The following is an excerpt from Bet the Farm: The Dollars and Sense of Growing Food in America, by Beth Hoffman. Hoffman has been reporting on food and agriculture for more than twenty years. With her husband John Hogeland, she runs Whippoorwill Creek Farm, a 540-acre farm in Iowa. The excerpt is used with permission from Island Press.

Nick Wallace is a fellow farmer and rancher who was in the business for at least a decade before John and I arrived on the scene: one of the who’s who of sustainable agriculture in Iowa. We were talking on the phone about the idea of Iowa ranchers working together to market and sell beef. I mentioned creating a cooperative when Wallace posed an interesting question.

“But what do farmers think when they hear the word ‘co-op’?” Wallace asked me. “Do farmers think it’s a good thing?”

John and I met Wallace at a Practical Farmers of Iowa gathering of meat producers, a group that came together to see if we could figure out better ways to sell our products. Many farmers in the room marketed directly to consumers via websites and farmers markets—mechanisms that sometimes generated higher per-pound sales but often left farmers exhausted. Others sold to big processors via the sale barn or through feedlot contracts—a much less tiring way to offload cattle but one that produced profit margins so small they barely covered the cost of raising animals, if they did at all.

It was there that Wallace presented his ideas for a meat company. The business would purchase animals raised without chemicals for above-market rates, he said. Then he would sell the products via the internet to customers in nearby cities, like Omaha or Chicago. Customers could choose their cuts, he continued, while artisanal butchers in small towns would add value to the products, bringing entrepreneurial spirit and jobs to rural communities. Perhaps the company would even offer home delivery in trucks full of products consumers could pick from, much like the “Schwan man,” Wallace mused, or maybe there would be brick-and-mortar shops in addition to meat lockers to process the product.

We were all excited about Wallace’s ideas. Raising animals without chemicals or genetically modified crops could become more attractive to farmers around the state if they could sell to a company like the one Wallace described. And less chemicals, corn, and soybeans (and perhaps more livestock grazing on pasture to add nitrogen to the cycle) would mean a lower environmental impact on the soil, water, and air in Iowa, making us a more sustainable industry overall.

Many of us were also more than happy to outsource our marketing and sales, as we had neither the time nor the knowledge to successfully sell our products directly to consumers. From setting up processing dates to knowing the food safety laws to creating online purchasing platforms, direct sales took a whole lot of labor. While it felt like a giant waste of precious time for all of us to individually seek out and nurture customers, none of us wanted to sell to another company that treated us as nameless, faceless producers, all raising the same commodity product.

Wallace’s ideas were also inspired by deep frustration. Consolidation had created a buyer’s market for livestock, leaving farmers unable to negotiate a fair price. With power in the hands of so few companies willing to buy their animals, farmers have virtually no ability to set prices based on their actual costs. It is a problem that evolved over time as companies took over more and more of the process of getting beef from the farm to the plate.

“In order to have a better life—in order to stay on the farm and not work quite as hard—farmers relinquished the sales and marketing of their products to companies,” Wallace explained. “But then those companies became bigger, and turned into even bigger stockyards and processors that sold to big grocery stores. And in the process the farmer got shafted. Today we have very little control over the markets anymore.”

Farmers’ lack of power in the marketplace is, of course, exacerbated by the “bigger is better” myth, which pits neighbor against neighbor. If growth is the only way to survive financially, smaller operations are necessarily overtaken or edged out. And with fewer farmers, the countryside becomes even more sparsely populated, the schools empty, the shops go out of business.

This cutthroat competitiveness also convinces farmers that installing a chicken or hog confinement unit is their fundamental right, despite what the neighbors think. Even though putting in a facility lowers your neighbors’ (and your) land values and increases the likelihood of antibiotic-resistant disease for those around it, a farm’s private property rights trump all other concerns. A community is no longer a group that works together for a common good; it is a loosely collected group of individuals looking out for themselves.

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Even if agribusinesses and extension agents constantly tell farmers that competition is the only way to get ahead, strong evidence exists to the contrary. Cooperation not only is possible but can in fact yield the greatest financial gain, according to the work of Nobel Prize–winning economist Elinor Ostrom. Through examples around the world, from self-managed forests in Nepal to fishing waters off the coasts of Maine and Indonesia, Ostrom’s work challenges the prevailing theory of the “tragedy of the commons.” Despite economists’ predictions that individuals will destroy resources as they strive to outcompete one another, often groups work together to protect the environment and reap financial success as a result.

Game theory—the study of how humans strategize in making decisions—reinforces this finding. In a game called the “prisoner’s dilemma,” researchers have proven that people who cooperate—even if they are geographically dispersed and can’t talk to one another—fare better financially than those working on their own. In other words, if farmers work to set prices together, all farmers will benefit.

With this in mind, Wallace’s ideas seemed to me well suited to creating a cooperative. Each farm could pay a membership fee, I suggested, giving the group a way to finance infrastructure such as processing facilities and distribution trucks. And as a cooperative, I continued, every farm would have an ownership stake in the business and could participate in decision making via voting. It would be our company instead of just Wallace’s.

But more than that, coming together could give farmers power. As I describe in other chapters in Bet the Farm, many models exist to guide farmers in forming cooperatives, groups created to address not only the economic issues in farming but also the cultural and social ones. Yet a single farm functioning in the midst of thousands of acres of corn and soybeans can go only so far in changing the world. It will take many farms coming together, to create real alternatives to the current dominant commodity structure.

I again turned to older, more established cooperative companies to learn what made them tick. Organic Valley is one such entity, a well-known and successful agricultural cooperative whose products are found in nearly every supermarket in the United States. The company today boasts yearly sales of more than a billion dollars and is controlled by its nearly two thousand rancher-members, who elect representatives and are guaranteed a set price for their products. Back in 1988, when the co-op began, many of the farmers had the same complaints we have today.

“In the mid to late 1980s, it was a mess. The markets were really terrible,” Joe Klein, the midwestern dairy pool manager for Organic Valley, told me. Klein was referring to the farm crisis of the 1980s, when—yet again—the supply of commodities far overwhelmed the demand for them, and farmers were forced to sell their goods for less than the cost of production. “The group of farmers that started this organization were fed up,” Klein told me. “They were like, ‘What can we do to keep farmers on the land?’ That was their number one concern.”

The key, the group decided, was to get farmers a stable and fair market price, Klein said. Originally calling themselves the Coulee Region Organic Produce Pool (to sell produce), the group focused on a niche market, offering hard-to-find organic products directly to consumers. The higher price customers were willing to pay for organics would cover the farmers’ cost of production plus a small profit and allowed the group to guarantee farmers a set market price.

But how to structure the business wasn’t clear. Many of the farmers had been part of co-ops in the past, but not everyone had had the best experience. “Many in the group were like, ‘Co-ops?!’” Klein recalled. “We all know that coops struggle.”

Since the early 1800s, farms in the United States have come together to form co-ops to purchase seed, fertilizer, and other products in bulk, achieving an economy of scale not possible for each individual farm. Cooperatives have also been created for farms to market products collectively or to have more control over the supply chain, processing raw materials together to receive a higher price. In fact, cooperatives have been so ubiquitous in agriculture that in 2014, 134 agricultural cooperatives in the United States celebrated anniversaries of one hundred years or more. The majority of those cooperatives were located in the Midwest—Minnesota (35), Illinois (20), and Iowa and Kansas (each with 13).

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Yet, as Wallace astutely pointed out, many farmers today can tell you negative stories about cooperatives, just as the Organic Valley farmers did in 1988—stories about belonging to a group that sold seed and pesticides to members at a loss or about how the co-op couldn’t compete in the commodity market and went under. Others gripe that their co-op struggled with organizational issues and power dynamics or about the increasing costs that plagued the group.

“As they grow, cooperatives can lose focus,” Klein told me. “When you first start out, it’s great—you are supporting farmers, giving them a better price.” But as the cooperative grows, the business might start to lose money because it is trying to do too much or decided to hire expensive executives to run the show. “Dissension can easily slip in,” Klein added.

Beyond these standard disagreements are more extreme allegations of cooperatives that have engaged in nefarious activities. Farmer-members, for instance, accused the Dairy Farmers of America of cutting payments to farmers for their milk in order to make and sell cheese more cheaply. They also claimed the cooperative returned the bulk of the profits to investors rather than to its farmer-members.

On a more mundane level, perhaps the biggest issue is that cooperatives are notoriously slow-moving, unable to recalibrate or iterate quickly. The virtue of co-ops, their wide membership and emphasis on democratic processes, can also be their downfall. Presented with new opportunities or challenges in the marketplace, they tend to move like molasses as everyone meets, discusses, debates. Instead of taking risks, the group can take too defensive an approach, which, in today’s anything-can-happen-at-any-moment world, might feel like trying to steer a bulky freighter through uncharted waters when a sleek speedboat is needed.

Even in the 1980s, getting farmers to join yet another cooperative was difficult. “I can’t stress enough,” Klein warned me, “people over thirty years of age have heard from their parents and grandparents about how co-ops fail. Getting past the word ‘cooperative’ means defining and redefining what your co-op is and how different you all want it to be from the others.”

From its earliest days, Organic Valley tried to differentiate itself, beginning with strong leadership. “You need a really good leader,” Klein told me, “a person who is knowledgeable. But someone who is also well respected and respectful to all members.” Organic Valley also made sure to limit its activities. Initially the group decided to focus solely on marketing and selling products for a fair market price and left the rest to evolve over time.

Today, the Organic Valley cooperative is alive and well, even though just a few years ago (before COVID-19) the group weathered hard financial times when it couldn’t sell all the milk its members generated. Cheap organic milk is now plentiful in grocery stores, presenting tough competition for the cooperative. But the group “tinkered” and grew as a result, which, according to research, is essential for cooperatives that thrive long-term.

Klein contends the biggest indication of Organic Valley’s success has been its impact on individual farms and communities. Towns that house Organic Valley offices are doing far better, he told me, than neighboring communities, which often struggle with vacant shops and few jobs. The guarantee of fair prices has kept farms in business too. “We truly have kept farms running, and the local economies are some of the biggest winners,” remarked Klein. “There is no denying that.”

Beth Hoffman

Beth Hoffman is a farmer, journalist, and the author of Bet the Farm: The Dollars and Sense of Growing Food in America. Hoffman has been reporting on food and agriculture for more than twenty years, airing on NPR, The World, Latino USA, Living on Earth, and others. She blogged for Forbes as the Hungry Hack and studied the food system in depth as a student, fellow and co-lecturer at UC Berkeley’s School of Journalism. She has completed several documentary projects including a year cooking with immigrant women in their homes and telling their stories. She was an Associate Professor in Media Studies at the University of San Francisco for six years. You can connect with Hoffman on Twitter and her farm’s website.

Sharing the Pie: How Farmers Are Using Cooperatives to Stay Profitable and Grow Local Economies

Beth Hoffman

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