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12 CapitalPress.com Friday, December 21, 2018 Co-ops: Member base gets smaller as number of farms declines Continued from Page 1 The number of supply and service and marketing cooperatives has dropped by about one-third from 2007 to 2016 while the com- bined net business volume for the 1,953 that remain rose by 28.5 percent, USDA reported. There were 1,871 cooperatives last year, down from 6,736 in 1976. “And the projections are that there will be even fewer over the next few years,” said Ken Blakeman, general man- ager of CHS Primeland in Lewiston, Idaho. “It mirrors the changes in our produc- tion-agriculture world.” The trend toward fewer, larger players includes farm- ing in general. An example is when economic or other fac- tors prompt sons and daugh- ters not to return to their fam- ily’s farm, which in turn rents or sells its ground to a neigh- bor, he said. “You don’t see too many people getting smaller, and it’s tough,” Blakeman said. Because of the shrink- age in the number of farms, USDA found there has been a nearly 23 percent drop in cooperative memberships from 2007 to 2016. As many farms get big- ger, Blakeman said, “there is a need for cooperatives to update facilities and build things that are bigger and faster, to take care of today’s and tomorrow’s high-volume producers. “We really had to recapi- talize the industry,” he said. “One of the challenges to the small, independent coopera- tive is access to capital. You need to build for the produc- ers’ need and scale.” Purdue University agri- cultural economist Michael Gunderson said that as coop- eratives’ member base gets smaller as the number of farms declines, those farm- ers who remain are differ- ent. “Even two or three gen- erations ago, most farmers looked pretty similar and farms had similar acreage, crops and needs.” Today’s larger farms can be very different from one another with much different needs, he said, “so the oppor- tunity for a cooperative to serve them effi ciently could be pressured.” For example, some farms are big enough to run their own chemical application equipment instead of leasing cooperative-owned equip- ment as needed. As older farmers retire and new decision-mak- ers take over, “that loyalty and that relationship may come under pressure during that transition,” Gunderson said. “Cooperatives are pay- ing attention to their market- ing programs, and how to build programs meeting the needs and wants of today’s farmers.” Drive to merge The tight labor market is one factor driving cooper- atives to merge, said Hood River Supply President and CEO Pat McAllister in Ore- gon. As co-ops get larger, they often need fewer middle and upper managers. Jerome, Idaho-based Brad Carlson/Capital Press Farmers Cooperative Ditch Co. board Vice President Bill Hartman warms a spindle with an acetylene torch in the Hartman Farms shop near Parma, Idaho. Ag co-ops * on the decline 8,000 6,445 The number of cooperatives in the U.S. dropped by nearly 25 percent from 2007 to 2016. 6,000 Michael Gunderson Justin Darisse Valley Wide Coopera- tive has grown twenty-fold since forming 20 years ago through the merger of two small co-ops. CEO Dave Holtom expects more growth and change. “As our customers change, we have to change to remain relevant,” he said. Holtom expects contin- ued growth for Valley Wide — likely by around 30 per- cent in the next fi ve years due to mergers, he said — amid challenging market condi- tions. Competitors include large multinational compa- nies and newer businesses using an online, price-dis- covery model that adjusts prices for the size and needs of individual customers. Valley Wide formed in 1998 when the Menan and Madison cooperatives merged in eastern Idaho. It now has about 900 employ- ees and operations in 40 communities in Idaho, Ore- gon, Washington, Wyoming, Utah and Nevada. Members grow about 200 different crops compared to four at the outset 20 years ago. “We have tried to incorpo- rate the history of the cooper- atives that have merged into us, the legacies, recognizing their unique place in their communities and the cooper- ative system,” Holtom said. All of the mergers aimed to maintain Valley Wide’s infl uence and market rel- evance, he said. They also provided some risk aversion by broadening and diversify- ing geography, business units 3,791 4,000 1,871: Down 50.6% from 1997; down 71% from 1979 2,000 Courtesy of Adam Clark *Includes marketing, farm supply and service co-ops. 0 1979 ’81 ’83 ’85 ’87 ’89 ’91 ’93 ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 2017 Source: USDA Alan Kenaga/Capital Press and the crop portfolio. Annual sales exceed $500 million and are track- ing about 10 percent higher than a year earlier, Holtom said. All segments — agron- omy, retail and energy — are contributing. “Because of our diversity, customer base and talent, I think we will be successful,” he said. “We are going to be here for a long time.” Cooperatives remain effective for reasons includ- ing personal service and just-in-time delivery at brick-and-mortar locations, transparency, customer input on business direction, and member profi t-sharing, Holtom said. Adam Clark, who farms and raises cattle near Menan, Idaho, and chairs the Valley Wide board, said coopera- tives provide value beyond members eventually being repaid a portion of their pur- chase volume and potentially building equity. “There is member input as well, and it helps,” he said. “When people tell me some- thing, I can take it back to the boardroom. And a co-op is a little more service-ori- ented in that it takes feed- back directly. The people on the board are using these products.” Bigger voice National Council of Farmer Cooperatives spokes- man Justin Darisse said the group lately adds one or two co-op members per year. They join because they want to tap its services, although “the pool of organizations that make up that member- ship is not that large.” “Trends that impact agri- culture, and impact the farm- ers and ranchers themselves, also play out on the co-ops,” he said. “Mergers in co-ops and the consolidation there refl ect what we have seen generally among the produc- ers themselves.” Darisse said prolonged lackluster pricing for many commodities poses con- cerns throughout agricul- ture. “Co-ops are an import- ant way to bridge that a little bit” by helping produc- ers receive a slightly higher price for commodities or reduce some net costs, he said. Oregon, Washington and Idaho have even merged their states’ cooperative Dairies: There is absolutely no need for either of these bills Continued from Page 1 “The state’s oversight of these over-sized facilities is fl awed and needs to be fi xed,” he said. “At a minimum, the state should take a time-out on permitting the very large facilities until a number of changes to the CAFO program are made.” Tami Kerr, executive direc- tor of the Oregon Dairy Farmers Association, called the proposed changes “ridiculous” and said dairy farmers were unfairly being targeted after one operator’s poor management gave the industry a “black eye.” “There is absolutely no need for either of these bills,” she said. “Size isn’t the problem, it’s management.” Under one of the propos- als, Legislative Concept 2718, Oregon regulators wouldn’t be allowed to issue permits to build or expand “industrial dairies” unless they comply with local restrictions, including those on emitting methane into the air or nitrates into water. The other proposal, Legisla- tive Concept 2706, would com- pletely prohibit the construction of “industrial dairies” until law- makers lifted the ban when a new permitting system is established. Local governments would also be allowed to regulate such facilities under this proposal, but it contains numerous other pro- visions, such as disallowing per- mits for “industrial dairies” until they’ve obtained water rights. The state’s Department of Environmental Quality would also have to enact new rules on dairy air emissions under the proposal and to annually report to the Legislature on its regula- tory progress, while the Oregon Department of Agriculture would have to study the economic effects of “industrial dairies” on smaller farms. A task force on dairy ani- mal welfare would be convened under this proposal and recom- mend minimum standards to lawmakers. Maluski said the wastewa- ter problems at Lost Valley Farm directly hurt animal welfare as the manure management system malfunctioned, forcing the cows to stand in their own waste. “A lot of people were stunned to see the conditions Lost Valley was keeping its cows in,” he said. Kerr said that 98 percent of the milk in the U.S. is pro- duced under the Farmers Assur- ing Responsible Management program, which sets standards for animal care, environmental stewardship and antibiotic stew- ardship and enforces them with inspections and audits. “Our farms are not indus- trial. Our farms are multi-gen- erational family businesses,” she said. “They take it very seri- ously. They’re proud of the work they’re doing.” Valley Wide Cooperative Board Chairman Adam Clark, who raises crops and cattle with his family near Menan, Idaho, says cooperatives bring value to agricultural producers. advocacy groups. The Idaho Cooperative Council this month joined the Northwest Agricul- tural Cooperative Council, formed in the past year when the Washington and Oregon councils merged. Blakeman said the states grow many of the same crops, and “we have much more in com- mon than we have that is different.” So far within NWACC, there has been no loss or dilu- tion of Oregon issues, Hood River’s McAllister said. NWACC fi elds separate lob- byists in Oregon and Wash- ington, and continues proj- ects each state worked on before the merger. The coun- cil emphasizes education. NWACC Executive Director Ben Buccholz expects a smooth transition as Idaho integrates. “They have a pretty strong advocacy arm and a pretty strong educational arm,” he said of the Idaho council. “We may try to pick up on some of the edu- cational offerings. They do a big FFA student and Legislature lunch in Janu- ary in Idaho. That might be something we try to do in Washington.” College students tour cooperatives in the summer through an Oregon State University-tied program the state’s council initiated. Buc- cholz said NWACC aims to replicate it with Washington State University next sum- mer. Another Oregon-initi- ated program, an FFA quiz on cooperatives that awards scholarship money, is also targeted for Washington. Council-led education can help young people under- stand that cooperatives are great places to work and offer competitive salaries, he said. “What we are trying to do is cultivate the next gen- eration of employees and of cooperative owners,” Buc- cholz said. Even with all of the changes, the bedrock value of every cooperative remains, because members have a voice in its operation, advo- cates say. Cooperatives’ ongoing value can be seen in the more- than-century-old Farmers Cooperative Ditch Co., in the Parma, Idaho, area. Bill Hartman said it func- tions as an irrigation district or canal company with water rights, infrastructure and a per-share assessment, “but its irrigators are board members and directors. Local irriga- tors can change bylaws and the way the company is run by vote.” Farmers Coopera- tive Ditch earlier this year partnered in a sizable set- tling-pond project designed to improve water quality. “A group of directors chose to move that direc- tion, and we pretty easily got that accomplished,” Hartman said. Hemp: legalization could spur growth in even higher-value uses Continued from Page 1 Senate Majority Leader Mitch McConnell, R-Ky., was the bill’s chief sponsor. On Tuesday, McCon- nell tweeted that, “At a time when farm income is down and growers are struggling, industrial hemp is a bright spot of agriculture’s future.” Sens. Wyden and Jeff Merkley, both Oregon Democrats, were also vocal supporters of legalizing indus- trial hemp. “For too long, the outrageous and outdated ban on growing hemp has hamstrung farmers in Oregon and across the country,” Wyden said in a statement. “Hemp prod- ucts are made in America, sold in America and consumed in America. Now, hemp will be able to be legally grown in America, to the economic benefi t of consumers and farmers in Oregon and nationwide.” Estimates show the total retail value of all hemp products in the U.S. in 2017 was $820 million in 2017, according to the Agricul- tural Marketing Resource Center, a national program funded in part by USDA Rural Development. A report by New Frontier Data, which studies cannabis markets, also shows the U.S. CBD sales grew by nearly 40 percent in 2017, reach- ing $367 million. Moran said legalization could spur growth in even higher-value uses of hemp, such as paper, fi ber and construction. “It’s really time we start build- ing our national infrastructure in all aspects of the industry for what this plant can do,” she said.
