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Growing Co-Operation

AURI is launching Minnesota’s first Rural Cooperative Development Center, with help from a $225,000 U.S. Department of Agriculture grant. The AURI Center will “help start-ups or existing cooperatives understand the feasibility of starting a new operation or creating an enterprise,” says Dennis Timmerman, AURI project director.

For more than two decades, AURI has helped cooperatives with developing products, improving processing, finding raw materials and converting byproducts to income streams. But it has not had a formal program focused on rural cooperative enterprise development. “It aligns very nicely with our mission,” Timmerman says.

Funds from the USDA Rural Cooperative Development Grant will expand AURI’s capacity to evaluate cooperative business structures, marketing and business plans, finances and equity development. All cooperatives served by the Center will benefit rural areas and be located in communities under 50,000 in population.

The first year, “we are partnering with other CDCs to provide these services to cooperatives because we don’t have the expertise within AURI yet, but we are acquiring it,” Timmerman says.

Grant funds are helping procure services from CDC consultants such as Win Curtiss of the Wisconsin Cooperative Development Services in Madison, who is knowledgeable in board governance and strategic planning. Also, St. Paul attorney Lois Josefson is contributing expertise in cooperative business planning and development, and conducting market and feasibility assessments.

When named a CDC site, AURI joined CooperationWorks!, a network of 24 centers across the country that intend to revitalize communities through cooperative enterprise development. The national organization offers intensive training in cooperative business development, finance, law, governance and management. AURI project directors Timmerman, Randy Hilliard and Bruce Stockman are participating in CooperationWorks! training programs.

“When we went to Wisconsin (for training), everything from the taxi cab we rode in to a coffee roasting company and grocery store we visited to the credit union we talked financing with,” was a cooperative, Stockman says.


Cooperative History

Midwesterners are rooted in cooperative history, Stockman says. “When we first settled in North America, Europeans brought the co-op concept over. A lot of producers were able to survive — especially in agriculture — because of cooperative ownership” of grain elevators, banks, dairy plants and other value-added ag businesses.

Stockman, who grew up in Kansas, says like many in the rural Midwest, he’s been “involved with cooperatives most of my life. Our farming-ranching operation did business with co-ops and later I worked for a company that served Credit Unions.” Before coming to AURI a year ago, he was executive director of the Minnesota Corn Growers Association and “many of the value-added businesses we worked with were co-ops.”

“I think that the trend and the opportunity is growing again in our country.”

AURI equipped to serve

Minnesota’s Cooperative Development Center has a head start with existing AURI laboratories, scientists and technical staff who provide testing and analysis of food, renewable fuels and byproducts. Staff will help formulate products, develop recipes, source feedstocks, identify distributors, analyze the economic and technical feasibility of new products and processes, provide sensory testing for food products, source raw materials, and evaluate technologies the co-ops are considering.

Besides providing services, AURI will refer cooperatives to potential partners, such as producer groups, food industry representatives, and local and regional economic development partners.

AURI’s Center will serve cooperatives in various stages of development — from early formation to expansion. Along with large dairy, livestock and grain cooperatives, AURI is helping small community businesses like Spiral Natural Foods in Hastings, Minn., founded in 1978.

“The little food co-op was struggling and is making a turn around — with better marketing, promotion, management,” Stockman says. “They need help to both expand their markets and go through a planning process to move and expand their space, so they can grow in members and products.”

AURI Cooperative Development Service will help Spiral Natural Foods through the “catch 22” problem of ordering enough product to attract and increase buyers but not too much to lose inventory. “There is quite a bit of loss in fresh produce.”

“We will help them transition — with expansion, business development, marketing and increasing their membership base.”

As a Cooperative Development Center, AURI has identified other ventures it may be

assisting including:

Identifying high-value uses for dairy processing byproducts.

A southern Minnesota dairy cooperative that produces cheese, butter and sauces wants to turn waste products into high-value coproducts, such as livestock feed. AURI analytical laboratories will analyze byproduct composition, conduct technical reviews, identify potential coproducts uses, analyze technical and economic feasibility and assist with product development.

Developing a local foods cooperative.

AURI will assist Farmers Union in developing a producer-owned marketing and processing cooperative that could distribute local produce to food companies. Currently, small producers direct market most of their dairy and meat products, vegetables, fruit and flowers in the Twin Cities. Working collaboratively, rural producers could increase their marketing efforts to food service providers, distributors and large retailers. AURI will provide business and technical assistance on co-op development, policies, governance structure, processing development and market and feasibility studies.

Expanding value-added turkey product line.

A grower-owned turkey company, with more than 200 employees, wants to expand its product line. The co-op processes 40 million pounds of turkey annually as whole turkeys, bone-in turkey breasts, and tray-pack and bulk-commodity turkey parts for private label, retail and distributor markets across the United States. AURI may provide sensory panel and shelf-life testing, and assistance with product, process and coproduct development, food safety certification/compliance and business development.

Starting an apple co-op.

A central Minnesota winery intends to produce apple wine but doesn’t have enough produce. The winery wants to find producers interested in forming a marketing cooperative to sell apples. AURI may assist with apple wine product development, feasibility assessment, product testing, quality control, and assist with the apple cooperative’s

business development.

Turning corncobs into plastic.

A central Minnesota ethanol cooperative is interested in extracting xylose syrups from corncobs to produce a polymer resin. While xylose syrups are being imported from China for polymers, supplies are inconsistent and costly. If producing xylose from local cobs is proven economically feasible, AURI’s fats and oils lab in Marshall will test xylose extraction and separation methods and technical staff will help develop a system to collect and deliver cobs.

Pelletizing buckwheat meal.

The Buckwheat Growers Association is interested in pelletizing buckwheat meal for livestock feed and, potentially, biomass energy after oil is extracted. AURI laboraties in Waseca and Marshall would assist with processing development and product testing.