Wisconsin co-op offers fresh approach to produce auctions - Cover Story

Rural Cooperatives, Jan-Feb, 2004 by Pamela J. Karg

Editor's note: Karg is a freelance writer based in Baraboo, Wis., with extensive experience working with cooperatives.

Growers are hauling professionally boxed fruits, vegetables and flowers into a large metal auction building, where they line up their goods on neat rows of pallets. Keeping a watchful eye on the action is Juanita McDowell, manager of Badgerland Produce Co-op Auction near Montello, Wis.

"We really stress that the auction be fair for both the sellers and the buyers," McDowell says of the newly formed sales outlet. At precisely 10 a.m., she welcomes the growers and the auctioneer goes to work, selling everything from raspberries and sweet com to gladiolas and mums.

"We've had a lot of growing pains," McDowell says. "But we really keep encouraging each other because we know it's going to take time."

The project began when a grower shared ah article on an Ohio produce auction with Laura Paine, an agricultural agent for the University of Wisconsin (UW)-Extension in Columbia County. "I thought it was an interesting idea," says Paine, "but it was the grower's persistence that made it a reality. He wanted to see this happen for Columbia County growers."

After several grower meetings, a core group emerged and decided to forma cooperative. Completing its first year, the co-op continues making small steps toward success.

Farmer-driven co-op

"It's been the same evolution you'd see with any new business," Paine says. "The strength of the organization is that it's farmer driven and directed. That's the weakness, too, because these members are also trying to rtm their farms. It's hard to juggle both."

The auction is the third of its kind in Wisconsin and the first with open coop enrollment. Its organizers learned about produce auctions, structure options, capital requirements and other start-up issues from similar operations at Withee, Wis., which organized as a limited liability corporation, and at Cashton, Wis. The latter is a cooperative of Badgerland Amish growers who obtained information from Amish friends and relatives involved in produce auctions in Indiana.

Badgerland received ah $18,000 Agricultural Development and Diversification grant from the Wisconsin Department of Agriculture, Trade and Consumer Protection, and another small grant from the UW-Extension Central District. In addition to UW-Extension assistance, growers spent hours with UW Center for Cooperatives staff.

"I was very impressed by the speed with which the farmers acted this spring to set up the auction," says the UW Center's Greg Lawless. He advised growers on the fundamentals of creating a cooperative. Center staff provided initial legal assistance for the co-op.

"Despite the reluctance of some of the more conservative but supportive producers, who wanted to wait a year and get more ducks in line, a core group said 'it's now of never,' and they just plowed forward," Lawless says.

Starting in mid-June, auctions were held two to three times per week. In October, auctions were held only on Fridays. Lawless attended auctions several times this past year.

"While supply and demand still aren't where they need to be, it's very impressive what they've accomplished so far," he says. "While a common opinion of co-ops is that they are too slow and clunky due to their democratic nature, this group was definitely an exception."

More buyers

"Just the fact that the auction exists is an incredible success, but they do need to seek out more buyers," says Kathleen Haas, country UW-Extension community development agent. She and ag agent Paine are local resource people to the co-op. "The first year has been rough, but it's given the coop time to figure out roles for people like Juanita, as the manager, and the expectations members have for the auction."

On the buyer side, produce stand operators, supermarket owners and restaurateurs participate. On any day, however, it's guesswork who will show up. Everyone agrees more buyers are needed to strengthen this weakness.

To that end, McDowell makes buyer reps available if buyers are too busy to attend. These substitute buyers have sold to wholesale warehouses and know top-quality produce. The buyer rep gets the limit an absentee buyer is willing to go and then bids accordingly.

Although membership in the cooperative is not required to sell there, it is encouraged through reduced commission rates. Badgerland membership spans the gamut of the local community. Amish and Mennonite farmers participate as both buyers and growers. Other members include Hmong and Hispanic people.

Growers come from down the road or across several counties to participate. Each grower comes as an equal partner, willing to support and encourage the other as they sort out this new business.

"We really have a nucleus of support and almost a family feel," McDowell says.

"It's an excellent example of different cultures and groups having a common interest and working together to make something happen," Haas says.

Recognizing that diversity, producer user fees are set on a sliding scale. Non-Amish growers decide at what level they want to buy in. A parallel fee structure respects the Amish growers' reluctance to join formally organized groups, yet it provides them with similar co-op benefits.