OHIO'S CO-OP GIANT
Fowler, Bertram B.
Ohio's Co-op Giant By BERTRAM B. FOWLER NO GIANT was ever born with less fanfare. In 1924, things the farmer sold went cheap, things he had to buy stayed high—notably fertilizer. A handful of...
...Any money earned goes back to the members...
...No, it isn't competition," agrees Lincoln, "not because of the tax situation, but for deeper reasons...
...Its assets were $12,000,000, its cash reserves $4,000,-000...
...Operating in 14 states, the Farm Bureau Automobile Mutual Company in 1943 stood fourth in the United States in auto casualty business...
...The fertilizer people were organized...
...Sure," say the fertilizer men, "the Co-op has grabbed off a pretty slice of the business...
...For example, the Wholesale Co-op pointed out that it was wasteful to keep in stock dozens of types of wire fencing...
...So the Farm Bureau Agricultural Credit Corporation was born...
...Ohio Business Isn't Alarmed Today, the Ohio Co-op manufactures 70,000 tons of fertilizer a year in its own factories and buys another 45.000 tons from other companies to supply the members...
...The Farm Bureau groups wholly own two feed mills and partly own another, producing together 300 tons a day...
...But from the beginning, Lincoln saw it as only part of the structure...
...He bought a carload— small tonnage as fertilizer goes—in the South...
...Discussion groups were asked to decide how many types of wire fence a farmer really needs...
...The farmers took the lumps out behind their barns and pounded them back into powder...
...We don't pay a Federal tax on profits because we don't have profits...
...We can't compete with them," they complain, "because the Co-ops don't pay Federal taxes...
...The state is covered by 1,100 neighborhood councils, binding together 35,000 farm families...
...In each of 55 c6unties there is a full-time, paid educational leader...
...Certainly no one who was present then could have foreseen the present stature of the Association, with its membership of 35,000 families, 100,-000 patron-members, its big and growing system of insurance, production, wholesaling, and retailing—and behind it all a system of adult education which deals in tough-fibred realities...
...A credit pool was needed from which other Co-ops could borrow...
...That is a large volume of business...
...He insisted that the farmers must also have sound financial institutions of their own...
...Some prosperous farmers have $10,000 to $15,000 in Co-op securities...
...they are not being high-pressured into business ventures controlled by somebody else...
...now it costs a fifth of that...
...The Co-op brought sharp competition into what was a comfortable sort of business...
...They have blanketed Ohio with 168 local Co-op units in 85 of the state's 88 counties, and many of these have their own Teed mixing plants...
...The difference is that the farmer who belongs to the Co-op gets part of this fertilizer money back as a dividend on his stock...
...But in Ohio, the co-op has spread into more lines of activity...
...Many Co-op Activities The Ohio Co-op is always broadening its activities...
...use of potash alone has doubled in the past nine years...
...Last year, study groups were asked to consider whether their organization should go further into oil production...
...The secretary of the meeting sends the minutes to Columbus ; there, the results of many meetings are digested and tabulated...
...So they sent a man further afield...
...This is one-eighth of the total fertilizer business done in Ohio...
...Other companies meet the Co-op rates and in some instances underquote them...
...It used to cost $60 a year to insure a school bus...
...They launched the Ohio Farm Bureau Cooperative Association...
...The gesture typifies their determination...
...The result was an affirmative decision...
...next it bought a life insurance company...
...Many of the topics are ultra practical...
...Columbus headquarters sends a steady flow of material for study and discussion to the local leaders...
...From the beginning, the Co-ops saw the insurance business not as an end in itself, but as a start toward broader financial operations...
...The Co-op idea, they sense, is their own effort...
...Any business which provides the consumer with an honestly represented product, which he needs, at a price bearing reasonable proximity to manufacturing costs, doesn't have to worry about Co-ops...
...These farmers are not timidly venturing into any foreign or imported ism...
...By now, the original $10,000 loan has grown into a total insurance business of $30,000,000 in assets...
...The co-ops do not claim all the credit for the general reduction in insurance rates but there is no doubt they helped potently to secure them...
...Members are polled monthly on subjects of state or national interest...
...But use of fertilizer per acre is constantly increasing...
...When the Ohio farmers banded together to buy fertilizer, no company in the region would sell to them...
...It is clear that "the Co-op sure has something," as on3 business leader remarked...
...losses have been less than $500...
...In 13 years, it has lent over $7,000,000 in 35,-000 individual loans...
...We don't want to wave any red flag in the face of business," says Murray D. Lincoln, the quiet genius behind the Ohio movement...
...Newspapers publish these polls as showing the opinion of Ohio farmers...
...thus the key men know at any given moment just what their member-owners are thinking...
...And they don't...
...When it reached Ohio, it had hardened into lumps...
...The farmers themselves decided four types would cover every need...
...A copy of the digest is sent to each executive of the Co-op...
...Model Educational Program The educational pattern laid out by the Co-op is rightly looked upon as a model...
...Business need not worry at all about the Co-ops...
...A handful of farmers met to see what they could do...
...Taxes And Profits Farmer members of the Co-op have the choice of several types of investment within their own organization —shares in the Wholesale, shares in the local retail unit, certificates in the Agricultural Credit Corporation maturing in six months to a year...
...In 1934, the auto mutual put up the money to start a fire insurance company...
...It is back, now, to $34.50...
...Farmers needed cheaper farm mortgages and short term credit at low rates...
...the farmers decided they also must organize...
...There's enough business for us all...
...Some businessmen say Co-ops aren't fair competition...
...Groups meet in the home of a member, and discuss the solid, practical subjects thus laid before them...
...Hence the co-ops are able to build up reserves which are used for expansion and competitive programs against independent retailers who are required to pay a very large share of their profits in taxes...
...They are acutely conscious of their ownership and their control...
...In three weeks the Wholesale sold an issue of $500,000 of stock to finance a refinery program...
...here the growth of the cooperative idea seems to have the greatest significance as a possible portent of the future...
...There are bigger co-ops, measured by dollars worth of business done, in Minnesota and California and Wisconsin...
...The subject was talked over in thousands of farm homes...
...During the battle between the co-ops and the private companies, the price of fertilizer dropped from $34 to $21 a ton...
...It is no part of co-op strategy to undersell private business...
...Similarly they decided four types of poultry feeder were enough, instead of 12...
...So the membership advanced $10,000 to the Co-op, to start an insurance company...
...The Co-op prices are exactly the same, grade for grade, as the other manufacturers quote...
...Ohio business men are not alarmed...
...The commodity business of the Ohio Co-op was $20,-000.000 last year...
...Also the Co-op owns a soybean mill, an alfalfa dehydrating plant, two oil blending plants, a chick hatchery, an oil refinery...
Vol. 8 • September 1944 • No. 37
