Celebrating the Cooperative Way

October 16, 2020In October we celebrate Co-op Month throughout the U.S. It’s a time when we reflect on the contributions cooperatives make to our society. Cooperatives are thriving today, providing critical goods and services to their members. There are approximately 160 cooperatives operating in the state of Montana in areas like farm supply, agricultural product marketing (grain and dairy), electricity, telecommunications and internet, food and housing.

Most of you know cooperatives have a significant presence in agriculture. Familiar names include CHS, Land O’ Lakes, Darigold, Ocean Spray and Dairy Farmers of America — larger scale organizations which have a multinational presence in many cases. And, of course, these include local supply cooperatives like Rocky Mountain Supply.

While many of us are familiar with these types of cooperative businesses, we might be surprised at their significant presence in other industries besides agriculture. For example, the Associated Press news service and well-known hardware companies True Value, Ace, Do It Best and RMSI’s hardware distributor, United Hardware are all cooperatives.

Agricultural cooperatives serve farmers and ranchers on both sides of production — providing inputs to grow their crops, raise their livestock and produce their milk while also purchasing and processing their end product to sell to the consumer.
The economic impact of cooperatives in their communities is significant beyond their direct service to farmers and ranchers. The number of people employed by cooperatives and their contribution to local communities cannot be undervalued. Many local supply cooperatives exist in small towns where they may be the most significant, or only, employer.
One of our employees in Belgrade once heard a community member, who was not associated with Rocky Mountain Supply, mention that Rocky Mountain Supply is the “heartbeat” of Belgrade. I would say this could be a true statement in all the communities which RMSI has a presence.

Consolidation continues

Like all businesses, cooperatives have had to evolve in order to survive and remain relevant. Over the last 50+ years in agriculture, there has been a trend toward consolidation, just as there has been a similar trend on the farm or ranch. We are seeing fewer hobby, small and medium size farms and ranches (owning/operating 2,000 acres or less) and more large operations (more than 2,000 acres). Those acreage numbers might be slightly different here in Montana, but the trend is the same.

In 1982 we had approximately 825,000 hobby, small and medium size farms and ranches. Today we have fewer than 600,000. At the same time, large farms and ranches have grown from about 75,000 to more than 100,000 today.

This consolidation has a trickle-down effect on the cooperatives that serve these farms and ranches. In 1982, there were approximately 4,000 agricultural supply and marketing cooperatives throughout the U.S. serving farmers and ranchers. Today there are fewer than 1,000. There are presently 22 farm supply cooperatives in Montana — the fourth largest state in the U.S. from a geographical perspective. This is not many to serve such a vast geography.

My sense is you will see cooperatives consolidate in Montana. Could that consolidation include Rocky Mountain Supply? Many might ask, why merge or consolidate? The best answer is, once again, to stay relevant. As farms and ranches grow in size, their wants, needs and expectations change and grow. Local cooperatives need to determine how to adapt to these changing and growing needs and bring value to their producers. Size and scale can help create the efficiencies and capacity to provide the products and services demanded by tomorrow’s producers.

This does not mean that RMSI is actively seeking to merge or consolidate with anyone. But we need to be prepared and approach these opportunities with an open mind.

RMSI is one of less than 1,000 farm supply and marketing cooperatives in the U.S., and we should be extremely proud of that fact! We have been fortunate to not only survive but thrive through the recent downturn in the agricultural economy and the impacts of COVID-19. In 2012, 14% of all agricultural supply and marketing cooperatives lost money locally. In 2019, that number had grown to 28%. Rocky Mountain Supply’s local earnings have actually grown during this same time frame.

However, we will need to continue to change and adapt to be relevant to all of you. That is our responsibility to our membership — not only to protect our member’s equity but to create a strong organization that can adapt, thrive and continue to serve you long into the future. That’s why we have made, and will continue to make, significant investments in assets and people.

For now, we will focus on our task at hand, enjoy our success and continue to make this great cooperative even better. Thanks to each of you for your business and support, without which our success would be impossible. ◆