Living with sprawl: as farms give way to subdivisions and traffic lights, America's rural cooperatives struggle to adjust - Cover Story

Rural Cooperatives, July-August, 2003 by Catherine Merlo

Editor's Note: Merlo is a freelance writer based in Bakersfield, Calif., with extensive experience working for, and writing about, cooperatives.

Jim Roskam used to head out each morning along the Rivertown Parkway to his job as general manager of Farmers Co-op Elevator Co. in Hudsonville, Mich. Along the way, he passed a dozen flourishing corn and bean farms--and not a single traffic light.

That was 15 years ago. Today, that same route would take Roskam past new subdivisions, one of Michigan's largest shopping malls, 12 traffic lights--and not a single farm.

Roskam is not alone in his transformed commute. Across the United States, increasing suburban development of farmland is not only altering the rural landscape, it is forcing many rural cooperatives to take a hard look at their future operations and customer base.

Between 1992 and 1997, the United States paved over more than 6 million acres of farmland, an area roughly equal in size to Maryland, according to American Farmland Trust (AFT), a private, nonprofit farmland conservation organization. AFT recently released a study, "Farming on the Edge: Sprawling Development Threatens America's Best Farmland."

"The problem is getting worse," says Ralph Grossi, AFT president. "America developed twice as much farmland in the 1990s as it did in the 1980s."

While business and community leaders, futurists and professors debate the pros and cons of urban sprawl--the loss of prime farmland, the apparent random, unplanned nature of urban expansion--rural cooperatives are on the frontline coping with the challenges caused by sprawl.

Some co-ops have found their membership and customer base so affected by suburban development, they have been forced to close whole divisions. Others have merged with neighboring co-ops in an effort to survive. Others have refocused their efforts on new services targeted at a more suburban customer base. Still other co-ops, especially rural utilities, are thriving as a result of the increased population that suburban development is bringing to their once-rural territories.

New customers, new services

In Roskam's case, more urbanization has compelled the Michigan co-op he manages to expand its services in at least three areas. Farmers Co-op Elevator, a traditional grain marketing and farm supply cooperative formed in 1917, serves a 2,500-square-mile territory between Holland and Grand Rapids. In recent years, the co-op has branched out beyond its shrinking base of traditional farmer-members.

"Rather than complain about increased development in our area, we've diversified to make things happen," says Roskam.

In addition to providing farm supplies and services for farmers, Farmers Co-op Elevator now targets homeowners, greenhouse growers and nurseries. It also focuses on the turf and ornamental business, such as lawn and garden care, golf courses and city municipalities.

"At 640, our membership is the largest it has ever been," says Roskam. "Our gross sales grew from about $6.5 million in 1989 to $19 million in 2002--by diversifying." Only 30-40 percent of Farmers Co-op Elevator's membership now is represented by traditional farmers. The rest, says Roskam, are suburban customers and retired or part-time farmers.

The shift from its old ways hasn't been without some pain. Between 1998 and 2000, Farmers Co-op Elevator closed a full-service agronomy and feed service facility that once catered to traditional farmers. It curtailed the operations of several service stations that pumped gas for customers. And it closed a portable feed-grinding division that delivered on-farm services.

"As a co-op, we have to shift and change gears to continue to roll with the urban growth," Roskam says.

Customer shift in Minnesota

At Federated Co-ops in central Minnesota, a similar transition is taking place. Built by local growers in 1914, Federated Co-ops serves 14 counties in Minnesota and six in Wisconsin. Subdivisions and hobby farms are sprouting up across the land, where property values now range from $3,000 to $24,000 per acre.

Today, Federated Co-ops counts more than 35,000 customer-members, only 2,000 of whom are conventional growers.

"This was once a traditional dairy area with between 2,500 and 3,000 dairy farms," says Tim Kavanaugh, general manager of Federated Co-ops, based in Princeton, Minn. "That number is declining at the rate of about 200 dairy farms per year."

Replacing them are cash-crop operations, mostly with a corn-soybean rotation, and part-time farmers.

"Our traditional feed business is disappearing," Kavanaugh says. "We're seeing more growth in the hobby farms with small animals, horses and pets."

As a result, Federated Co-ops has shifted its product line to more bag feeds. It's opened two Country Stores in the past year, and expects to open two more within the next two years. These retail stores offer feed, animal health products, pet supplies, lawn/garden supplies and equipment.

As further proof of how suburban its customer base has become, Federated Co-ops' propane home-heating business has become its fastest-growing and most profitable operation, with 25,000 accounts.