AG co-ops hit their stride
Dr. Michael Cook has worked with agricultural cooperatives for more than 40 years, as an employee as well as in academia. Today, he holds the Robert D. Partridge Chair in Cooperative Leadership and serves as a professor of agricultural and applied economics at the University of Missouri. His Graduate Institute on Cooperative Leadership attracts co-op leaders from across the nation. As we celebrate the International Year of Cooperatives, we asked Cook for a status report on co-ops in the region, the nation and the world.
MFA Incorporated will celebrate its 100th anniversary in 2014. Dr. Michael Cook has a theory on why this agricultural cooperative continues to thrive.
“If you’re a producer, you trust the knowledge that the co-op brings to you, and you pass that trust on to the next generation,” Cook said. “The co-op becomes an extension of your farm.” This long-term commitment contrasts with an investment in a for-profit corporation, which people tend to sell off frequently.
Cook made his mark with his work on the life cycle of cooperatives. Many ag co-ops have lasted 60, 70, even 100 years or more. Cook’s research into co-ops across the globe led to his theory that farmer-owned co-ops have an unusual ability to regenerate themselves.
In 2012, Cook was named to America’s Cooperative Hall of Fame, which is sponsored by the Cooperative Development Foundation. In his acceptance speech, he talked about what he calls co-op genius.
“MFA Incorporated has that co-op genius—an ability to adapt to member needs and maintain a level of trust that other organizations would just die for,” he said.
Like the best of America’s ag co-ops, MFA has gone beyond its role as a grain marketing and farm supply business to become a knowledge network, Cook contends—and that’s something that today’s farmers need more than ever.
“As resources decrease for the federal agricultural extension service, producers are looking for a source of knowledge that they can trust,” Cook said. “More sophisticated ag co-ops like MFA are filling that role.”
Co-ops still face challenges
Another reason that MFA Incorporated and most other ag co-ops in Missouri and the nation are doing well, Cook added, is because, with recent strong prices across farming sectors, their members have been doing well.
Cooperatives don’t always rise and fall with their members’ success, he said. With co-ops, the patrons are the owners, and you won’t see the high level of volatility that you see in the stock market. Ag cooperatives can be a stabilizing force for members, in part because they generally return a share of profits to members.
But co-ops aren’t immune from hard times. This year’s drought in our region may put downward pressure on income for some producers. “The drought raises a flag for co-ops,” Cook said. “Co-ops depend on transaction volume—both marketing and input volume—and when volume drops, fixed costs must be spread across less volume.”
Overall, U.S. ag co-ops have been improving their balance sheets, upgrading management and listening to their members, Cook said. “They’re adapting to fewer and better educated farmers, and to more complex and volatile markets.”
Co-ops come with their own set of challenges. Raising capital has always been an issue for start-ups. But Cook contends that the number one co-op challenge remains attracting talented managers who empathize with member needs. Other challenges include keeping managers up-to-date, and fending off for-profit organizations looking to steal away top managers with higher pay and stock options.
On the rise across the globe
It’s not easy to find Michael Cook these days. He’s been on the co-op speaking circuit in places like Argentina, China, Italy, Kenya and New Zealand.
“In general, co-ops are doing well in the U.S. and around the world,” Cook said. “The 2008 global financial crisis helped generate tremendous interest.”
In African and other developing nations, agriculture is much more important to the economy than it is here, he added. Organizations like the World Bank and the Food and Agricultural Organization of the United Nations are looking to co-ops to provide farmers with a way to exit poverty.
Whether a co-op is in Africa or the U.S., and whether it’s an agricultural or a grocery co-op, Cook believes that the primary goal of co-ops is to create a collective good. “If governed well, co-op members working for a collective good can embed a higher level of civility into their everyday lives,” he said. “If ever we needed an increase in civility, it’s now.”
For more information, visit youtube.com/coophall and click on “2012 - Michael Cook”.