USDA's expanding cooperative development assistance role - Brief Article

Even before the Cooperative Marketing Act of 1926, the U.S. Department of Agriculture was in tune with the development of cooperatives in the United States and was responding to the growing needs for information regarding cooperatives. USDA's first cooperative-specific project, the "Farmers Cooperative Cotton Handling and Marketing Project," was authorized by USDA's Bureau of Plant Industry in 1912.

This project included: devising a simple form of cooperative organization; compiling state laws relating to cotton ginning and warehousing; surveying freight rates and surveying cotton handling mechanisms. This was the genesis of the research and service assistance to cooperatives now administered by the Cooperative Services program of USDA's Rural Business-Cooperative Service.

Possibilities of cooperation in agriculture appeared unlimited to many people during the 1920s. As interest and public support for cooperatives grew, so did the problems facing these relatively inexperienced organizations. This led to greater demands on USDA for advisory assistance on economic and business problems.

Scope of work changes

Over time, the scope and direction of assistance to cooperatives by the Department of Agriculture changed with the needs of farmers and their associations. The Cooperative Marketing Act created a focal point for carrying out government efforts for improving cooperatives as a way to benefit farmers. Essentially, this legislation directed the secretary of agriculture to establish a unit that would carry out a comprehensive program of service, research and education for agricultural cooperatives on a permanent basis.

It should be noted, however, that after passage of the Cooperative Marketing Act, the department's newly formed Cooperative Marketing Division did only limited work in direct consulting, or advising, with producer groups seeking to form cooperatives. Rather, the emphasis was in providing the general background information that would be useful to those who were actively engaged in assisting producers' organizing efforts. During this time, many field marketing specialists and county extension agents were active in the formation of local cooperatives.

As the need for cooperative support shifted, so did the emphasis of the Cooperative Marketing Division. During these early years, the cooperative program was transferred several times: from the Federal Farm Board to the Farm Credit Administration, then being elevated to agency status in 1953 as the Farmer Cooperative Service (FCS). It was with FCS that cooperative development technical assistance began to take on added emphasis. The agency became more directly involved in helping unorganized producers form cooperatives.

This direct involvement had become necessary because cooperative organizational efforts were not being assisted by others. This type of technical assistance was made available in addition to the ongoing research and preparation of various publications on cooperative interests and organization.

Providing direct technical assistance to producer groups interested in organizing cooperatives has been an ongoing effort since the days of FCS, through its successor organizations, to the Cooperative Services program of today's Rural Business-Cooperative Service. The initial cooperative development program was comprised of international, rural services and training functions which responded to needs beyond those of established cooperatives. The program emphasis was on rural and cooperative development activities that encouraged the organization of new cooperatives and provided training to those seeking to form them. A small number of field offices were established to bring this direct assistance closer to those areas where the need was greatest for organizing and developing new cooperatives.

Larger field staff aids development

Today, as a result of USDA's most recent reorganization efforts, direct cooperative development assistance to rural and agricultural producers is accessible through 47 state Rural Development offices and a national office staff based in Washington, D.C. The role of these cooperative specialist is to work with producer groups and assist in the organization of new cooperatives using a disciplined approach to business development and educational activities. This "hands on" approach to co-op development assistance is just as important today as it was 75 years ago.

Within the past five years, additional financial resources have been made available through the Department to encourage the development and use of cooperatives as an economic tool for farmers, ranchers and other rural residents to improve their financial well-being. A Rural Cooperative Development Grant (RCDG) program has been funded, with increasing amounts, over the past five years (growing from $1.5 million in 1997 to $4.5 million in 2001) to encourage establishment of regional cooperative development centers throughout the country.

The purpose of the centers is to supplement, not replace, USDA's ongoing assistance to cooperative development initiatives. In fiscal year 2000, 21 different centers were funded to expand cooperative efforts in the United States. Other programs, including loan and grant programs of the Rural Business-Cooperative Service, have established "set-asides" and funding opportunities for producers or groups of producers wanting to form new cooperative ventures. Programs such the "Cooperative Stock Purchase Program" provide loans to producers seeking to join new cooperatives that produce value-added goods.

Today, the U.S. Department of Agriculture continues to provide not only direct technical assistance to "groups of producers desirous of forming cooperative associations," but also financial assistance to cooperative business efforts and encouragement of others to engage in cooperative development assistance work. The Cooperative Marketing Act of 1926 established the foundation for this kind of assistance to producers and 75 years later the need for this type of service still exists.

By John Wells, Director
USDA/RBS Cooperative
Development Division

COPYRIGHT 2001 U.S. Department of Agriculture, Rural Business - Cooperative Service
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