Conference Highlights

by Kim Zeuli and Ashwini Rao

Business innovation can be defined as any new activity related to firm structure, production, or output. "Innovation is rarely rocket science…in the past few decades most of the companies that have created truly extraordinary amounts of wealth have done so by inventing great processes, not great products." (Economist, April 24, 2004)

Today, many co-ops are at the forefront of agri-business innovation. Co-ops are being created in new sectors, such as renewable energy, to help farmers capture the full rewards of technological innovation. Established co-ops are modifying their financial and ownership structures to seek strategic advantages in today's global marketplace. Recent changes in state laws allow unprecedented prospects for the evolution of the co-op model.

This year's conference highlighted some unique and successful examples of innovative agricultural co-ops. In his summary presentation, William Nelson, president of CHS Foundation, identified eleven key themes from the conference:

  1. Objectivity. Farm Foundation, a main sponsor of the conference, promotes agenda-free environments for discussion and dialogue on agricultural issues. By fostering the exchange of ideas and building networks, they hope to increase understanding of policy options and consequences among the agricultural community.
  2. Critical thinking. Nelson pointed out that the Conference is organized annually to provide an open forum for critical thinking about the major trends and issues affecting agricultural co-ops. Such critical thinking is essential with today's co-op evolution.
  3. Invest in the next generation. "Keep youth in the community. Agriculture has been unique in that it wanted to send its youth elsewhere," said Nelson. A fine example of keeping youth in rural communities was illustrated by Raymond Defenbaugh, president and CEO of Big River Resources Ethanol Plant. Two goals for the Illinois-based potential to effectively serve agriculture and rural communities in today's global economy.
  4. Capital. "The first component of risk management is capital. Capital is the life-blood [of a co-op]," commented Nelson. This thought was shared by many at the conference. However, as several speakers cautioned, a good business idea does not necessarily mean that capital will flow to a new venture.
  5. Taking risks. On the importance of taking risks, Jeff Nielsen, general manager, United Farmers Cooperative, remarked: "We are coops.... We do things that blow up."
  6. Evolving business structures. Brad Boner, chair of Mountain States Lamb Co-op (MSLC) presented an overview of the unique structure of their Wyoming co-op. As co-ops like MSLC pursue innovative business strategies, organizations like Farm Foundation will continue to research and identify new institutional arrangements that have the potential to effectively serve agriculture and rural communities in today's global economy.
  7. Shaping the evolution of evolving business structures. Mark Hanson, attorney and partner at Lindquist & Vennum, PLLP, was the primary architect of the new Wyoming co-op statute. He focused on the conditions that created the need for new co-op laws and summarized four different co-op models that are being utilized today.
  8. "Added services are increasing in importance." For United Farmers Co-op, a local co-op in Minnesota, adding value to their customers' lives is the focus of their "Promise" (or mission statement). Risk management and the desire to provide "customer-driven solutions" guided their pioneering effort to create a member-owned alternative insurance company: Parthenon Risk Partners.
  9. The role of policy. Jean-Marie Peltier, president & CEO of the National Council of Farmer Co-ops (NCFC), evaluated the importance of policy makers in the future of agriculture. She observed that many of the 2005 changes in the House and Senate will influence how co-ops are treated by lawmakers. Groups like NCFC and trade associations will continue to play an important role in shaping agricultural and co-op policies, especially those related to alternative co-op models.
  10. Resources. Michigan State University Professor Chris Peterson suggested that coops seek advice on innovation from universities, research and development firms, government agencies, and consultants.
  11. Co-op as learning business organizations. Nelson, while wrapping up the conference, commented that co-ops should be learning organizations, with dynamic processes leading to constant innovation and revitalization.

  12. For a more detailed summary, please read the first in a series of articles on the conference appearing in USDA's Rural Cooperatives Magazine. The second part (March/April 2005) in the series is available only in pdf, but will soon also be available in html.