Published on 09/12/02

Co-op can change farmers to 'market makers'

By Dan Rahn
University of Georgia

Opportunities like the Farmers Oilseed Cooperative can enable farmers who are "market takers" to become "market makers," says a University of Georgia expert.

"If a farmer grows soybeans and goes to sell them, he's got two choices," said George Shumaker, an agricultural economist with the UGA College of Agricultural and Environmental Sciences. "He can take what the market will give him, or he can store them on the chance of getting more down the road. Either way, he's a market taker."

If the same farmer joins a cooperative, however, he becomes a part of the market. "He assumes the role of the 'middle man' and stands to gain the benefits other middle men have been making," Shumaker said. "He becomes an owner, a market maker."

Big change

For most Georgia farmers, he said, becoming part of a cooperative means changing from being producer of a raw product to being a producer of a product going directly to consumers.

"You're not just growing soybeans anymore," he said. "You're producing soybean meal and oil.

"It's important for farmers to understand that by joining a cooperative," Shumaker said, "they're diversifying their entire portfolio. They're becoming part owners in another business."

The FOC, an oilseed cooperative begun in May 2001, expects to begin selling stock in the co-op by early November. As soon as enough shares have been sold, construction will begin on a $55 million processing facility near Claxton, Ga.

Important sales

Shumaker said it's important for the FOC to begin selling stock soon for four reasons:

  • Beginning stock sales will establish the co-op's viability in people's minds, moving the effort beyond the concept stage.
  • Farmers who need to invest typically have more income in the fall and winter.
  • Fall and winter are the easiest times to contact farmers.
  • And the quicker the co-op starts selling shares, the quicker they can finish and get on with building the processing plant.

Loan guarantees?

The FOC is pursuing a U.S. Department of Agriculture loan guarantee program that could make stock purchases more attractive to farmers, Shumaker said.

Regardless of whether that happens, though, Shumaker said cooperatives like the FOC are an important opportunity for Georgia farmers.

"While this kind of cooperative is a new concept in Georgia, it's widely accepted elsewhere, and we're quickly seeing it being applied to other crops here," he said.

"With the new peanut program, two or three farmer groups are already forming new cooperatives," he said. "That indicates to me that growers are accepting this business form."

Dan Rahn is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.