NEWS
from the Quentin N. Burdick Center for Cooperatives
North Dakota State University
November 1998
The mission of the Quentin N. Burdick Center for Cooperatives is to conduct, promote and coordinate university education and research on cooperatives, to strengthen cooperatives' operation, and to work toward expanding employment and economic opportunities through cooperatives.
Dennis Melander
Burdick Cooperative Center Advisory Board member, Dennis Melander, died November 3, 1998 in Mesa, Arizona at the age of 70.
Dennis represented Cass-Clay Creamery on the Burdick board. He grew up near Hunter, farmed near Hope and Gardner and served on many agri-business boards. He and his wife Mary Ellen and their four children were honored in 1993 with the Farm Family of the Year Award. We are thankful for the service Dennis gave to North Dakota, the agricultural community and the development of the Burdick Center.
Our condolences go out to the Melanders.
From the Chair of the Board
Low commodity prices and other challenges in agriculture make the cooperative way of doing business more important than ever. We cannot remain isolated as individual farmers. We must come together to face these challenges.
North Dakota cooperatives continue to provide services, supplies and income for members. At the same time they have infused economic growth in many communities around the state.
Education is one reason for the success of the new generation co-ops. The Quentin Burdick Center has contributed to that success by providing research, leadership and co-op training for students of all ages.
Just as members come together to form cooperatives, we must continue to work together to weather these tough economic times.
We welcome the new QBCC Director, Dr. William Nelson.
Sincerely,
Mark Watne, QBCC Advisory Board Chair
Co-op Education Goes Multi-Media
The Farmers Union Educational Foundation Grant was used in part this summer to create a multi-page web site for the QBCC. Jodi Young and Bill Nelson worked to include a variety of information on cooperatives. Business people, students, farm and city residents and out-of-state web surfers can learn of the QBCC's goals, projects, publications, upcoming events and transcripts of speeches delivered through the Bloomquist Lecture Series.
Check out the reprint of the home page on the back cover of this newsletter. Help spread the word that this co-op information is only a mouse click away for anyone from anywhere in the world, thanks to technology!
The second phase of the Farmers Union grant is now underway. One to five day lesson plans are being developed through the use of multi-media.
The goal is to teach future accountants, agribusiness people, attorneys and other university students around the region about the advantages the cooperative business structure offers its members and consequently its communities.
Sidney Olson Reflects on QBCC
Former QBCC Advisory Board Chairman Sidney Olson recently took time out to reflect on the center's roots and progress. The long-time Rural Electric Cooperative district board member and Mohall, ND farmer helped found the center after the death of Senator Quentin Burdick.
"Senator Burdick was an ideal person to center it after because he had been a co-op supporter throughout his political life," said Olson.
Prior to the establishment of the $800,000 endowment fund, Olson said, there hadn't been cooperative education in our North Dakota colleges and universities. Meanwhile, businesses were looking for key personnel knowledgeable in that area.
The need for such graduates has increased as the number of product-enhancing ventures has grown in our state. Business has become too capital intensive for one person to handle, but working with neighbors and other investors the possibilities become a reality, according to Olson.
"Together we can compete against the large companies that had a headstart on us," says the veteran of rural electric activism. "The QBCC is off to a good start dealing with education, research and assisting coops. It has a good future, but like any endowment fund, the more money in it, the more that can be accomplished," Olson emphasized.
Individuals can still contribute now or at any time in the future, he said.
Olson has retired from the Advisory Board but he looks forward to the publication of the Quentin Burdick biography and other QBCC accomplishments.
New QBCC Director Named
Dr. William C. Nelson is the new director of the Quentin Burdick Center for Cooperatives. Nelson comes to the center with more than 25 years of experience at NDSU in the Department of Agricultural Economics. He has served as provost of the Tri-College University and director of the Northern Plains International Trade Program. He has conducted international research and directed the Institute for Natural Resources and Economic Development (INRED), the research division of the Agricultural Economics Department at NDSU.
Nelson has conducted marketing research and feasibility studies on a number of new generation cooperatives.
Nelson replaces Dr. David Cobia who has retired and is living in Australia.
Nelson has issued a working paper available on the QBCC web site. In it he says, "The Burdick Center is at a defining moment. It has gone through its birth and initial growth and now has to determine its second stage."
Nelson outlines the possibilities under four headings:
*Education on campus and through co-ops
*Public and confidential research
*Outreach communication
*Coordination/cooperation
Nelson invites comment on this blueprint while acknowledging flexibility and adjustment will be needed as QBCC members identify more specific objectives.
If you don't have access to the Internet, please call for a copy of the QBCC blueprint.
Thanks to the Founders and Goals for the Future...by Dr. Bill Nelson, Director
Long-term professor of cooperatives and the first director of the QBCC, Dr. David Cobia, retired at the end of January. Two of the first employees of the Center, Dr. Brooks Wilson and Sanjib Bhuyan, previously moved on to new challenges. The Center and the cooperatives in the region owe these individuals, particularly Dr. Cobia, thanks for their dedication to the cooperative education and research. I am very aware of the high standards set by Dr. Cobia and hope to continue to serve the cooperatives in the region through education, research and outreach activities.
This has been an exciting year of new beginnings. A month prior to becoming director, I started teaching the cooperatives course and became involved in the development of an executive training program for the new generation cooperatives. Later, a joint effort with Montana and Wisconsin led to a proposal and funding for a project on the future business environment faced by traditional cooperatives and their training needs to prepare for that future.
This year, I had the opportunity to travel to Japan, Korea and Ukraine, in addition to two NCFC conferences and the ACE conference. I've also hosted groups from Ontario, Iowa and Australia who were interested in our new cooperatives. At the printing of this newsletter, we are waiting for commitments to the training program for the new generation cooperatives.
In March 1998 the Advisory Council of the QBCC approved an expanded mission which includes traditional and in-service education, general and confidential research and outreach activities. We have started to implement the priorities in this mission. During the next few years, we hope to bring the cooperatives course statewise through IVN (Interactive Video Network), establish an on-going training program for the new generation cooperatives, assist the traditional cooperatives in their strategic planning processes, provide educational modules on cooperatives for accounting, business and law courses, and respond to individual and collective needs from cooperatives in regards to education and research.
If you would like to send Dr. David Cobia a retirement note,
you may e-mail him at dcobia@bigpond.com or write:
Dr. David Cobia, Australia Melbourne
West Mission, PO Box 354
Niddrie, VIC, Australia 3042
Al Bloomquist Lecture Series--Advantages of Cooperative Business Structure
Ralph Morris, recognized expert in the field of cooperative law, spoke March 31, 1998 at North Dakota State University. Morris is general counsel for American Crystal Sugar Co. and is the chairman of the board of directors for the Doherty, Rumble and Butler law firm in St. Paul, MN. He was instrumental in the formation of United Sugars Corporation and Midwest Agri-Commodities Co. Thirty of the 130 attorneys in his office are working on the initial stages of the United Spring Wheat Cooperative.
Morris said research indicates the public favors products produced by farmers, so he encourages management personnel, faculty and students to remember that when promoting their products. Morris said farmer input is also important to large agribusinesses such as Cargill and Archer Daniels Midland (ADM). Both companies value solid relationships between their corporate office and growers. Morris crafted the lease between the ProGold plant in Wahpeton and Cargill.
The major focus of the Morris address outlined the pros and cons of Co-ops (Cooperative Corporations), the LLC (Limited Liability Company) and the C Corp (Corporations). When taxes are the issue, Morris said the LLC is advantageous, but in regards to financing, the co-op's flexibility gives it the edge. The co-op is also the best investment model in regards to anti-trust regulations and securities.
When equity is the issue, the cooperative business structure is not favored. Investors can only put in 8% in Minnesota. "As those people age and move South so goes the market," said Morris.
Flexibility is another limitation in the cooperative structure. The time needed to make management decisions ties the hands of the cooperative's CEO because of the need for grower meetings. Meanwhile, the CEO at ADM or another large corporation can quickly react to changes and challenges in the marketplace. He or she can seize the financial moment! Morris challenged the Burdick Center to pursue this disadvantage. He asked, "How can the growers keep control but allow for flexibility and change within the co-op?"
Morris also raised a red flag for those joining a new co-op. Check out the membership contract carefully, he warned, because a bank or holding company may hold you accountable for more than your investment if the financial institution is short on start-up funds. Limited liability co-ops are advantageous because the investor is liable only for the amount he/she invests.
Morris said he and his law firm receive calls every week from potential co-ops, but he and his staff can only take on 20% of those requesting professional advice. The majority of proposed co-ops are not fulfilling a need, he said, instead they are just motivated by economic development, in other words, a desire to create jobs in their respective communities.
Morris saluted Al Bloomquist as the driving force behind the first new age cooperative, American Crystal Sugar. Bloomquist, former president and long-time American Crystal executive, was present and was singled out with appreciative applause.
For more information on the pros and cons of various business structures, access the University of Wisconsin Center for Cooperatives web site at http://www.wisc.edu/uwcc/staff/lawless/gregtab.html
New Burdick Board Member Owns State's Largest Dairy
Wanda Hogness grew up on a grain farm new Langdon, loved horses and was trained as a medical secretary. But that's past history. Now at the age of 40, she and her husband Tom have become the biggest dairy operators in North Dakota.
Wanda is the newest member of the Burdick Center's Board of Directors and represents Land O'Lakes Cooperative. She and her family own 5-Star Dairy near Milnor, ND. That's about 70 miles southwest of Fargo.
Tom has been involved in dairy work most of their 20 year marriage, but now it has become truly a family operation. At a time when most dairy farmers are getting out of the business, the Hogness family considered expansion. With management help from Land O'Lakes, they increased their herd tenfold.
"We worked with the Minnesota Dairy Development Program through Land O'Lakes," Wanda explains. "They told us to build up our equity and LO'L developed a turn-key program that we joined."
Tom and Wanda were told to line up additional staff and to multiply their herd. They calved 10 cows a day, "So the fall and winter of '97 was crazy!" Wanda recounted.
LO'L helped them research various aspects of dairying including financing, herd size and actual construction of the barn.
Flexibility proved essential when the barn wasn't ready in time. The herd was moved in stages as construction was completed.
Besides housing, nutrition is a key concern so they hired a nutritionist who visits one or two times a month. "Feeding the cows is a science," Hogness explains. "I read horse magazines growing up, but now I'm into cow magazines. When you have over a thousand cows, you don't want them dropping production."
Tom and Wanda have two daughters and a son, ages 19, 16 and 8. The size of the business gave all five family members jobs during the summer months. When school started, however, the children replaced milking and maintenance duties with extra-curricular activities. Ironically, growing their business has allowed Tom and Wanda more time with their family. Their expansion forced them to hire about 24 employees, and that help has allowed them time away from the farm for school, church and community events. Now Tom's days are 12 hours long and Wanda has given up medical secretary work for 9 hours of bookkeeping and dairy management duties each day. She's also taking on the role of tour guide since their farm is now a curiosity, attracting people from around the world. They are still adjusting to the 24-hour-a-day operation, but are appreciative to Land O'Lakes for its expertise.
Recent NDSU Publications Available On-line or by Mail
Just type in the web site address: http://agecon.lib.umn.edu/ndsu.html or fax a request to Carol Jensen (701-231-7400) or call for your free copy from the NDSU Agricultural Economics Office (701-231-7441).
*Potential Role of Non-Agricultural Cooperatives in Rural Development: Focus Groups in Rural North Dakota.
*Non-Agricultural Cooperatives in the United States.
*The State of North Dakota: Economic, Demographic, Public Service and Fiscal Conditions.
*Economic Feasibility of the Cattle Feeding Industry in the Northern Plains & Western Lakes States.
*Industrial Hemp as an Alternative Crop in North Dakota.
*Bilateral Trade of Durum Wheat & Barley Under CUSTA & Implications for Farm Prices & Income.
*Potential Tourism Development in North Dakota with Emphasis on Southwestern North Dakota.
*Casinos in the Upper Midwest: A Discussion of the Impacts.
*Factors Affecting the Supply of High Quality Spring Wheats: Comparisons Between the US and Canada.
*Consistency of Quality Characteristics in Hard Red Spring Wheat.
*Workforce Profile of New or Recently Expanded Manufacturing and Exported Services in North Dakota.
*An Economic Assessment of Wetland Mitigation in Northwestern Minnesota.
*Economic Contribution of the Barley Industry.
*Credit Guarantee Programs and United States Market Share in Selected Wheat Import Markets.
*Export Enhancement Strategies for Small and Medium Rural and Agricultural Firms.
*Financial Characteristics of North Dakota Farms.
*1998 Outlook of the United States and World Sugar Markets.
*Characteristics, Expenditures and Economic Impact of Resident and Nonresident Hunters and Anglers in ND.
*Regional Funds in North Dakota.
*Analysis of Farm Financing & Risk Management for North Dakota Farmers.
*Economic Contribution of the Sugarbeet Industry to North Dakota & Minnesota.
*Perceptions of Leafy Spurge by Public Land Managers, Local Decision Makers & Ranch Operators.
*Ranch Operators' Perceptions of Leafy Spurge.
*Understanding Agriculture's Transition into the 21st Century.
*In-Migrants to North Dakota: A Socioeconomic Profile.
Co-ops Changing with the Times
A recent article in North Dakota's "Going Places" magazine honored the work of cooperatives in our state. Comments made by two co-op managers appear to echo the mission of the Burdick Center, that is, to train the next generation in order to ensure a sturdy financial future.
Orlan Buseth, manager of the Farmers Union Oil Company in Velva, Butte and Drake, has worked his way up since joining the company as a mechanic in 1959. When he reached the management level, the store's annual volume was a half million dollars; today it is $9 million.
Buseth gives credit to his progressive board members and out sourcing computerized bookkeeping work. He says both CENEX and ND Farmers Union have provided education and motivation for co-op managers, employees and boards. He warns, however, that, "Co-ops will have to keep hustling to keep growing." Buseth says it's different today because the customer doesn't always have co-op loyalty.
Buseth told "Going Places," "I think there is a future for cooperatives, but there will be changes. It's up to the young people to figure it out. Financially strong co-ops can maintain dedicated members."
Tony Bernhardt, Rugby Farmers Union Co-op manager, agrees with Buseth. Bernhardt told "Going Places," "The future financial health of co-ops will require directors and managers be innovative in finding solutions."
"We've got to break the traditional thinking of how things used to be," Bernhardt said. "Co-ops need to evolve to keep in step with the changing needs of patrons."
Bernhardt's convenience stores on US Highway 2 in Towner and Rugby see a steady flow of customers throughout the year.
Trying to stay on top of the trends Bernhardt warns, "We need to diversify. We can't just focus on spring and fall agronomy sales. Farmers are taking too much risk and we need to help them manage that risk." "This is even more important to our young producers. One way we can help protect them from risk is by offering future contracting for input costs."
"We need to get closer to our patrons," Bernhardt said. "We can't be middlemen. Somehow, we need to help farmers be involved from farm to store shelf in order to get the profits generated at that level."
Assessing the future, Bernhardt concluded, "We need to figure out how to work closer together as co-ops in order to survive. We need to pull together now more than ever."
The entire article can be read in the October 1998 issue of ND "Going Places" Magazine, Schmidt Publishing, 209 27th Ave. NS, Minot, ND 58703 or call 701-858-1600.
Building the Future of North Dakota Agriculture
The Commission on the Future of Agriculture recently published a 15-page report that outlines a vision, goals, objectives and actions. The vision is to position North Dakota as the trusted provider of the highest-quality food in the world with:
*Prosperous family farms
*Thriving rural communities
*World-class stewardship of resources
The goals are:
1. Make ND agricultural products synonymous with high quality, dominating the premium markets.
2. Increase value-added agricultural processing.
3. Diversify and increase the value of agricultural production.
4. Increase farm and non-farm cooperation that supports thriving rural communities and enhances our natural resources.
5. Create a political, regulatory, economic, trade, financial and natural resource environment in which ND producers can compete in the global marketplace.
The second goal calls for an increase in value-added ag processing and recommends the US Congress and the ND Legislature provide tax incentives for investors in value-added processing.
It also recommends the strengthening of the Agricultural Products Utilization Commission (APUC).
The Commission asks the ND Legislature to assure a permanent funding source to support value-added research and development through APUC, which would remain under the control of farmers.
The Commission's report calls for the providing and promotion of finance programs for value-added ag processing businesses and an innovative financial tool so that non-farm North Dakotans can invest in value-added ag processing projects. And finally it calls for the location of value-added businesses in rural areas, where feasible, and a high preference for ND locations.
Copies of the report from the Commission on the Future of Agriculture are available through the ND State Agriculture Commissioner's office (800-242-7535) or from the publisher, ND REC/RTC Magazine, PO Box 727, Mandan, ND 58554-0727 or call 701-663-6501.
Surf the net and link up with co-op news!
Access the Burdick Center web site to gain information on staff, projects, co-op ideas elsewhere in the country, publications and upcoming events. Here's what you'll find on the homepage when you simply go on-line at http://www.ag.ndsu.nodak.edu/qbcc
This newsletter is published by the Quentin N. Burdick Center for Cooperatives, Box 5636, NDSU, Fargo, ND 58105-5636. Phone 701-231-1016. Fax 701-231-1059. Advisory Board: Mark Watne, ND Farmers Union, chair; Gerald Kuster, Harvest States, vice chair; Dennis Hill, ND Association of Rural Electric Cooperatives; Donald Anderson, NDSU; Allen Henderson, NDSU; Everett Dobrinski, St. Paul Bank for Cooperatives; Francis Leiphon, CENEX; David Loer, Minnkota Power; Robert McPhail, Basin Electric; Alan Qual, Cass-Clay Creamery; Dale Stenerson, Farmland Industries and Wanda Hogness, Land O'Lakes.