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January 2012 Featured Story
Co-ops make the world go ’round
Indiana’s electric co-ops usher in International Year of Cooperatives
Is it possible to change the way people eat a fruit? Could cheese unite communities? Can electricity transform the future of a country? It’s possible … with a little cooperation.
The United Nations General Assembly designated 2012 as International Year of Cooperatives (IYC 2012), under the banner “Cooperative Enterprises Build a Better World.” The resolution recognizes the vital role cooperatives — democratically governed businesses that operate on an at-cost, not-for-profit basis — play in the economic and social well-being of nations around the globe. It also encourages countries to foster cooperative development as a way to generate local wealth, employment, and marketplace competition.
“At a time when folks are losing faith in big corporations, International Year of Cooperatives 2012 offers us a great opportunity to showcase the many ways the local, consumer-owned and member-controlled cooperative form of business benefits communities all over the world,” said Glenn English, CEO of the National Rural Electric Cooperative Association. “It gives cooperatives a perfect venue to contrast how we differ from profit-driven companies.”
Co-ops are everywhere
If variety is the spice of life, co-ops are a zesty bunch. Every day, more than 29,200 cooperatives supply essential products and services to American consumers, touching our lives in almost every way.
Tomorrow at breakfast, check your morning paper. Many of the articles may be labeled “Associated Press” or “AP.” Those stories were written by individual reporters but distributed by a cooperative news organization.
If your breakfast includes freshly squeezed orange juice, it may be from a Sunkist product. Sunkist is a cooperative formed by California and Arizona citrus growers.
And the list goes on: Land O’ Lakes butter, Ocean Spray cranberry juice, Sun-Maid raisins, Welch’s grape jelly, Nationwide Insurance, Blue Diamond almonds, Ace Hardware, REI outdoor gear — they are all cooperatives. In fact, one out of every four Americans claims membership in some type of cooperative, including 91 million served by credit unions and 42 million connected to more than 900 electric cooperatives in 47 states.
Although many in number, cooperatives differ from “typical” businesses in one big way: they are organized for the benefit of their members, not single owners or stockholders.
“Co-ops are established when the for-profit, investor-owned commercial sector fails to meet a need, either due to price or availability of goods and services,” explained Martin Lowery, NRECA executive vice president, external affairs and chairman of the Washington, D.C.-based National Cooperative Business Association board of directors. “The co-op business model works in housing, utilities, and in both rural and urban settings. Co-ops empower people to take control over their own economic destinies.”
He continued: “When you’re a member of a co-op, you have a real say in the direction of that business. That’s critical — it helps the co-op rapidly respond to changing conditions. As an example, a number of electric co-ops have branched out into other pursuits beyond electricity to meet pressing consumer and community requirements.”
Dallas Tonsager, under secretary for rural development with the U.S. Department of Agriculture, points out that co-ops “are only as good as the people running them and only succeed when members support them. But well-managed, democratically run co-ops have proven time and time again that when people unite to achieve a common goal, they can accomplish anything.”
On the cutting edge
Odds are you have orange juice in your refrigerator. But before a 1916 advertising campaign by Sunkist, oranges were only eaten by the slice. By the end of World War I, however, Sunkist’s “Drink an Orange” push had increased the average per capita serving size from one-half an orange to almost three.
This pioneering co-op tradition continues in many ways today:
• Credit unions fought off the destructive cycle of payday loans by creating salary advance loans with low rates that placed part of the borrowing into a savings account — helping members escape a cycle of debt;
• Marketing cooperatives added food nutrition labels to products long before it was required by federal law;
• Electric cooperatives lead the way in smart grid implementation — close to half have installed advanced metering infrastructure (AMI), with 30 percent integrating AMI or automated meter reading devices with various software applications, such as outage management and geographic information systems.
“Co-ops have made these investments because it makes sense for them and their members,” stressed English. “It’s an outgrowth of the co-op commitment to innovation — the same spirit that allowed co-ops to overcome seemingly insurmountable technical, engineering, legal, political, and financial hurdles in the late 1930s to bring central station electricity to all corners of America. Thanks to our consumer orientation, co-ops work to ensure that all decisions — technology-based or otherwise — focus on their core mission: providing members with a safe, reliable, and affordable supply of power.”
It is hard to conceive of America without cooperatives, Tonsager noted. “Agricultural co-ops have made our nation the breadbasket of the world. This occurred, in part, through lending from the farmer-owned, cooperative Farm Credit System and power supplied by electric co-ops. Today, electric and telephone co-ops are playing a vital role in deploying the advanced distribution, transmission, and telecommunications infrastructure that rural America needs to prosper and stay competitive.”
Building a better world
The IYC 2012 theme, “Cooperative Enterprises Build a Better World,” embodies NRECA International Programs, a division of NRECA that celebrates its golden anniversary this year. Since its creation in November 1962, NRECA International Programs has assisted with electrification endeavors that have resulted in increased agricultural output and millions of new jobs, as well as an enhanced quality of life for more than 100 million people in 40-plus nations.
NRECA International Programs projects are currently under way in Afghanistan, Bangladesh, Bolivia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Haiti, Pakistan, the Philippines, South Sudan, Tanzania, and Uganda. Despite progress, much work remains.
Indiana’s electric co-ops announced in October that they would be sending crews of linemen to Guatemala to build power lines and bring electricity to remote villages this coming fall (revisit the October 2011 issue at electricconsumer.org.)
“More than 2 billion people worldwide still lack electricity and millions more must depend on unreliable and unsafe power,” emphasized Ingrid Hunsicker, manager of international program development for the NRECA International Foundation, a charitable organization that has partnered with more than 300 electric cooperatives in the United States to bring power and economic development to rural villages overseas.
“In many countries, traditions of self-help, self-government, and joining together to achieve a common goal don’t exist. A dismaying array of financial problems, such as a lack of investment capital and little understanding of even the most basic accounting procedures, throw up even more barriers,” she added.
Because circumstances vary so widely, NRECA International Programs has adopted the slogan, “Electrifying the world, one village at a time.” Outreach relies on the time-tested electric cooperative approach — giving individuals, many for the first time, practical experience in democratic decision making and entrepreneurship so they can launch locally driven services.
“One of the challenges we face in many countries is building a rural business culture,” said Hunsicker. “When electric cooperative employees and volunteers arrive, they outline how to create a business plan, how to conduct meetings, how to collect the full amount due from consumers, what type of electric generation system to invest in, and everything in between. It’s all about discovering and building on what works. Best of all, we show the best face of not only who we are as co-ops but who we are as Americans.”
While NRECA International Programs does not limit help to co-ops — municipal electric systems benefit, too — many foreign communities embrace the cooperative way. Argentina boasts the largest number of electric co-ops — nearly 800 — outside of the United States, while Cooperativa Rural de Electrificacion in Santa Cruz, Bolivia, serves more than 400,000 members, ranking it as the largest electric cooperative anywhere. The Philippines has 119 electric co-ops, Bangladesh 72, and the imprint of cooperation can also be seen in Costa Rica, South Sudan, Uganda, and other countries.
Spreading the cheese
“Cooperation among cooperatives,” one of the seven cooperative principles, delivers great results. “Twenty years ago, as a new brand, we had absolutely nothing — we relied on electric cooperatives and credit unions to let us piggyback on their annual meetings for advertising purposes,” said Roberta MacDonald, senior vice president of marketing with Montpelier, Vt.-based Cabot Creamery Cooperative.
Flash forward to today and the farmer-owned dairy co-op sold 8 million pounds of cheddar in addition to a host of other merchandise in 2011 — enough cheese, butter, whipped cream, and other items to crisscross the nation more than three times.
“By working with electric co-ops and others we were able to remind co-op members that when they bought Cabot products, they were supporting another co-op,” MacDonald commented, recounting trips made in the late 1980s and early 1990s to electric co-op annual meetings in southeastern states. “Spreading the word among different co-ops helped us flourish. Electric cooperatives in Tennessee even invited me back repeatedly because our message also underscored the importance of co-ops working together.”
Unlike electric cooperatives, which are owned by members — consumers — who receive electricity, dairy producers own Cabot Creamery. Through the co-op, more than 1,200 farm operations across New England and upstate New York are guaranteed a market and fair prices.
“Our farmers are so proud to own the brand,” MacDonald said. “They wear T-shirts with the slogan, ‘I’m a farmer, I’m an owner.’”
For IYC 2012, Cabot Creamery will orchestrate a 2,300-mile cooperative ride, walk and bike tour across 15 eastern states. Eight major community events held between May 12 and July 7 will bring electric cooperatives, agricultural co-ops, credit unions, and others together to help connect the public with local cooperatives.
Connecting with the public is what co-ops are all about. It’s their reason for being.
“It’s in every co-op’s DNA to serve members in the best way possible,” said Lowery. “That’s why co-ops remain the best type of business around.”
Story by Megan McKoy-Noe, a writer for the National Rural Electric Cooperative Association.
To find a cooperative near you, visit www.go.coop.
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