FiS^JS^b INFORMATION 30 OCTOBER 1962 UNIV. OF FL Ui. DOCUMgiLES DE? U.S. DEPO*TO*Y IT'S UP TO FARMER COOPERATIVE SERVICE U. S. DEPARTMENT OF AGRICULTURE The Farmer Cooperative Service con- ducts research studies and service activ- ities of assistance to farmers in connection with cooperatives engaged in marketing farm products, purchasing farm supplies, and supplying business services. The work ojf the Service relates to problems of management, organization, policies, financing, merchandising, product quality, costs, efficiency, and membership. The Service publishes the results of the studies; confers and advises with offi- cials of farmer cooperatives; and works with educational agencies, cooperatives, and others in the dissemination of infor- mation relating to cooperative principles and practices. Joseph G. Knapp, Administrator Farmer Cooperative Service U. S. Department of Agriculture Cooperative destiny— It's Up to You! By Joseph G. Knapp Cooperative destiny is a matter of choice. The future of cooperatives largely will depend upon what you do as cooperators -- individually and collectively. There is an old expression to the effect that life is what we make it. This applies also to cooperatives. Co- operatives are what we make them, and I would like to emphasize the "we" be- cause cooperatives are not made by any one man. They are made by a number of people working together in different capacities. The members are, of course, the foundation of a successful cooperative, but it's what the members do in selecting directors, and it's what the directors do in hiring or firing a manager, and in their formulation of policy and evaluation of results, that is all- important. When we talk about cooperative destiny, we are thinking of the factors that contribute to the rise or decline of organizations. Perhaps we can Note: Talk given at Summer Conference of Maine Cooperative Council, University of Maine, Orono, Maine, July 19, 1962. paraphrase the topic something like this: "How do we build strong, ef- fective coope native organizations with a built-in capacity for growth and survival 7 T Must Adapt to Change Here, I would like to bring out the point that if organizations are to sur- vive and grow, they must be able to adapt to change. They must be able to improve with time. They cannot stand still in any way. If we look backward instead of for- ward for a moment, we shall see that the major organizations^ in existence today -- the ones we consider im- portant — are generally the ones that have changed quite a good deal in past years. Take, for example, an organization like the Cooperative G.L.F. Exchange, Ithaca, N. Y. It's a far different or- ganization from the rather simple feed, seed, and fertilizer purchasing asso- ciation that was established by Ed Babcock and other New York farmers just after World War I. It has main- tained the high principles and objectives of the original organization, yet it has adapted itself to changing conditions and has greatly extended its scope of operations to meet many problems that were not even imagined forty years ago. Another great cooperative, Land O'Lakes Creameries, Inc., Minneapolis, Minn., is a far more complex and better integrated organization than it was even a few years ago. I could take other examples throughout the country to illustrate how the organizations which have survived and grown are those that have been able to adapt to change. In fact, such organizations have even initiated and helped bring about changes in the environments in which they operate. Must Meet Needs Now to continue with my subject. If a cooperative is to survive, it must be able to continue to meet economic needs. It must be able to perform functions of importance to its mem- bers -- those who are served by it. Farmers can't start a cooperative as a viable organization unless it has a good prospect of success -- that is, unless it has a good prospect of at- tracting the support of those who will see and obtain benefits from its serv- ices. We can't expect continuous growth unless the cooperative finds new and better ways to serve members' needs. This calls for research and planning, provision for financing new facilities and services, and many other related things which I cannot fully discuss here. We must always remember that an organization doesn't exist for itself alone. It exists because it is of serv- ice to someone- -this is particularly true of cooperatives. People may join An organization doesn't exist for itself alone-- it exists because it is of service to someone. cooperatives in the expectation that they will be well served, but if they are not well seryed they are going to leave the organization. Keeping up with the trends is im- portant for all kinds of businesses. A considerable number of organiza- tions now on the 1962 Fortune maga- zine annual list of 500 major corpora- tions were not there a year ago. Conversely, a large number on the list a year or so ago are now off. Even a big organization may lose ground and finally fail. Think of automobile com- panies that were once great, but are now only memories. When we think of the future of a cooperative, we must ask ourselves this question: Who is responsible for seeing to it that an organization thrives ? Actually, the responsibility rests with all the three elements that make up a cooperative: The members, the board of directors, and the manager and his staff. Members Must Accept Responsibilities The first requirement is well in- formed members who will accept re- sponsibility. We must expect mem- bers to be responsible in the same way that we must expect our citizens to be responsible. We can't have a living democracy unless we have citizens willing to accept their duty to vote and elect representatives capable of guiding the affairs of the country. The same thing is true for cooper- ative organizations. I know an organ- ization in the West that has the slogan -- "Every Member a Field Man." I like this slogan because it indicates the sense of responsibility Members become loyal to those things from which they benefit or whose value they recognize . that is vested in the members and assumed by them. We often hear the expression that a cooperative needs loyal members. I T m of the opinion that loyalty is something that is built into people. They become loyal to those things from which they benefit or whose value they recognize. Cooperatives must engender in mem- bers a sense of responsibility — a realization that they must do their share to help an organization succeed. On the other hand, I don't feel that we must ask the impossible of them — blind loyalty. We must see that mem- bers are well informed and that they know what the organization is doing. They must be given some indication of the benefits of their participation. They must be given the feeling that the organization is theirs, and that it does not belong to the board of directors, the manager, or anyone else. The members must realize that they are responsible for having able di- rectors. They cannot ignore this responsibility. Does your organiza- tion have a plan to select the best possible directors? The method by which the directors are elected often affects the quality of a director se- lected. Directors Must Be Well Informed Let f s focus our attention now on the directors. Certainly if you are a director, you have a responsibility for the success of the cooperative you represent. You have been placed in your position as director to help main- tain the strength and vitality of the organization. You can either contri- bute to that objective or be of little value to it. I think that one of our great weak- nesses in cooperatives is that, in many cases, directors do not have a full understanding of directorial respon- sibilities. As a result, they do not make the best use of their opportunities to serve their organizations. Fre- quently, there is lack of knowledge on how a board of directors should func- tion. We often find directors who attempt to manage the day-to-day oper- ations of an organization and this can blight the spirit of a manager as fast as anything. Directors who attempt to take over the manager's prerogatives do untold harm. Such directors seem to want a There must be a reciprocal arrangement be- tween members, the board, and the manager. None can operate efficiently without the other . rubber-stamp manager rather than a vital, able man who can perform as a manager in a satisfactory manner. No first-class manager is going to continue long with a board of directors that restricts him at every point. If rivalry develops between a board of directors and a manager, something is wrong. Either the board or the man- ager isn't functioning correctly. A situation of this kind calls for analysis of the cause of the difficulty and cor- rective action. While a board should not allow it- self to hamstring the manager, neither should it go to the other extreme and give the manager too free a hand. A cooperative can become subservient to the manager unless directors exert an effective role in the total management process. Let's turn now to the job of the man- ager. We cannot expect any cooperative Managers must not only carry out directives of the board and members , but must have creativity and independence . organization to 5 long if it does not have a first and firs:- managerial employees. I like to think of a first-class manager not only as a man who carries out the intent of the board of directors and endeavors to meet the needs of the members, but one who also is a man of some rid independence. I don't believe we ca: a person who cannot think for himself to be a capable mana^ Lrst-clasj leadership to the board of dii -nould re a judgment and counsel of his di- rectors. They can be his sound board to help hi way :s opera:. set- the needs and objectives :: organization. All Depend Upon Each Other I hold that - be a re- ciprocal, or reciprocating, relation- ship between the and the manager. None of th operate effectively without the others. The members need the board and I board of directors require - manager needs a board of directors and a board of directors exists only to meet the objectives of its members. If we could firmly establish this idea of the reciprocating action of these three interrelated functioning parts of the organization, it would help us build stronger organizations. No one of the three can function effectively unless the other two are working well. I recently talked on the future of cooperatives at the American Farm Economics Association meetings in New York City. In preparing for that talk, I gave a lot of thought to the factors affecting cooperative destiny and to a number of devel- opments that are contributing to a growing importance of cooper- atives. 1 From this analysis I concluded that the kind of agriculture we now have, and the kind we can foresee, requires that farmers have strong business or- ganizations to best serve their needs. How can farmers long survive as independent business men unless they, like other independent business men, join together for their mutual benefit and protection? To me, it seems significant that independent grocery stores have found it necessary to join together in order to meet the com- petition of the chain stores. The same thing is true of most farmers. They must join together if they T re going to meet the competition of highly efficient productive units in a market that de- mands greater uniformity and steady supplies of large quantities of high quality products. At the present time, department stores are having a rather tough time meeting the competition of discount 1 Knapp, Joseph G. , The Scope of Farmer Coopera- tives - Present and Future, Journal of Farm Economics, May 1962, pp. 476-488. 10 houses and mass market food com- panies. It is significant that many department stores now buy together cooperatively in order to meet such competition. Cooperatives thus may be viewed as a way in which people or organ- izations can join together to compete better. If we look at them in this manner, we shall free ourselves from sentiment, and shall regard them as a practical method of doing business., Co-ops enable people to join together to compete better. Without doubt, there are fine social elements in cooperatives and we should not lose sight of them. The process of working together toward a common ob- jective is in itself something that should be encouraged. It's also important to work together for an ideal. In farmer cooperatives we have the kind of organ- izations that farmers can rally around to protect their own vital interest as farmers. 11 Cooperatives have made a lot of progress in the last 25 years, but the evidence indicates that many are just now learning how to cooperate in an effective manner. In the next half century we're go- ing to find cooperatives becoming the recognized way through which most farmers conduct their own business affairs. There are many reasons why farmers should have their own organ- izations in the same way that workers have their unions or other private business men have their own special types of organizations. Moreover, a more independent agri- culture made possible by cooperation between farmers will contribute to the best interests of all parts of our society. We have considered here what indi- viduals can do to help farmer coopera- tives be of maximum service to farm- ers. I have stressed the importance of being a responsible member, an able director, or a competent manager. If all cooperative members, directors, and managers perform in the most efficient manner, cooperative po- tentials can be largely realized and the future of farmer cooperatives will be bright indeed. So to sum up — It r s up to you. 12 ilif§ Other Publications Available Planned Public Relations — In Modern Cooperative Business. Information 10. Co-ops Have a Place in Rural Com- munity Progress. Information 23 Cooperatives in the American Private Enterprise System. Information 24. How Farmer Cooperative Service Works. Information 26. List of FCS Publications. Informa- tion 4. A copy of these publications may be obtained upon request while a supply is available from — Information Division Farmer Cooperative Service U. S. Department of Agriculture Washington 25, D. C.