Cooperatives: Delivering value to members and communities

In celebration of MFA’s dedication to cooperatives and youth, each year Today’s Farmer prints the winning speech from the Missouri Institute of Cooperative’s annual meeting. This year’s winner was Trent Ludwig of the Nichols Career Center FFA Chapter in Jefferson City, Mo., where Erin Carl, Stefanie Eslinger, and Jeff Suthoff serve as advisors. Trent is the son of Dale and Rhonda Ludwig of Linn, Missouri.

Here is the winning speech:
A story for perspective: A youngster was telling his family about his Sunday school lesson: Moses crossing the Red Sea. “Moses ordered his engineers to build a pontoon bridge across the sea,” the boy said. “Then his people went across. Then Moses’ reconnaissance planes radioed in and told him an Egyptian tank corps was about to cross the bridge too. So, Moses ordered his jets to blow the bridge up. They did. So Moses and his people were safe.”

“Are you sure that’s how your Sunday school teacher told the story?” his father asked. “Well, not exactly,” the boy admitted. “But the way she told it, you’d never believe it.”
That’s how I feel about the story of American cooperatives. It’s a true success story that’s almost too good to believe. Cooperatives show how individuals can come together for the good of all. Cooperatives have had a huge effect on our economic system, and I believe that will continue for years to come.

We can study the effects of cooperatives by looking at three aspects: 1) the history of cooperatives; 2) the principles that guide cooperatives in delivering value to members and communities; and 3) what does the future hold for cooperatives.

First, let’s look at how this amazing success story got started. Cooperatives in the United States date back to the Mayflower Compact in 1620. It was over 250 years later, however, when Congress did something to give cooperatives a huge boost. In 1890, Congress passed the Sherman Antitrust Act, which allowed farmers to compete collectively in the marketplace. The agricultural industry embraced the cooperative spirit from the beginning. Cooperatives like MFA, Rural Electric Cooperatives and Dairy Farmers of America were set up to help farmers market their products and obtain services at fair rates. In 1933, the Farm Credit System was started with the Farm Credit Act. These cooperatives were run by their own set of principles and bylaws, which helped form many of the traditional cooperatives we know today. In the United States, over 100 million people are members of over 45,000 cooperatives.

Next, let’s look at the principles that guide cooperatives in delivering value to members and their communities. I’d like to share a story with you once told by Abraham Lincoln. Lincoln told of a frog that was mired in a deep, muddy wagon track. His frog friends came and did everything they could to encourage him to get out. Try as he would, he couldn’t. Finally in despair, his friends left. The next day they found their friend by the pond. He was chipper, joyful and real pleased with himself. “We thought you couldn’t get out of that rut,” they said. He replied, “I couldn’t, but a wagon was coming along and I had to!”

That’s exactly how cooperatives begin. They are born out of necessity. People see a need, so they work together to fill that need. For example, rural citizens worked hand-in-hand just to make electricity a reality, and it took thousands of people. Like our frog friend, they probably felt they “had to.” This commitment kept electric cooperatives going even in the back lash of the Great Depression and WWII.

A cooperative is defined as a business primarily operated to provide benefits to members through marketing transactions and through a distribution of earnings from these transactions. In return, members have a responsibility to provide equity capital and govern the business. Cooperatives follow seven guiding principles in delivering value to members and their communities:
•    Voluntary and open membership—means membership is open to anyone who can use the cooperative’s services
•    Democratic member control
•    Members’ Economic Participation—means members can contribute to and benefit from the cooperative equitably
•    Autonomy and independence
•    Education, training and information—to members and the general public
•    Cooperation among cooperatives—utilizing local, regional, national and international structures to strengthen cooperatives
•    Concern for community

Using these seven principles, cooperatives around the world work on behalf of their members.
Finally, what does the future hold for cooperatives? I believe traditional cooperatives will continue to find new and better ways to serve the needs of their members. For example, electric cooperatives today offer a much greater variety of services than they did even 10 years ago, such as internet and cable television.

In addition to traditional cooperatives, today we have New Generation cooperatives. These cooperatives help producers increase their share of the consumer dollar. They add value to basic raw commodities through processing. Plus, they allow farmers to work together in marketing, while maintaining independence on their own farms.

Farmer organizations, such as the National Wheat Growers, National Corn Growers and National Pork Producers Council, are leading proponents of New Generation cooperatives. Examples of new-generation cooperatives include: South Dakota Soybean Processors, West Liberty Foods, and U.S. Premium Beef. Right here in Missouri, we have NEMO Grain, Mid-America Biofuels, and Paseo Cargill Energy. It is estimated that over 100 New Generation cooperatives have been organized to date.

I am reminded of a story about Aristotle and Galileo. Aristotle taught that if a one-pound ball and a five-pound ball of the same size were dropped at the same time from the same height, the five-pound ball would fall five times as fast as the one-pound ball. For two thousand years, this was accepted as a fact. After all, the great Aristotle had said it and it did sound “reasonable.” Then along came Galileo. He questioned this theory. He gathered the scholars of his day to meet him—not to argue, but to ascend the Tower of Pisa. Then and there the experiment was tried for the first time. Aristotle’s theory instantly became a dead duck. The two balls hit the ground at the same time.

The lesson of this story is that the fool argues; the wise man experiments. I believe both traditional and New Generation cooperatives will continue to do just that. They will continue to experiment, explore and study to find new and better ways to serve the needs of their members. They will not accept status quo as “good enough.”