Need for change trumpeted at NICE: farm bill task force proposes actions to reserve farm-income downward spiral

Rural Cooperatives, Sept-Oct, 2001 by Dan Campbell

A decade ago, shoppers spent an average of 40 minutes in the grocery store, but today it is down to 18 minutes. "Today, meals are assembled rather than cooked, and dining can take place anywhere. I just saw an ad for a minivan with 17 cupholders!" Mullen said.

Agrilink, Mullen said, wants to redefine the word "commodity" by bringing growers and management together to find ways to add value to their products. Strategic thrusts for Agrilink include being the lowest-cost producer of products and services that meet customers needs through a program of relentless improvement, investment in innovation and developing new supplier partnerships.

Total customer service, development of a totally effective workforce and pursuit of profitable growth are goals driving Agrilink as it pursues its vision statement: "To be widely recognized for leadership and accomplishment as a food processing and marketing cooperative by using all of its members' and employees talents."

Are cooperatives getting too big?

In one of several sessions at NICE dealing with concentration, Charles Beckendorf, board vice chairman of Dairy Farmers of America (DFA), and John Reifsteck, board vice chairman of GROWMARK, talked about why their cooperatives have seen the necessity to grow to survive during a time when food companies are consolidating even more rapidly.

"The vast majority of growers say agribusiness is too large, said Reifsteck, who is also president of his local cooperative, Illini FS Inc. "But when we ask them if co-ops should be large enough to meet the competition, they also say yes." This creates a major dilemma for cooperatives dealing with huge companies that may do more than $200 billion (such as Walmart) in sales annually, he said.

"We need efficiency to compete, but members are very concerned about concentration. Producers must have a competitive marketplace," Reifsteck said.

GROWMARK has grown from a single-state operation in Illinois into a multi-state, international cooperative. But a "wave of proposed legislation and regulations" could threaten future co-op mergers, and will--at the very least--make it much more time-consuming and expensive for coops to pursue mergers, Reifsteck said. Some of these proposed new rules would trigger reviews at the attorney general level if a merged co-op would result in a new business with more than $100 million in annual sales.

But many local co-ops--including his own--are approaching $100 million in sales, he said. And these locals have even fewer resources than do regional co-ops to deal with a more cumbersome review process.

"Had these regulations been in place in the past, I don't think we would be as good a co-op as we are today," Reifsteck said. He noted that his father and grandfather were both co-op presidents, but said that if those co-ops had not grown over the years, there is no way they would be able to meet the farm supply needs of today's sophisticated farms.

"It (adoption of the proposed laws) would be like closing the door on our co-op fingers as we struggle to compete. Why should we let legislators in Washington tell us what is good for our future? Who pays for it? We will," he said.