University of Wisconsin Center for Wisconsin

Farmer Cooperatives, August 1995 Vol.62 No.5
Published by the Rural Business and Cooperative Development Service

Look in the Mirror Ignited Rural Development

by Dan Campbell, Editor 

The genesis of North Dakota's co-op revival occurred in 1990, "when the rural electric cooperative family stood in front of a mirror and realized that it didn't like what it saw," says Dennis Hill, vice president and general manager of the North Dakota Association of Rural Electrical Cooperatives. "What we saw was a ghastly version of our former self. a rural economy in steep decline."

If prompt action was not taken to reverse this decline, Hill says "we would have soon reached the point where people would be asking why rural electric and telephone cooperatives were needed to serve rural areas where nobody lived anymore."

This soul-searching look into the mirror followed two decades that took rural North Dakotans from the height of euphoria in the 1970s to the lowest depths of despair in the 1980s.

"We roared through a decade of robust growth in the 70s, feeling that nothing could stop us," Hill says. "But in retrospect, it was really a decade of delusion."

The euphoria was the result of record high grain prices and a surge of energy development projects that drew thousands of new residents to the state and sparked robust economic growth. "Farm implement dealers couldn't keep trucks and combines on the lot long enough for the paint to dry; banks and PCAs couldn't get money out the door fast enough," Hill says. Per capita income rose 142 percent between 1970 and 1978.

"I remember my dad contracting 10,000 bushels of durum wheat straight off the combine in the middle of McLean County for $5.50 a bushel," Hill recalls, "then being upset because two days later the price had already jumped to $6.25."

The rural electrical cooperatives decided new powerplants would be needed to serve the booming population and farm sector. But almost before the new powerplants were operating, the boom went bust. "We ended up with 1,000 megawatts of surplus power that we didn't know what to do with, because suddenly it all came to an end."

Most of the euphoria of the 1970s had been brought about by two one-time events: the crisis caused by the OPEC oil boycott, and a "bonanza wheat sale to a grain-starved Soviet Union." Those events prompted North Dakota to "borrow, build and brag about an economy that was built on a house of cards," Hill says.

The "trickle down economics" of the 1980s may have been good for the East and West coasts, but it was murder on the rural heartland, Hill says.

To make matters worse, the 1980s ended with a three-year drought that was one of the worst on record for North Dakota, causing things go from bad to worse. "The turnstiles were spinning rapidly as people exited the state in droves," Hill says. North Dakota ended the 1980s with 634,000 people, down 18,000 from 1970 -- a big loss for such a sparsely populated state. Most of the loss occurred in rural areas, which lost 16,000 residents.

"We finally had to give up the notion that someone on a white horse was going to ride over the hill and make things better again," Hill recalls. The rural electric cooperatives decided they were in the best position to take action, so we adopted a new economic development philosophy that emphasized rural development through cooperative development.

Some argued against this strategy, saying that community development was not the responsibility of the rural electrics. "They felt we were only supposed to bring electricity and telephone service to rural areas -- to be a Kilowatt K-Mart that provided energy as cheaply as possible and to forget the service." But there were more who felt that helping to ensure good roads, schools, telecommunications, cable tv and water were essential for the rural quality of life, and that electric co-ops had a role to play in promoting them.

The rural electrics launched a formal rural development program by hiring Bill Patrie, who had been economic development officer for the state. His job was to light some fires that would unleash the rural state's latent economic muscle through the creation of new rural businesses. More often than not, that has meant forming new cooperatives.

Patrie and his partner, Jack Piela, formerly vice president of finance for one of the state's major food companies, have crisscrossed the state hundreds of times in the last two years while promoting business development.

"It's almost astounding how much human capital it requires to bring something from the idea stage to operational stage," Hill says.

The rural electrics have also been working closely with USDA and Congress to change the scope and nature of the rural electric lending program. They helped refashion some of the thinking behind the lending programs of USDA's Rural Utilities Service, which can now be used for a broader range of economic development purposes.

Now when they look in the mirror, the future looks much more promising, Hill says, adding that there is still much more to do.

This material has been reproduced in electronic format with the permission of Farmer Cooperatives. 

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