Southern Ag Today

Author: Steven Richards

  • Agricultural Cooperatives in the United States: How Does the South Stack Up?

    Agricultural Cooperatives in the United States: How Does the South Stack Up?

    Good Reasons to Cooperate

    Southern Ag Today has recently published several articles on why producers should consider joining, starting, or becoming more involved with a cooperative in their state. An annual publication from the US Department of Agriculture’s Rural Development[i] (USDA RD) offers solid financial reasons to do the same.  How does a return on investment (allocated equity in the case of a cooperative) of 11.3% to 45.2% sound? It appears that cooperatives offer a distinct advantage to farmers in their state.  

    How Does the South Stack Up?

    The readership might be interested in a little competition (or some light post-holiday reading) – how does the US Southern Region[ii] stack up with the rest of the US?  Table 12 in the report cited above provides information on cooperatives represented in each state, which are illustrated with the heat map graphics below and ranked[iii].

    Cooperatives Doing Business in Each State

    Texas (#2) pulls its weight, ranking behind Minnesota in the number of cooperatives doing business in the state.  Oklahoma (#11), Tennessee (12th), Mississippi (16th), and Alabama (17Th) also make the top 20.  

    Number of Cooperative Members in Each State

    Kentucky comes in first place!  Virginia (#8), Texas (#9), Tennessee (#11), Arkansas (#18), Mississippi (#19), and Oklahoma (#20) combine forces to propel the Southern US into just over one-third of the top 20 placements. 

    Marketing Cooperatives Headquartered in Each State

    Marketing cooperatives generate their revenue from the sale of members’ products. Texas again takes the #1 spot, but only Virginia in the Southern Region makes the top 20 at #19. These results, however, may not reflect next-generation cooperatives and cooperatives organized as LLCs (i.e., peanut cooperatives in Georgia)[iv].

    Supply and Service Cooperatives Headquartered in Each State

    Supply and service cooperatives provide farmer members with what their name suggests. Southern states claim nine of the top 20 spots, with Tennessee (#4), Alabama (#6), Mississippi (#9), Texas (tied for #9), Oklahoma (#12), Arkansas (#16), Kentucky (tied for #16), Virginia (tied for #16), and Louisiana (#20). 

    And the Winner Is….

    Honestly, anyone who is a member of a well-functioning cooperative! In terms of sheer numbers, the North Central Region is first, followed by the Southern Region in second.  However, the presence of more cooperatives, their members, and specific types of cooperatives in various regions of the US is largely influenced by the types of commodities grown and the number of different commodities that can be cultivated in each region.  Farm size and the density of farming operations in each location also play a role.  Finally, farmers’ willingness to collaborate with other farmers seems basic, but refers to the willingness of farmers from two or three generations in the past.  Many cooperatives have been around for a long time, with 78% of all cooperatives operating for more than 50 years[1].

    The “well-functioning” part of a cooperative is largely due to the engagement of its members. If your farm is part of a cooperative, strive to be engaged with it by attending meetings, voting in elections, serving as a board member, and encouraging the next generation to do the same.

    If you are looking to start a cooperative or improve a cooperative’s performance, many land-grant universities have specialists who help cooperatives succeed by training and developing cooperative board members and staff. 

    [i] Service Report 87.  USDA Rural Development Rural-Business Cooperative Service.  November 2024 [Unpublished Report]. https://www.rd.usda.gov/publication-cooperatives/sr-87-agricultural-cooperative-statistics-2023

    [ii] The US Southern Region, as defined by the Southern Risk Management Education Center, comprises 13 states, which account for approximately 26% of the US states (and a larger proportion of the land mass). The other regions are also defined, based on the types of crops grown in each region. 

    [iii]  To keep things simple, this article just compares the number of states each region has in the Top 20, as the acres of farmland, number of farmers, and the volume of business through each cooperative in each region may vary significantly.  

    [iv] The report excludes cooperatives that deviate from the one-member, one-vote model, as well as those that handle more than 50% of their volume from non-members.  

    Richards, Steve. “Agricultural Cooperatives in the United States: How Does the South Stack Up?” Southern Ag Today 6(1.5). January 2, 2026. Permalink

  • Using Cooperatives to Enhance Competitive Advantage

    Using Cooperatives to Enhance Competitive Advantage

    A cooperative is owned and controlled by its members. It can therefore negotiate on behalf of its members to increase competitive advantage by achieving efficient operational scale, negotiating better product and input prices, reducing production risk, obtaining better insurance, engaging the next generation, and handling the administrative red tape burden for its members. 

    Marketing 

    One of the most common uses of a cooperative is to aggregate farm products and collectively market these products on an efficient scale.  Many markets, such as wholesale and institutional markets, are not accessible to smaller, individual growers.  Value-added processing is another layer of risk management that newer, next-generation cooperatives employ to access markets and increase economic value to their members.  PYCO Industries is a good example: a cottonseed oil mill with over 50 cotton gin members.

    Ownership and voting details aside, other business structures, such as LLCs and S Corporations, may address many of these marketing items.  However, the Capper-Volstead Act protects cooperatives from some provisions of antitrust legislation [entire history and explanation and a shorter blog version].  One purpose of this exemption is to give farmers more bargaining power with large processors and distributors, to whom the farmers are at a competitive disadvantage.  Another purpose is to allow farmers to unite to survive economic downturns.

    Production Risk Management

    Cooperatives can manage production risk by joining farmers in various growing regions to help them survive widespread production losses.  Shoreline Fruit Cooperative is a good example.  This cherry grower cooperative mitigates the risks of total cherry crop loss by sourcing from multiple growers in separate microclimates in the Great Lakes region.  

    Bargaining for lower input costs is another production risk management technique many supply (or buying) cooperatives use.  The Southern Loggers Cooperative is a successful cooperative that helps its members get the best prices on fuel, truck parts, and other supplies. The Producers Cooperative Association, the United Ag Cooperative, and the  Southern States Cooperative are good examples of southern agricultural supply cooperatives. 

    Casualty and Liability Insurance

    Mutual insurance companies are good examples of consumer-owned cooperatives.  The first cooperative in the US was a mutual fire insurance company, the Philadelphia Contributionship, founded in 1752 by Ben Franklin. 

    Cooperatives are also helpful in obtaining better rates on liability insurance, and prescribed fire cooperatives are good examples. The Aiken Prescribed Fire Cooperative in South Carolina is working with other prescribed fire cooperatives to find better options for liability insurance products for using prescribed fire to manage privately held forest lands. 

    For cooperatives looking for insurance, it should be mentioned that Triangle Insurance, located in Oklahoma, is a cooperative that specializes in insuring other cooperatives.

    Engaging the Next Generation

    Engaging the next generation and retaining a dedicated workforce is challenging for many farm businesses. A cooperative can be an excellent tool for addressing this challenge by bringing in the next generation as cooperative owners. Shifting one’s role from “employee” to “owner” is a powerful motivation, and allows a cooperative the potential to offer a higher annual income (versus wages).  A good example is the Cape Romain Oyster Cooperative, which formed solely to bring along the next generation of employees-as-owners. For cooperatives with high equity/capitalization requirements, the cooperative may elect to have new owners buy in, over time, to meet these equity requirements. This buy-in, over time, may also provide a reasonable trial period for prospective new owners. 

    Reducing Administrative Burdens

    Ever hear the quote “if it is not documented, it didn’t happen?” Farming today involves more documentation, paperwork, and general red tape than ever. It may be worth starting a cooperative purely to share this administrative burden and reduce legal risks. Citrus grower cooperatives, such as  Florida’s Natural, are good examples. These cooperatives handle paperwork items such as Good Agricultural Practices (GAP and Harmonized GAP), pesticide application records, and traceability for their members. 

    Enhance Your Competitive Advantage!

    The fundamental difference between a cooperative and other business structures is that the farmer-owners of a cooperative have collective “skin in the game”.  If you are part of a cooperative, strive to be engaged with that cooperative by attending meetings, voting in elections, becoming a board member, and encouraging the next generation to do the same.

    If you are looking to start a cooperative, many land-grant universities have extension personnel and cooperative specialists who help cooperatives succeed by training and developing cooperative board members and staff. Also, CooperationWorks! is a cooperative that supports land-grant and non-land-grant cooperative development centers. A map of development centers can be found on their website, along with many good supporting materials. 

    Richards, Steve. “Using Cooperatives to Enhance Competitive Advantage.” Southern Ag Today 5(29.5). July 18, 2025. Permalink

  • Before Starting a Farm Transfer: A Farm Family Pre-Agreement

    Before Starting a Farm Transfer: A Farm Family Pre-Agreement

    Often, when speaking to groups of young farmers looking to return to the family farm, the first question I am asked is, “What is the best way to start a farm transfer?”  In most circumstances, I typically recommend a trial period for both generations. Instead of jumping into a farm business partnership, the junior generation (future owners) and the senior generation (current owners) must agree on how they will work together and how rapidly the farm transfer process will progress. This is something I refer to as a “pre-agreement.”

    A pre-agreement should contain at least three parts: how to work together, how to develop the junior generation’s skills, and how long a trial period is necessary. Keep this agreement simple; it is not a legal agreement but a precursor to one. Treat this like an internship opportunity, where both sides must work together to improve the skills and employability of the junior generation and benefit the business for both generations.

    How to Work Together

    Get both generations’ expectations out on the table. It is better to air one’s concerns ahead of time than have difficult situations result. These “working together” guidelines should include basic things such as pay, time off, and when people are expected to show up and leave work. It is also wise to discuss how much autonomy or decision-making authority each person will have: will decisions be shared, or will the owner be the sole decision-maker?  Also, both parties need to be realistic about working together, even discussing how to part ways amicably if things don’t work out during this pre-agreement process. 

    How to Develop the Next Generation

    The next generation rarely has all the necessary skills and management ability to run the farm immediately. It is also just as rare that the senior generation will have all the necessary skills to be excellent trainers and teachers. The solution is to craft a development program that assesses the skills the junior generation needs and places the training responsibility on the senior generation. If training the next generation is too tricky, don’t be afraid to look to outside sources for farm manager training, such as college degrees, cooperative extension programs, trade schools and associates degrees, and Farm Bureau young farmer and rancher meetings.

    How Long of a Trial Period

    The junior and senior generations must agree on how long this pre-agreement trial period will last. At the end of the trial period, plan to make a decision: continue farming together; modify the working relationship and progress the farm transfer process; or part ways in a friendly manner. Both parties must always be open to voicing and hearing concerns.  For longer agreement periods, it’s a good idea to schedule routine checkpoints (at least annual, if not more frequent) to discuss how each generation is living up to their side of the bargain.

    A Sample Pre-Agreement

    A sample is provided here as an example of the types of things a pre-agreement could address.  Feel free to modify this sample to fit your farm’s circumstances.  If additional materials are needed, please talk to your local extension agent.  You may also find general business transfer guides at https://coopcenterSC.org. 

    Richards, Steven. “Before Starting a Farm Transfer: A Farm Family Pre-Agreement.” Southern Ag Today 5(15.1). April 7, 2025. Permalink

  • Making Cooperatives More Relevant and Exciting

    Making Cooperatives More Relevant and Exciting

    I truly enjoyed Phil Kenkel’s Southern Ag Today’s Article “Why Don’t We Start More Cooperatives?” The points and questions he raised got me thinking about cooperative formation opportunities and challenges faced by today’s business owners and society in general. 

    Recently, Phil’s article again came to mind when someone interviewed me about what it meant to run a cooperative development center: what were the challenges and opportunities? My answer to this question was that we must make cooperatives more relevant and exciting. 

    Relevance

    Certainly, the successful cooperatives we have in the United States are prime examples of relevance: credit unions, mutual insurance companies, cotton gins, peanut shellers, dairy processors, and many more.  By relevance, I mean a general awareness of cooperative organization being an option for incorporation.  

    I also believe we may be on the cusp of a cooperative resurgence.  Over 200 years ago, the cooperative movement was largely credited as society’s reaction to the Industrial Revolution, when the workforce had to adjust to mechanized production processes. At the same time, the manufacturing and transportation industries were consolidating into very large firms.  

    Today, we are amid the Digital Revolution, where society is grappling with information technology and artificial intelligence during a period of consolidation and rapid growth of technology firms, which has immensely changed commerce.  Cooperatives may yet again provide society with a response to these trends.   

    Excitement

    How does one get excited about a business structure? Well, a cooperative does have the word “cooperate” embedded in it, so that helps.  Also, in its most basic form, cooperative membership equates to one member, one vote, meaning equal voting representation for all its members.  So, a cooperative structure also embodies the principles of democracy.

    However, my take is that corporate by-laws (although important) are not an exciting rallying point.  Rather, what is the purpose of groups coming together? To address common social, economic, or cultural needs, as defined by the National Cooperative Business Association? How about gaining additional power and independence in an economic system where smaller actors are having an increasingly difficult time? All the above reasons seem compelling to me!

    The local foods movement has provided plenty of excitement and challenges to this space. A “food hub” is a relatively new business model that encompasses the aggregation, distribution, and marketing of local/regionally produced food products (Bartham, 2010).  This definition is remarkably similar to that of a farmers’ cooperative, aside from the fact that some food hubs are non-profit corporations (or other entities) not owned and controlled by farmers. 

    At the South Carolina Center for Cooperative and Enterprise Development, we have had good results generating excitement about cooperatives focusing on these current trends. Within the past 4 years, we have started eight new cooperatives, each addressing issues important to their members.  Some examples:

    Once started, of course, the work does not end.  Keeping cooperatives running smoothly and efficiently is also necessary.  Thankfully, there are many sources of support.

    Assistance for Cooperative Development

    Like the SC Center for Cooperative Development at Clemson University, many land-grant universities have cooperative centers that help train new board members and develop current board members. There is also CooperationWorks!, a non-profit that supports both land-grant and non-land-grant cooperative development centers. A map of development centers can be found on their website, along with many good supporting materials. 

    The USDA Rural Development encourages cooperative development and helps fund cooperative development through its Rural Cooperative Development Grants, gives priority points to cooperatives on its Value-Added Producer Grants, and provides direct assistance to minority-owned cooperatives through its Socially Disadvantaged Groups Grant.  

    Returning to Phil Kenkel’s article with his last line quoted, “Perhaps we just need to recycle some good old ideas!” seems appropriate to repeat. Maybe I would modify it just slightly to “recycle and repackage.” 

    Resources and References

    Bartham, J. (2010). Getting to Scale with Regional Food Hubs.  USDA Rural Development website accessed 7.17.2024. https://www.usda.gov/media/blog/2010/12/14/getting-scale-regional-food-hubs

    CooperationWorks! The National Cooperative Development Network.  Cooperative Development Locations.  Website accessed 7.17.2024. https://cooperationworks.coop/member-locator/#search

    Kenkel, P. (2024). Why Don’t We Start More Cooperatives? Southern Ag Today.  https://southernagtoday.org/2024/05/17/why-dont-we-start-more-cooperatives/

    National Cooperative Business Association. (2024). What is a Coop?  NCBA website accessed 7.17.2024 https://ncbaclusa.coop/resources/what-is-a-co-op/

    South Carolina Center for Cooperative and Enterprise Development (2024). Website accessed 7.17.2024. https://coopcentersc.org/

    South Carolina Department of Agriculture (2022). New Beef Co-op Seeks to Expand Processing, Create SC Beef Product.  SC Department of Agriculture News Release. https://agriculture.sc.gov/new-beef-co-op-aims-to-expand-processing-create-sc-beef-product/

    South Carolina Department of Agriculture (2024). New Cut Flower Co-op Working to Market South Carolina Blooms. SC Department of Agriculture News Release. https://cooperationworks.coop/success_stories/new-cut-flower-co-op-working-to-market-wholesale-south-carolina-blooms/

    United States Department of Agriculture, National Institute of Food and Agriculture. Land Grant Colleges and Universities (2019).  Website accessed 7.17.2024. https://www.nifa.usda.gov/sites/default/files/resource/LGU-Map-03-18-19.pdf  

    United States Department of Agriculture, Rural Development (2022). Preserving Seafood Heritage by Bringing in Next Generation.  Rural Development Success Stories. Website accessed 7.17.2024. https://www.rd.usda.gov/newsroom/success-stories/preserving-seafood-heritage-bringing-next-generation

    United States Department of Agriculture, Rural Development (2022). Gullah Coop: Growing Food, Preserving Culture.  Rural Development Success Stories. Website accessed 7.17.2024. https://www.rd.usda.gov/newsroom/success-stories/gullah-co-op-growing-food-preserving-culture

    United States Department of Agriculture, Rural Development (2024). Website accessed 7.17.2024. Webpage resources:

    Service Center Locator https://www.rd.usda.gov/browse-state

    Rural Cooperative Development Grant https://www.rd.usda.gov/programs-services/business-programs/rural-cooperative-development-grant-program
    Value Added Producer Grant     https://www.rd.usda.gov/programs-services/business-programs/value-added-producer-grants
    Socially Disadvantaged Groups Grant https://www.rd.usda.gov/programs-services/business-programs/socially-disadvantaged-groups-grant

    Richards, Steven. “Making Cooperatives More Relevant and Exciting.” Southern Ag Today 4(33.5). August 16, 2024. Permalink

  • Interested in Forming a Cooperative? Take the Cooperative Challenge!

    Interested in Forming a Cooperative? Take the Cooperative Challenge!

    There are many good reasons for starting a Cooperative, such as collaborative marketing, processing, distribution, or administration.  And there are many different goals for cooperatives to pursue, such as enhancing local food systems, increasing resources and funding, and even sharing philanthropic or community development goals. With all the potential cooperative purposes and goals, how does a group of individuals start the conversation about how they would like to form their cooperative?  

    One way is to start with a set of proposed by-laws formed by a similar cooperative and have this new group of individuals voice their desires on how they would edit them to fit their situation. This method is suitable, especially if coordinated with an experienced cooperative development professional (these people are typically located at land grant colleges and cooperative development centers in each state). 

    There is one potential drawback to the face-to-face development scenario, and that is ensuring that all members have voiced their concerns.  To this end, the South Carolina Center for Cooperative Development developed an online cooperative development tool called “The Cooperative Challenge.” A link to this survey is located here https://clemson.ca1.qualtrics.com/jfe/form/SV_aeCSaXEpEKJp3GS

    Participants can take this challenge to see how they will work together; the best part is that it is anonymous and involves a hypothetical cooperative, not their specific cooperative.  Producers can voice their concerns without being singled out.  To date, this tool has been used with three groups to help them discuss the more difficult cooperative development topics.  Some of the most controversial questions are:

    • Patronage dividends: how much will be distributed versus retained by the cooperative?
    • Capitalization: how much debt versus equity contributed by members?
    • How restrictive should the cooperative be with members selling outside the cooperative?
    • How does a new member join the cooperative, and how does a member leave the cooperative?
    • Should the cooperative accept products from non-members to fulfill contractual obligations?
    • What measures should be taken if a member does not follow the rules, such as selling outside the cooperative or not delivering acceptable produce?
    • How much should the cooperative pay a general manager, and what benefits are provided?

    The survey findings will be analyzed within the next year to see how different groups responded to the same questions. It will be interesting to note if there are differences in the concerns of conventional farmers versus niche-product farmers, new farmers versus established farmers, and those relating to different product types (i.e., organic produce). In the meantime, this survey tool is available for interested producer groups and cooperative extensions.  Also, if needed, a QR code is available so that this survey can be taken using a mobile phone.  

    Richards, Steven. “Interested in Forming a Cooperative? Take the Cooperative Challenge!” Southern Ag Today 3(22.5). June 2, 2023. Permalink

    Photo by RDNE Stock project: https://www.pexels.com/photo/variety-of-fruits-and-vegetables-8540920/