin, can be determinedby the point at which it can be used as

an energy source. For example,distillers grains produced as a byproductof the ethanol industry can be used as asupplemental energy source. Of course,burning distillers grains and glycerin isa last resort and is best avoided, becauseglycerin typically doesn't burn well, andcrude glycerin gives off toxic fumeswhen burned, limiting its energy

potential. However, Virent Energy Systems

and the University of Wisconsin-Madison Department of Chemical andBiological Engineering believe thatglycerol can be an energy sourcethrough aqueous phase reforming(APR). APR generates hydrogen fromaqueous solutions of oxygenatedcompounds in a single-step reactorprocess.

Low-grade crude glycerin isespecially favored because it is cheaperand readily converts to hydrogen. Itssodium hydroxide, methanol and thehigh pH levels actually help the process.About 10 pounds of glycerin can beconverted to 1.5 pounds of hydrogen inVirent's process for less than $2 perkilogram.

ElectricityResearchers at eTEC Business

Development Ltd., a biofuels researchcompany based in Vienna, Austria, havedevised mobile facilities that

successfully convert the biodiesel by-product glycerin into electricity. Thefacilities, according to researchers, willprovide substantial economic growthfor biodiesel plants while turningglycerin into productive renewableenergy.

The glycerin is burned in speciallyadapted engines to produce electricity.Stable and virtually maintenance-free,eTEC’s units consist of a glycerinprocessing module, a combustionengine with a generator and a controlunit that is compatible with anybiodiesel plant. With the unit’s lowmalfunction rate and compact design, itcan be integrated into a transferencasement, making it easy to betransported, assembled and moved fromone biodiesel plant to another, ifdesired.

Because electricity is expensive inEurope, biodiesel producers will be ableto create their own electrical energyusing eTEC’s technology to help offsetfeedstock cost. In addition, heat issimultaneously released during theelectricity conversion process, whichcan be used for heating the plant’s tankfacilities. eTEC also has plans toreconvert heat back into electricity.Unused electricity can also be fed intothe main supply grid for use at theEuropean sponsored eco-electricityrates. Having this kind of ‘green’electricity is supported by the localstates in the EU, so it is quite profitablefor biodiesel projects.

Biogas, methane digesterA Belgian biogas firm, Organic

Waste Systems (OWS), is building amethane digester system that uses crudeglycerin and resulting biogas from acommercial-scale biodiesel facility topower the plant itself. Such anintegrated, closed-loop system hasmany benefits and makes the biodieselproduction process “greener.” Glycerinis reported to increase biogas yieldsconsiderably, provided the rightmicrobial populations are used.

The Agricultural UtilizationResearch Institute (AURI) in Marshall,

Researchers at Battelle in Columbus, Ohio, are working to find new uses for soybean byproducts. Such work is funded in part by Soybean Checkoff dollars, contributed byproducers. Photo courtesy Ohio Soybean Council


CountryMark expandingrefinery; rebranding Midwestfuel stations

CountryMark Cooperative isinvesting $20 million to upgrade andexpand its refinery in Mt. Vernon, Ind.The project, announced at the co-op’smost recent annual meeting, is expectedto be completed in 2008 and will boostrefining capacity by 45 million gallonsper year, or roughly 12 percent ofcurrent production.

The additional production at itsIndiana refinery comes at a time when anational gas shortage, combined with a2-percent increase in U.S. fuel demand,has forced energy prices upward, saysCountryMark CEO Charlie Smith. Inaddition to increasing refinery yields,CountryMark also has announced plansto invest in the reliability of the refineryand fuel distribution facilities.

The co-op has also announced thatits EnergyPlus 24 retail fuel stations arebeing rebranded with the CountryMarkname and image. The look has beenupdated to reflect the stations’ identityas CountryMark fuel stations. The 90fuel stations across Indiana, Ohio andMichigan will continue to have fuelavailable 24 hours, and many also offerconvenience store products andservices. The stations are operated by21 independent local cooperatives, all ofwhich are based in Indiana.

Nearly half of the profits made byCountryMark in 2006 were returned tomember cooperatives throughpatronage refunds. In the past twoyears, CountryMark has sent $43.3million back to its membercooperatives.

Some 5 million gallons of soybiodiesel and 6 million gallons of corn-

based ethanol were purchased by theco-op in 2006 and blended intoCountryMark's premium diesel andgasoline products. Nearly 80 percent ofthe diesel CountryMark distributesthrough local cooperatives is a blend ofsoy biodiesel.

In 2006, the co-op completed workon a $44 million advanced diesel fuelprocessing unit, which enables it toproduce premium, ultra-low sulfurdiesel fuel that is more environmentallyfriendly and meets new EPA clean airmandates. Known throughout the yearsas an agricultural co-op, CountryMarkis now focused exclusively on energy.

Two familiar premium Northwestpear shippers have combinedoperational and marketing relations tobecome one of the largest premiumpear shippers in North America. StemiltGrowers Inc. will market 100 percent ofPeshastin Hi-Up Growers pearsstarting in August. Under a previousagreement, Stemilt marketed a largepercentage of Peshastin’s crop.

"Stemilt’s marketing channels forpremium fruit are a perfect fit with ouroperations,” says Peshastin Hi-Upgeneral manager Ken Hemberry. Thecollaboration makes the twoorganizations the largest Washingtonsupplier of Concorde, Taylor's Goldand organic pears.

Peshastin Hi-Up is a grower-ownedcooperative that has a long history ofgrowing premium pears in the upperWenatchee River Valley. The co-op,which only ships pears, grew andpacked about 750,000 cases of pears in2006. The majority are d'Anjou andBartlett pears, while other pear varietiesround out the program.

“Stemilt and Hi-Up will gainefficiencies through collaboration in notonly marketing but also in packing,storage, packaging, ripening programs,transportation and logistics. This willbe a complete go-to-market strategy,"says Stemilt vice president of sales andmarketing Mike Taylor. Stemilt isprivately owned by the Mathison family,which has farmed in CentralWashington since the early 1900s.Stemilt shipped approximately 1 millionboxes of pears in 2006.

GROWMARK to acquire energyfirm; teams with FB on riskmanagement

GROWMARK Inc. is seeking toacquire 100 percent of STAR EnergyLLC (STAR), Manson, Iowa. STAR is aretail energy company servingnorthwest Iowa with $60 million insales last year.

STAR, currently owned byGROWMARK, West CentralCooperative and NEW CooperativeInc., primarily serves rural markets. Itdelivers gasoline, distillates, propane,and lubricants and operates unattendedfueling locations.

West Central Cooperative CEO JeffStroburg says the transaction will allowWest Central to focus more on itsstrategic businesses. STAR Energy andWest Central have many commoncustomers and plan to continue to

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NW pear shippersto combinemarketing

support each other in the marketplace,he notes.

In other GROWMARK news, theco-op is forming a joint venture withIllinois Farm Bureau called AgriVisorLLC. The venture brings together theorganizations’ grain and livestockmarketing analysis and contractexecution functions in an effort to offerfarmers the best marketing toolsavailable.

“Uniting our efforts to providefarmers with risk managementalternatives that maximize theirprofitability is a logical step for twoorganizations committed to serving thebest interests of our farmer-membersand owners,” says Larry Keene,GROWMARK director of grain riskmanagement and value-enhanced products.

Co-op development class Applications are being accepted for

Session II of The Art & Science ofCooperative Development, a trainingprogram for new and established co-opdevelopment practitioners. Theprogram is produced byCooperationWorks!, a nationwideservice co-op for cooperativedevelopment centers and individualpractitioners. This five-day, intensivetraining takes place in Madison, Wis.,Sept. 10-14. Session I is not aprerequisite for Session II. For moreinformation, contact Audrey Malan,(307) 655-9162 or [email protected].

AMPI acquires Cass-Clay Associated Milk Producers Inc.

(AMPI), New Ulm, Minn., hascompleted the acquisition of Cass-ClayCreamery Inc. The North Dakota-based cooperative is now operating as adivision of AMPI.

The Cass-Clay division includes afluid milk bottling plant in Fargo, N.D.,and a specialty cheese plant in Hoven,S.D. Products manufactured at theFargo facility will continue to bemarketed under the Cass-Clay® brand,recognized in the upper Midwest forquality fluid milk, ice cream andcultured products such as yogurt andsour cream.

“The dairy farmers of Cass-Clay areproud to be the newest AMPI owners,”says David Glawe, chairman of theCass-Clay and a Detroit Lakes, Minn.,dairy farmer. He is one of nearly 200cooperative owners who unanimouslyvoted to authorize the transfer of Cass-Clay Creamery assets to AMPI.

The Cass-Clay brand and productline complements productsmanufactured at AMPI plants across theMidwest. AMPI is a private-labelmanufacturer of consumer-packagedcheese, butter, instant milk and shelf-stable dairy products. With theacquisition, the 4,000 dairy farmer-owners of AMPI now operate 15 plantsand annually market more than $1

billion of dairy products regionally andnationally.

“This acquisition reflects thecooperative’s long-term commitment toMidwest dairy farmers,” says Paul Toft,AMPI board chairman and a dairyfarmer from Rice Lake, Wis. “It allowsus to optimize our farmer-owned milkmanufacturing facilities.”

Study: ethanol not main factor in higher food costs

A new study by agriculturaleconomist John Urbanchuk of LECGthrows a bucket of cold water on thepopular argument that the rising cost ofcorn – prompted by the increasingproduction of ethanol – is the cause of

increased food prices and otherconsumer-related inflation. Instead,Urbanchuk's new statistical researchshows that escalating energy costs arethe real culprit behind the recent run-up in retail food and beverage prices.

The study arrives amidst a growingdebate over the expansion of the U.S.ethanol industry. Many critics blameethanol and corn producers foreverything from shortages of Mexicantortillas to higher prices for corn flakesand soft drinks.

Urbanchuk's study – The RelativeImpact of Corn and Energy Prices in theGrocery Aisle – was commissioned by theRenewable Fuels Association. The fullreport and corresponding tables can befound at: http://www.rippmedia.com/LECG-JU-Ethanol.doc.

According to the Urbanchuk report,rising energy prices have had twice theimpact on the Consumer Price Indexfor food as has the price of corn. Heexamines CPI data from 2002 throughMay of this year to make his point.

"While it may be more sensational tolay the blame for rising food costs oncorn prices, the facts don’t support thatconclusion,” says Urbanchuk. “By afactor of two-to-one, energy prices arethe chief factor determining whatAmerican families pay at the grocerystore.”

Moreover, he notes, "Retail foodprices are not likely to acceleratesignificantly in 2008 and beyond, even

as ethanol production continues toexpand. In fact, consumers will be moreseverely affected by rising gasoline andenergy prices than by increases in cornprices."

A&N Electric Co-op to acquire Delmarva Power

A&N Electric Cooperative’s (ANEC)board has voted to acquire the electricdistribution service territory ofDelmarva Power in Accomack andNorthampton counties on Virginia’sEastern Shore. The purchaseagreement, which is subject to approvalby the Virginia State CorporationCommission (SCC), will mean thatANEC will become the electricity

This processing plant in Fargo, N.D., willnow be part of AMPI, but will continueto produce foods under the Cass-Claybrand.


provider for the approximately 22,000customers of Delmarva Power locatedin Virginia.

ANEC currently serves more than11,000 consumers in portions ofAccomack and Northampton Countiesin Virginia and Somerset County, Md.With the addition of consumers nowserved by Delmarva Power, ANEC willbe the distributor of electric service forall residents of Virginia’s Eastern Shore.

Terms of the purchase agreementwill be released to the public once aformal application has been filed withthe SCC.

A&N Electric Cooperative’swholesale power supplier, Old Domin-ion Electric Cooperative, will purchaseand operate the majority of DelmarvaPower’s 69 kV transmission facilities inVirginia, a transaction that willcomplement the distribution system

purchased by A&N. Old DominionElectric Cooperative, based in GlenAllen, Va., is a wholesale power supplycooperative that provides electricity to12 member distribution cooperativesacross Virginia, Maryland and Delaware.

CHS building threepipeline terminals

CHS Inc. is constructing two newMontana petroleum terminals and


The Farm Credit System (FCS, or System) is increasing itsfinancing of young, beginning and small (YBS) farmers andranchers, according to a recent report. The overall trend forlending to each of the three YBS borrower categoriescontinues to be positive, with solid gains in 2006 loan volumefrom 2005 levels, according to the report prepared for the FarmCredit Administration, which oversees the nation’s producer-owned FCS.

The number of new loans was up for beginning and youngfarmers and was flat for small farmers in 2006. However, thegrowth rate in the YBS categories as a percentage of theSystem’s total new-loan dollars was down slightly for 2006.Small farmers continued to receive the largest share — 54percent — of the System’s new loans during the year.

The report, prepared by Office of Regulatory Policy, is partof the FCA’s continuing effort to ensure that the FCS respondsto the credit needs of thesefarmers and ranchers. InMarch 2004, the FCA boardapproved a regulationstrengthening YBS programsand policies at System banksand associations. Congressestablished the YBS missionin the 1980 amendments tothe Farm Credit Act.

In 2006, the System held140,209 loans worth $15.4billion made to youngfarmers, age 35 or younger,up 11 percent from 2005.During 2006, 46,459 new

loans worth $5.5 billion were made to young farmers, or 17percent of all new loans made during the year and 10.5percent of the new-loan dollar volume.

FCS holds 189,223 loans, worth $25.4 billion, made tobeginning farmers — those with 10 or fewer years of farmingexperience. During 2006, 57,838 new loans worth $9.3 billionwere made to beginning farmers, representing 21.2 percent ofall new loans and 17.8 percent of new-loan dollar volume.

FCS institutions had 465,951 loans outstanding worth $36.3billion to small farmers — those with gross annual sales ofless than $250,000 — at the end of 2006. During 2006, 148,025new loans worth $11.6 billion were made to small farmers.New loans to small farmers represented 54.3 percent of allnew loans and 22.2 percent of new loan volume. Although thenumber of new loans made during 2006 was essentiallyunchanged from 2005, the volume of new loans increased 6

percent. Economic and

demographic factors haveled to a decline in thenumber of small and youngfarmers in the farmingpopulation. As a result, theSystem’s potential YBSlending market has declined.To encourage lending tothese farmers, manyassociations are usingspecial underwritingstandards, lower interestrates or other programsaimed at YBS borrowers. ■

The Farm Credit System is striving to provide financing to moreyoung and beginning producers, such as Matt and StacyStevenson of Maryland. Photo courtesy Mid Atlantic Farm Credit

FCS boosts lending to young, beginning and small producers

planning a third for eastern Washingtonto maximize supply efficiency forcustomers of its Cenex® brand refinedfuels products. The terminals underconstruction are located at Logan andMissoula, Mont., along the YellowstonePipeline. A location is being sought fora planned terminal in the Moses Lake,Wash., area.

The three terminals will supply CHScustomers with a wide range ofproducts for bulk distribution from thecompany's refinery at Laurel, Mont.,including gasolines, diesel fuels andethanol-blended gasolines. Theterminals are designed to accommodatebiodiesel blends in the future.

Conference to gauge truevalue of co-op businesses

Cooperatives are facing manystrategic dilemmas as they continue toadapt to a changing business landscape.Understanding the true value of thecooperative business is critical tomeeting these challenges.

“Valuing the Cooperative Businessin the 21st Century” is the theme ofthis year’s annual farmer CooperativeConference, which will help addressthese issues.

The conference, now in its 10th year,will be held Nov. 5-6 in St. Paul, Minn.,at the Crowne Plaza Hotel. The eventis sponsored by the University of

Wisconsin Center for Cooperatives. Topics will include:

• measuring the value of cooperatives;• the economic impact of cooperatives

on the U.S. economy;• financial benchmarks for cooperatives;• business structure strategies and

choices: the cooperative versus theinvestor owned firm. Updates on the conference and

registration information will be postedon the University of Wisconsin Centerfor Cooperatives Web site:www.uwcc.wisc.edu. Or contact: LynnPitman at (608) 261-1355, [email protected].

South Dakota co-ops mergingTwo South Dakota co-ops — Fremar

Farmers Cooperative, based in Marion,and Central Farmers Cooperative,based in Salem — have voted to merge,effective Aug. 1. The new cooperativewill be called Central FarmersCooperative and will be based inMarion. About 78 percent of Central

Farmers’ patrons and 89 percent ofFremar patrons approved the merger,according to the Associated Press.

Central Farmers has operations inMontrose, Canova and Rumpus Ridge.Its services include fuel, propane, tires,oil, feed, lumber, agronomy and grainservices to customers in a 35-mileradius of Salem. Fremar is based in

Small farmers learn waysat conference to add value

The 20th annual California Farm Conference in Monterey, Calif., inMarch, was attended by 375 farmers, ranchers, ag students, educators,farmers’ market managers and other professionals. They learned marketingpractices that will help them increase their profits and grow theirbusinesses.

The conference theme was “The Time Is Ripe,” and workshops weredesigned to meet the mission of the conference: to address timely topicsrelevant to family farming, direct marketing and agricultural sustainability.

Conference topic tracks included: “Growing Your Business,” “MakingYour Market Successful,” New Frontiers in Specialty Crops,” “After theHarvest: Value-Added Strategies,” “Hot Topics in California,” “Marketing: IfI Grow it; Will They Come?” and “New Ideas in Production.”

At a session titled “Financing Value-Added Projects,” speaker RhondaMotil of the Monterey County Vintners and Growers Assoc., spoke aboutthe success the organization has had using Value-Added Producer Grants(VAPG) from USDA Rural Development. Karen Firestein, cooperativespecialist for USDA Rural Development in California, provided detailedinformation about applying for a VAPG.

In attendance were scholarship recipients as part of a program fundedby USDA. They included small-scale farm operators with limited means aswell as agriculture students and farmers’ market managers. In the past fiveconferences, the California Farm Conference has targeted its outreach andsuccessfully increased the diversity of attendees.

In 2007, with the assistance of USDA, scholarships went to 90 small-scale farmers, of whom 38 percent were Hispanic, 6 percent African-American and 28 percent Asian or Pacific Islanders. About 38 percent werewomen, 4 percent Native American and 4 percent were persons withdisabilities. In addition, 15 farmers’ market managers and 15 students wereawarded scholarships.

USDA Rural Development provided a $72,000 Rural Business EnterpriseGrant to help cover the costs. For more information about the conference,visit: http://www.californiafarmconference. The 2008 California FarmConference will be held Feb. 24-26 in Visalia, Calif. ■


success in raising the communicationsprogram at her co-op to a new levelsince joining it in 2001. She serves aseditor of her co-op’s magazine andnewsletter, is responsible for specialevent planning, advertising, mediarelations, Web site maintenance,photography and a variety of othermarketing and communication projects.

Ditsch, who just assumed the CCApresidency, was called “one of thenation’s most creative, talented anddetailed communicators.” She“consistently demonstrates the sevenprinciples of cooperatives in all that shedoes. Because her work always displaysa high level of professionalism, manyother purchasing co-ops borrow hertalent and follow her lead.”

H.E. Klinefelter, who died in 1957,

was one of CCA’s founders and anemployee of what today is MFA Inc.Michael Graznak was a talentedcommunicator with FarmlandIndustries. He died at age 51 of a heartattack while on an assignment for theco-op.

Other top awardsCCA awarded its other top honors

to:• Photographer of the Year — David

Lundquist of CHS Inc./LandO’Lakes;

• Publication of the Year — SaraDorman of West CentralCooperative;

• Special Projects/Programs, Best ofClass — Morriah Morris of theWisconsin Milk Marketing Board;

• Writer of the Year— Dan Campbell,editor of USDA’s Rural Cooperativesmagazine.

Other awards won by RuralCooperatives staff or contributorsincluded: Anne Todd, first placefeaturette for an article about a co-opfor housecleaners; Catherine Merlo,first place serious/investigative featurefor “Left Behind,” about grain co-opsthat have lost business due to biofuelsdevelopment; Dan Campbell, secondplace for serious/investigative featuresfor “The Natural,” about a natural beefcooperative, and third place in thecooperative education category for anarticle on the 80th anniversary of theCooperative Marketing Act; AssistantEditor Stephen Thompson, third placein the news category for coverage of arenewable energy conference. Themagazine was awarded third place forbest overall use of photos in apublication.■

Top Co-op Communicators continued from page 29

Minn., has studied the possibility of using glycerin as a fuelor fuel supplement. One study tested glycerin in wood pelletsfueling a wood-burning stove. But analysis show no realsignificant improvement with the glycerin mixture.

Animal feedAURI also works with Minnesota biodiesel producer

FUMPA Biofuels to combine feather meal and glycerin foruse in beef and dairy diets. Because glycerin produced at theplant is about 85 percent pure, pH neutral and free of soapsand methanol, FUMPA has a unique product opportunityand is able to capitalize on the synergy between its biodieseland animal feed divisions.

FUMPA has developed an animal feed consisting of ablend of Central Bi Products' hydrolyzed feather meal withglycerin. Gro Mor Hi-Torque, as the product is branded, wasdeveloped in part through the Agricultural UtilizationResearch Institute's (AURI) co-product utilization lab inWaseca, Minn., where AURI developed a method for makingpellets from the mixture.

Various blends of glycerin and feather meal were tested to

develop a high-density feed with pellet durability greater than95 percent, making it ideal for high-volume transportationand extending the product’s shelf life.

Poultry feedA more recent animal feed trial using glycerin has received

national attention. Researchers at the University of Arkansas’Center of Excellence for Poultry Science recently studiedglycerin as a dietary supplement in growing broiler chickens.Although strictly preliminary, the study showed that as muchas 10 percent glycerin could be fed to chicks up to 16 days ofage in battery brooders. Battery brooders are brooding boxeswith wire floors stacked on top of each other to conservespace.

A 5-percent glycerin inclusion in pelleted feed showed noadverse effect on bodyweight, feed intake, feed conversion ormortality. However, 10-percent glycerin inclusion reducedbody weight due to reduced feed-flow rate.

A second study will determine the effects of a 2- to 2.5-percent glycerin inclusion to more accurately represent real-world market conditions. The typical poultry operation mixes4,000 tons of feed per week and would require a commercial-scale biodiesel plant to have enough glycerin for even a 1-percent inclusion. ■

Biodiesel Glycerin Glutcontinued from page 32


Marion and has additional facilities inFreeman and Dimock. Its servicesinclude agronomy, grain and feed.

Fremar has developed one of the

largest producer-owned ethanol projectsin South Dakota. Construction onMillennium Ethanol, a 100-million-gallon ethanol plant, is expected to be

completed by the end of 2007. USBioEnergy has announced a plan toacquire the plant.■


50 Years Ago...From the July & August 1957 issues of News for Farmer Cooperatives

Concentrated fresh milk stirs far-flung marketsFresh concentrated milk in one-third quarts has aroused

interest from coast to coast, and as far away as Central andSouth America. The Pure Milk Association (PMA), Chicago,Ill., began selling the milk in February. Almost as soon as themilk hit the market, newspapers began carrying stories aboutit. Altogether, 18 weekly and nine daily newspapers, includingthe Wall Street Journal, featured coverage about the milk.Radio and television stations also broadcast the event.

In six weeks, PMA’s wholesale distribution of the milkincreased about 30 percent overthe first two weeks’ average. About100 retail food stores in SoutheastWisconsin are on the list to buythe concentrate. Later the co-opwill expand into new areas insouthern Wisconsin and in Illinois,and may look into export markets.

PMA’s Kansasville, Wis.,plant makes, packages and storesthe concentrated fresh milk. Theplant also makes 93-score butter,skim milk powder and ice cream

mix. It receives both can and bulk farm milk. The plant isadding processing equipment to ensure uniform milk productquality. To satisfy requests of many grocers and consumers,the co-op may increase the size of the milk container to aone-quart paper carton.

Women’s co-op market celebrates 25th year (cover article)The silver anniversary of the Montgomery Farm Women’s

Cooperative Market, Bethesda, Md., drew about 2,000 visitorsfrom Washington, D.C., and nearby areas in late May. Amongthose present were some of the pioneers whose hard work andclear vision in the early days helped get the market started.

This women’s market, set in the heart of suburbanBethesda, has long given its farm women ready cash for theirproducts: home baked bread, beans, hams, fresh eggs andpoultry, home canned fruits and vegetables, and crafts. The

market, open Wednesdays and Saturdays, typically sells about$3,000 of farm-produced food on a Saturday.

“From tent to tent in 25years,” smiled one co-op member,thinking of the day the market firststarted with women sellingproducts from their own farmkitchens in a tent. Now, with theirown building on a valuable pieceof land, they again put up a tenton the same site – but this time toserve punch, coffee and cookies tovisitors who came to help themcelebrate their birthday.

The market now has 60active sellers, many of them selling on the same spot for manyyears. Nellie C. Hargett, one of the earliest members, joinedin 1933 and has since missed fewer than 10 market days, andonly then because of illness in the family.

30 Years Ago...From the July & August 1977 issues of Farmer Cooperatives

Oregon co-op using shrimp, crab shells as fertilizerTwenty farmers have formed the first cooperative in

Oregon to use shrimp and crab shells as fertilizer. At the sametime, the cooperative is resolving an ecological problem forthe Newport seafood processing industry.

The cooperative, Coastal Farmers Cooperative, hascontracted to remove shells from two of the half-dozen

seafood processors in Yaquina Bay.The co-op expects to use 1,500 to3,000 tons of shells annually fromthe two contracts.

The co-op pays a refusecollector to haul and dump theshells onto farms. The memberfarmers then spread the shells overtheir pastures and fields and plowthem into the ground todecompose. Preliminary testing

P A G E F R O M T H E P A S T

From the archives of Rural Cooperativesand its predecessor magazines


indicates a ton of shells provides 28 pounds of nitrogen, 10pounds of phosphorous and 160 pounds of calcium.

Paul Keady, a cattle producer and president of thecooperative, says he would rather use the shells than acommercial fertilizer. He said the cost is slightly less and theshells have the added benefit of promoting soil bacteria thatrelease nitrogen and other nutrients from sterile coastal soils.

Seafood processors have been placed under orders by thestate’s Department of Environmental Quality to stop dumpingshells into water. Keady explains, “The processors pay us $6 aton to haul away their shells and we sell the shells for thesame amount.” The cooperative then pays the hauling costs.

Global co-op collaboration needed More experiments in international collaboration between

cooperatives are needed, according to a committee of theInternational Federation ofAgricultural Producers (IFAP).The Standing Committee onAgricultural Cooperation of IFAPtook this position after voicingconcern for farmers’ interests inthe face of growing multinationalagrifood companies.

“Since 1960, there has been asubstantial acceleration in themultinational character ofcompanies both upstream and

downstream,” the committee wrote. “Upstream concentrationis particularly strong and cooperatives are very weak in thefertilizer industry, in farm machinery and in feeds at theproduction stage. Downstream it would seem thatmultinational companies currently supply 40 percent ofprocessed food products at the world level.”

IFAP is a federation of agricultural cooperativeorganizations that are representative of the primary producerswithin a country.

10 Years Ago...From the July/August 1997 issue of Rural Cooperatives

Co-op involvement in ethanol industry grows despiteuncertainty

Over the past decade, the production of energy fromrenewable resources has commanded considerable discussionand excitement. Various programs at the state and federal levelhave provided subsidies to start businesses in this industry.Simultaneously, technological advances have loweredproduction costs and the promise of economically viableproduction continues to be “just around the corner.”

Since the early 1970s, many farm groups, including farmercooperatives, have been studying the economic possibilities ofproducing ethanol, methane andoil/fat-based fuels. A number ofrepresentative organizations havebeen formed to encourage the useof “renewable fuels” and topromote policies that wouldprovide an economic climatesuitable for the industry’s growth.

Currently, a number of newethanol refining facilities are inoperation, under construction or inthe planning stage. They offer greatpotential to add economic value to corn and other feedstocksthrough the production and marketing of fuel ethanol.

Despite the general enthusiasm for renewable energy fromthe heartland, loan analysts from several banks forcooperatives remain cautious. For example, the St. Paul Bankfor Cooperatives, which has been assessing the viability ofethanol projects for more than 15 years, has chosen to financevery few. Government tax credits and exhaust emissionregulations, among others, are major areas of concern to theemerging ethanol industry.

The sunsetting of the federal excise tax reimbursement inthe year 2000 creates an aura of uncertainty around theindustry and especially any new fuel ethanol productionventure. Even though it is a subsidized industry still in itsinfancy, ethanol has passed some significant milestones in theU.S. fuel marketplace. Recent recognition of ethanol andethyl-tertiary butyl ether (ETBE) as high quality fuel additivescapable of delivering significant environmental, economic andenergy benefits to the consumer has spurred industryproduction to record levels.

Co-ops are major players in providing energy products forfarm production, having a 41-percent market share in 1993.That year, more than 2,500 cooperatives sold $5.2 billion ofenergy products to rural America. Around 29 percent of thegasoline sold by cooperatives contained ethanol.

To date, 11 farmer-owned ethanol production facilities arein operation, and 14 are in the planning stages. Whencompleted, these plants are expected to comprise 38 percentof the ethanol production capacity in the United States.Thousands of farmers have collectively invested more than $1billion to build ethanol facilities. Many thousands more co-opmembers already produce feedstocks that can be used forethanol production.

Although the economic landscape of this industry is fraughtwith uncertainty, profit opportunities may still exist given theright set of circumstances of low corn prices and higherethanol and distillers dried grain prices.■


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