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New Generation Cooperatives:

New Generation Cooperatives: . The North Dakota Experience. North Dakota Association of Rural Electric Cooperative . A statewide association 2 generation and transmission coop’s 21 local cooperative utilities Services: safety training governmental affairs (lobbying?) marketing

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New Generation Cooperatives:

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  1. New Generation Cooperatives: • The North Dakota Experience

  2. North Dakota Association of Rural Electric Cooperative • A statewide association • 2 generation and transmission coop’s • 21 local cooperative utilities • Services: • safety training • governmental affairs (lobbying?) • marketing • rural development

  3. Origins of the NDAREC Rural Development • Energy Bust of the early 80’s and out-migration from rural areas • High interest rates, low prices, and drought • Vision 2000 • USDA Funding for a Coop Development Center

  4. Approach • Add value to major North Dakota crops • A disciplined approach to development: • build a sound organization • understand the industry and the market • conduct an objective feasibility analysis • secure adequate equity • retain competent management

  5. The Success Stories • Dakota Growers Pasta - 1991 • North American Bison Cooperative - 1992 • Golden Growers Cooperative - 1994 • Avico Potato Plant - 1996 • Western Dakota Pork - 1995 • United Spring Wheat Processors - 1997

  6. Other Coop Experiences • Drayton Grain - 1994 • Farmer’s Choice Pasta - 1995 • Walton Bean Cooperative - 1994 • Heart of the Valley Cooperative - 1995 • Agro Oils - 1996 • Northern Plains Premium Beef - 1997

  7. Heart of the Valley Cooperative • two local open cooperatives • MayPort Farmers Cooperative • Central Valley Bean Coop • goals: • add value and profit to edible beans • vertical integration in the bean industry

  8. Chronology • 1987 NDSU feasibility study • 1992 Updated feasibility study • 1992-4 Process development • 1994-5 Business planning and offering • 1995-7 Joint venture negotiations • 1997 Joint venture agreement

  9. Heart of the Valley Today • Instant bean ingredients for food manufacturers • Patent Pending Process • Strategic Alliance • Production capacity • domestic and international marketing • product development capacity

  10. What we’d do differently • Less locality specific • More initial grower investment • More assertive in dealing with alliance partners • A less incremental approach

  11. Challenges • Securing equity investment • Retaining cooperative business advantages • definition of “corporate” farming • definition of “farmer” • definition of cooperative marketing

  12. Obstacles to recent equity drives • General ag economy • Ag finance limitations • Difficulty in making “informed” decisions • Guilt by association

  13. Keys to success • Secure enough seed money (contributions) • Organize a capable board with credibility • Provide flexibility in equity share purchase • Hire the best professionals you can get, and listen to their advice • Build a community of interest

  14. Conclusion • Potential for other cooperative food processing • Manufacturing cooperatives • International cooperatives • the coop model may apply to other rural problems

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