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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.