Hard Times Breed New Livestock Co-Ops

By Campbell, Dan | Rural Cooperatives, January-February 2002 | Go to article overview

Hard Times Breed New Livestock Co-Ops


Campbell, Dan, Rural Cooperatives


James Rhodes, an ag economics professor at the University of Missouri, once described cooperatives as "the children of distress." If so, small wonder the family of livestock co-ops did some growing in the 1990s, which was a very stressful period for the livestock industry, Brad Gehrke, livestock specialist with USDA's Rural Business-Cooperative Service, said during a seminar held at the National Institute on Cooperative Education (NICE) in Atlanta, Ga., this past summer.

Increased interest in livestock co-ops--particularly in new-generation coops -- can be attributed to low farmgate prices--including $8 pigs in December 1998. The ever-widening gap in the farm-to-retail price margins and the plunging number of spot livestock sales markets (which may be completely gone within 2 years, according to University of Missouri livestock economist Glenn Grimes) also have played a part.

Antitrust laws, the Packers and Stockyard Act, price reporting, commodity check-off programs and traditional co-ops have played roles in helping the industry in the past, Gehrke noted. "But producers perceive that traditional strategies are ineffective to address current market conditions." Instead, more are turning to value-added activity and new-generation coops, which have formed as a response to a host of challenges.

Gehrke cited U.S. Premium Beef, Consolidated Beef, Pork America, Prairie Farmers Cooperative and Mountain States Lamb Cooperative as examples of new-generation co-ops born of the recent period of distress.

In the first round of USDA's new value-added grants program, Gehrke said about 20 percent of the applications and 40 percent of the grants (by value) were awarded to livestock ventures. These included:

* Colorado Homestead Ranches--making ready-to-eat, natural meat products;

* Natural Meat Cooperative--feasibility study for a natural meat co-op;

* American Premium Foods--support for a pork processing plant project;

* Iowa Lamb Corp.--making freezer case-ready lamb products;

* Upper Mississippi Family Meats--feasibility study of a cooperatively owned, multi-species processing plant;

* Vande Rose Foods--production of pork jerky snack products;

* Prairie Farmers Cooperative--support for development of a 72,000-head processing plant;

* Eastern Foods--joint venture to process and merchandise pork;

* North American Bison Co-op--developing export sales and marketing division;

* American Native Beef--feasibility study for new-generation beef processing plant;

* Southern States Cooperative--fish farming, processing and marketing of tilapia;

* Valley Organic Meat Co-op--establishing an organic meat co-op. …

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