The cooperative future

Derek and I recently returned from brisk Minneapolis, Minn., where we had the pleasure of attending the CHS Inc. annual meeting and new leader institute. We attended as guests of our local cooperative, Mid-Kansas Cooperative, who we conduct some of our farm business through.

CHS Inc. is one of the nation’s largest cooperative and recorded record sales for fiscal year 2011. Its portfolio includes not only grains but fuels, investments and an agricultural financing firm. It was a great experience and one that allowed us to connect with a different group of young farmers and ranchers that we have not interacted with through our Farm Bureau functions.

The message of the new leader workshops and annual meeting was growth and strength through cooperation. In this case the cooperation was quite literal – local agricultural cooperatives.

The conference created a lengthy and still continuing line of discussion between Derek and myself on the need of cooperatives. We conduct some business with the co-op but do not send all our farm dollars that way. Derek continues a working relationship with an independent seed dealer and takes other business to competing companies because they can deliver the same product for the same – or better – price.

But cooperative leaders will argue that keeping business with the cooperative is essential to keeping rural America alive. Cooperatives are often the last door open in rural communities and keep agricultural dollars local. For many small towns and rural areas, it may be the only option for seed, fertilizer and grain storage. Customers also earn patronage dollars that they can’t get from a private business. But in our area, a small community book-ended by two larger cities that are home to agricultural giants Cargill and ADM, we have plenty of choices for grain sales and farm purchases. The cooperative is not the only option.

During the conference, we listened to many co-op leaders talk about the impending doom of small cooperatives. Larger co-ops were eyeing their companies and the future was likely to deliver a buy-out or merger that would take control and dollars out of their community and move it down the road.

Our local cooperative preached the same song – CHS has plans to move its business into our area – under-cutting prices on fertilizer, seed and farm products. It’s not a welcomed move – despite our cooperatives’ membership with CHS.

So where should we, as farmers, stand on this issue? On one hand, we want to see our local cooperative continue to thrive and provide solutions to local farmers and ranchers as well as jobs for our economy. But we always welcome low prices, especially during a period of rising input costs.

It’s the free market system at work and like every industry, we have to decide if we are going to welcome the Wal-Marts or save the small business.

Maybe the cooperative model has run its course. Agriculture has become a large enough business that companies want farmers’ dollars and they are willing to do what it takes to make a sale.

But as we have learned from big-box retailers, when we welcome the chain stores, we say good-bye to local control and hand-shake deals. Cooperatives allow local connections and control and farmers to know exactly where they are sending their dollars.

The cooperatives’ fight will likely be a long and complex one. Right now MKC has plenty of capital and income to propel it for the next several years. But it will, eventually, face added competition from a foe that can deliver rock-bottom prices and more lucrative incentives.

I would venture to guess that the questions Derek and I continue to ask ourselves will be ones that many of you will also ponder. Do you continue to dedicate your business to the local cooperative or will you welcome the competition, even if it comes at a price?

This article was also posted to the Farm Bureau Young Farmers and Rancher blog, which can be found at www.fb.org/blog


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