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THE COOPERATIVE WAY: Model of business spans the globe

0630
 2014


A democratic principle — From left: Workers on a Farm Security Administration co-op tractor in Utah, 1940;  a crowd at an early Texas electric cooperative meeting; Bluebonnet linemen Jeffrey Bolding and Kendal Fiebrich, 2014; blue dots representing rural electric cooperatives cover a map of the U.S.; 1930s poster for the Rural Electrification Act; coffee beans from a farmer-owned cooperative in a third-world country. (Illustration by Joe Stafford)
 
Photos: Russell Lee photo, Library of Congress; Texas Electric Cooperatives; Joe Stafford; NRECA; Library of Congress; Pachamama Coffee Cooperative

Born of British roots 170 years ago, the cooperative model of business spans the globe today, providing everything from electricity to eggs, cloth to coffee. 

By Ed Crowell

On the ground floor of a brick warehouse in the English town of Rochdale, 28 artisans and shopkeepers established the principles of a cooperative. Those same principles are followed today by Bluebonnet Electric Cooperative and an estimated 1.4 million co-ops of all kinds around the globe.

The year was 1844 and their group was the Rochdale Equitable Pioneers Society. Their goal: Sell goods such as butter, flour, sugar, tea and tobacco at fair prices with reliable service. Members of the society would benefit from any profits.

Sound familiar? 

Just substitute electricity for the commodities and the same goals apply to Texas’ 75 electric cooperatives and their 3 million members.


The Rochdale group began in difficult economic times, when British merchants often price gouged and cheated on measurements. The unifying idea was that because members of the cooperative owned the store they would treat each other equitably and all have a stake in its success.

By the end of the first quarter of the first year, the Rochdale store was paying a dividend for every pound and pence members spent there.

Earlier attempts at similar business models failed for a lack of firm guiding principles. This co-op grew, flourished and stayed in business for more than 125 years, eventually merging with other co-ops. Today, the original building at 31 Toad Lane is the Rochdale Pioneers Museum, which commemorates the birthplace of cooperative principles.

The modern landscape of U.S. cooperatives is wide and varied. Cooperatives provide electricity, telephone connections, agricultural services, groceries and even craft beer and fair-trade coffee to millions of people.
 
Electric co-ops alone now serve an estimated 42 million people in 47 states.

Many of the nation’s co-ops are rooted in the ethos of rural America.


In the Midwest in 1867, the Granger movement was launched by farmers seeking regulation of grain-transporting railroads and grain warehouses, as well as ways to band together for the community good. Their efforts succeeded, and local Grange-inspired rural groups around the country were created. Although it evolved into a fraternal organization, the Granger movement is considered America’s oldest organized farming advocacy effort.  

By the late 1800s, the Texas Farmers’ State Alliance was helping start feed and fertilizer stores and mill co-ops. 
Farm and ranch communities in Central Texas have had such stores for decades. The Burleson County Co-op Store in Caldwell, for example, has been operating since 1945. One of the first directors of both that co-op and Bluebonnet Electric Cooperative was Ben Wolz, whose son Lyle also was a longtime Bluebonnet Director. 

The notion that cooperatives could provide electricity to rural areas became a New Deal program under President Franklin Roosevelt during the Great Depression. He recognized that private utility monopolies, which had built few power lines between distant farms and ranches because of the costs per mile, were not going to help the economic recovery of rural America. Roosevelt saw the potential of increased agriculture production if electrical innovations reached into the fields, barns and homes from coast to coast. 

The Rural Electrification Administration was formed by executive order in 1935 to back low-cost loans to new electric cooperatives.


One of the earliest in the nation to apply for a loan was Bartlett Electric Cooperative, in a farming area about 50 miles northeast of Austin. It became the nation’s first co-op to be electrified in March of 1936, when 110 farm homes got power.

The Lower Colorado River Electric Cooperative, which is now Bluebonnet, was formed in 1939 to serve counties south of the Bartlett area. 

By the time the United States entered World War  II in 1941, more than 400 electric co-ops in 45 states had been organized.

In the mid-1930s, about 90 percent of rural homes and farms had no electricity. By 1953, about 90 percent had power thanks to electric cooperatives. 

The tremendous rapid growth of rural electric co-ops in the United States over the past 75-plus years is well documented by the National Rural Electric Cooperative Association in several interactive maps that can be found on its website, nreca.coop/about-electric-cooperatives.

More than 900 co-ops now provide electric service to 18.5 million homes, businesses, schools, churches and farms, according to the association. 

Co-ops own and maintain 2.5 million miles of electric distribution lines. That amounts to 42 percent of the nation’s electric distribution lines that cover three-fourths of the land in the United States.

Investor- and publicly-owned electric utilities dominate in cities and metropolitan areas. Of all electric customers in the U.S., about 72 percent buy from investor companies, 15 percent from public utilities and 12 percent from cooperatives.

Distribution co-ops such as Bluebonnet make up the vast majority of member-owned electric co-ops. They buy power generated by private and municipal plants or from quasi-governmental agencies such as the Lower Colorado River Authority.

There are fewer “generation and transmission” co-ops. Across the country, 65 of those build and operate power plants and high-voltage transmission lines.

One requirement for all co-ops is democratic governance. Consumer-members elect their board of directors to oversee the co-op. 

Here’s how Bluebonnet’s first Board President, C.A. McEachern, in a 1970s interview, summed up elections in the early years of the co-op:

“I think the (co-op structure) is good because it gives a member a little bit of pride to say, well, I belong to Bluebonnet Electric Co-op and I’ve got an interest in it.” 

Nothing was easy about electric co-ops’ efforts in Texas.

Getting a $5 co-op membership sign-up fee from poor farm families was like asking for $50 or more today. Obtaining miles of rights of way that crossed private property was difficult at times.

Back then, some people thought an electrical switch was more dangerous than lighting a kerosene lamp. In time, the co-ops held “burial” events where kerosene lamps were laid to rest forever once electricity arrived.

Co-op organizers by necessity were people with vision and courage. They had to convince new members that their money and line-building loans would be well spent. They emphasized that the co-ops were in business to provide electricity to their membership, not to enrich corporate owners.

Here is an explanation, pulled from Bluebonnet’s new-member handbook: 

“Being a member of a co-op has added benefits. Members/owners elect the Board of Directors who govern the co-op.
Also, each year Bluebonnet shares its excess  
revenue — money it collects above what it takes to run the business — with its members. The money is called capital credits….

“Bluebonnet employs more than 270 people, many of whom live in the cooperative’s service area. They are co-op members just like you.”
 

THE GLOBAL IMPACT OF COOPERATIVES

The value and power of all manner of cooperatives has been seen on every continent. The United Nations recognized successful modern co-ops in 2012 by declaring it the International Year of Cooperatives. 

“Cooperative Enterprises Build a Better World” was the official U.N. slogan and cooperatives around the world celebrated and promoted their efforts. The U.N. noted the “vital role they play in social and economic development — and meet the daily needs of hundreds of millions of people.”

The reach of U.S. cooperatives extends far beyond our borders. 

Through the Washington, D.C.-based National Cooperative Business Association and the grants it pursues, ongoing projects such as these three continue to apply the cooperative principles:


Niger, Africa
— A food security program called Arziki teaches farmers how to adapt to a changing climate, protect their soil and water, and to take advantage of economies of scale through member-managed producer organizations and associations.

Central America — A cooperative-to-cooperative trading system links 40 producing co-ops with U.S. purchasing and food co-ops. One project, a women’s organic coffee label called Café La Femme, has put its product in 15 U.S. grocery cooperatives.

East Timor — In the small island nation near Indonesia, the coffee-producing Cooperativa Cafe Timor has become the largest agricultural entity and the country’s largest private employer. The National Cooperative Business Association also is working to expand the cassava, cocoa, agroforestry, cattle and health sectors in the poor nation of 1.2 million people.

Elsewhere around the globe, the impact of cooperatives on nations’ workforces and economies is profound. According to the International Co-operative Alliance:

France — 21,000 co-ops provide more than 1 million jobs, which makes up 3.5 percent of the country’s working population.

Kenya — Approximately 250,000 people derive their livelihoods from co-ops

Mauritius — Agricultural co-ops here produce sugar, vegetables, fruit, flowers, milk, meat and fish; nearly 50 percent of sugar-cane planters in Mauritius work in cooperatives.

Canada — Four of every 10 Canadians are members of at least one cooperative. In Quebec, about 70 percent of the population are co-op members.

Worldwide — After the U.S., India is the nation with the most cooperative members (93,755,144); Japan ranks third, Iran fourth, then China, Indonesia and Bangladesh.



THE ORIGINAL SEVEN GUIDELINES

The Rochdale Equitable Pioneers Society's principles evolved into seven guidelines that will sound familiar to Bluebonnet members: 
 
1. Voluntary and open membership: Anyone in the service territory is welcome to become a co-op member. 
 
2. Democratic member control: The directors of a co-op are elected by the members. One member, one vote. 
 
3. Members’ economic participation: A co-op’s budget is accessible and the members control capital that comes from their membership fees and service payments. Surpluses can be returned to members in the form of capital credits or put into reserves for development projects. 
 
4. Autonomy and independence: Co-ops are self-sustaining organizations controlled by the members. Any agreements with outside sources must ensure democratic control by the members, who maintain their cooperative autonomy. 
 
5. Education, training and information: Cooperatives provide education and training for elected directors, managers and employees. They inform the public about the nature and benefits of cooperation. 
 
6. Cooperation among cooperatives: Members are served by working together through regional and national associations representing cooperative interests. 
 
7. Concern for community: Cooperatives work for the sustainable development of their communities in ways accepted by members.

 



BLUEBONNET'S FOUNDATION VALUES

To supplement the guiding principles of all cooperatives, Bluebonnet General Manager Mark Rose put into place these Foundation Values for the coop soon after he was hired in 2002. They are the guideposts for how Bluebonnet employees interact with fellow members, the communities in which they live and serve, and their co-workers.
 
Safety 
We are committed to the safety of our employees, our members and our communities. We support, encourage and educate our employees and members on ways to protect themselves and the environment in which we live. 
 
Courage 
We speak openly and honestly and ask others to do the same, encouraging truthfulness and candor even in the face of uncomfortable or unpopular decisions. We listen with an open mind and discuss our differences with the purpose of mutual resolution. We embrace the often dangerous nature of our work and exercise the courage it takes to fulfill our mission. 
 
Respect 
We respect one another and value the diverse contributions of all team members, each of whom is empowered to exercise leadership and can contribute toward the achievement of excellence in all we do. 
 
Reliability 
Whether working alone or on a team, we can be counted on to get the job done. We are committed to our members and our co-workers to provide services vital to the lives of others. 
 
Community 
We are committed to member and community service, and face business decisions by considering first the needs of our members and community. 
 
Love 
We act with compassion and understanding in the relationships we form through our work. While never sacrificing dignity or discipline, we approach each opportunity with enthusiasm and challenge ourselves to create an environment that is exciting and fun.

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