South Dakota Farmers Union Celebrates a Century of Cooperative Leadership in
South Dakota

Owen Jones, 77, can clearly remember the day electricity came to his family's Britton farm. "It made a big difference when we went to milk cows because we could turn lights on in the barn and didn't have to worry about tipping over a lantern," says the third-generation farmer, referencing the kerosene lantern which hung on a wire that ran the length of the barn. For light, Jones, his dad and brothers would simply slide the lantern along as they did chores.

Jones was 12-years-old when Lake Regional Electric Cooperative brought electricity to rural Marshall and Day Counties. His dad, Arthur, was among the founding members responsible for the co-op's development. "Dad was a strong cooperative-minded person. Early on, he realized that if he wanted a better lifestyle in the country, he would have to work for it and organize cooperatives."

It's no surprise that Arthur was also actively involved in his local Farmers Union Chapter. Cooperative development was the original mission of Farmers Union when South Dakota farmers and ranchers established the organization in 1914. "Cooperatives are the reason the Farmers Union organization began. Its founders felt they didn't have a real good market for their products, so they decided to collectively market their products together," explains Doug Sombke, S.D. Farmers Union President. "At that time, some received more for their grain than others, so by coming together they had a better chance of higher prices."

This basic concept that uniting farmers could obtain better prices for the products they grew and raised is what drove National Farmers Union founder and its first president, Newt Gresham. According to historian, Lynwood E. Oyos' book The Family Farmers' Advocate, "He (Newt Gresham) constantly reiterated that family farmers needed a voice and an organization to fight for their rights and survival. Farmers, Gresham argued, were continually being exploited by non-farmers."

Gresham and the organizations' 10 founding members established the Farmer's Educational and Cooperative Union of America near Point, Texas, in 1902. According to Oyos' account, by 1914 the message was carried to South Dakota by Nebraskan member J.K. Weinmaster. The first farmer he visited with about Farmers Union was Knute Strand who farmed about 8 miles southwest of Mitchell.

Strand became the first paid-up South Dakota Farmers Union member and loaned his buggy to Weinmaster to spread the message to his neighbors. On Feb. 6, 1914, Strand was among the state's 17 charter members.

The message of "together we can accomplish what we can't alone" resonated with farmers across the state. Soon, what had begun in Davison County spread and within two years, the state boasted the required 5,000 dues paying members to receive a state charter recognized by the national organization.

Less than a decade after receiving their state charter, Farmers Union grain, livestock, insurance, wholesale and retail marketing cooperatives were serving their member/owners in several South Dakota counties. By the 1930s Farmers Union oil, cream buying stations and credit union cooperatives were also established in rural townships and communities across the state.

Co-ops have played an important role in our state's progress," explains Sombke, a fourth generation Conde farmer. "When companies didn't want to invest in the infrastructure necessary to bring electricity, telephone service, fuel and agriculture inputs to the countryside, our state's farmers and ranchers banded together to form member-owned cooperatives."

"Farmers Union helped people understand that there were things they could do together that they couldn't do by themselves," explains Jones, who has served on several cooperative boards throughout his farming career and currently serves on the American Coalition of Ethanol board.

Healthy Competition

Along with providing needed services, cooperatives created marketing competition in what was a monopoly run by off-farm interests. According to Oyos' book, by the 1880s South Dakota's grain producers were at the mercy of "an unfair price structure determined by milling magnates and commodity firms in the Twin Cities and Chicago."

This issue extended to livestock producers who faced their own set of corporate competitors explained Jim Woster, a retired stockyards buyer, who today spends his time advocating for many South Dakota agricultural organizations.

"I started working for Farmers Union Livestock the morning after I graduated from South Dakota State University in 1962. In those days, most livestock farmers didn't sell that many cattle. When they did sell, they were not in the position to compete with corporations like Morrell's, so commission firms like Farmers Union Livestock played a valuable role in getting those producers a fair price," Woster said.

The competition cooperatives bring to today's marketplace, whether in purchasing inputs for their owner/members or marketing grain, is important even today, explains Dave Andresen, CEO of Full Circle Ag, a full service agriculture cooperative that serves ag producers in 12 counties in northeast South Dakota and southeast North Dakota.

"In the last few years we've seen a lot of money come into production agriculture from outside interests - Wall Street, Silicon Valley and international players like China and Japan. If you do business with an international corporation, the profits leave the country," Andresen explains. "Whereas when you do business with your local cooperative, the money stays in the community and profits are returned to the farmer/owners."

Andresen appreciates the role Farmers Union continues to play in supporting cooperatives through youth education and lobbying state and national government. "Only 1.7 percent of the people serving in D.C. have any ties to agriculture, yet they are setting our policy," he says. "If it had not been for Farmers Union and other farm organizations stepping up and lobbying Congress during the recent rail crisis, I don't think we would have seen any resolution." 

Beyond the Elevator: Cooperatives Impact Multiple Aspects of 
South Dakotans' Lives

For some, the term “cooperative” may evoke images of towering grain elevators. However, for most South Dakotans, cooperatives serve as a lifeline to technology, capital, products and services which extend beyond the local grain elevator and have allowed rural communities, farmers, ranchers and businesses to grow and thrive.

“For a century now, co-ops have played an important role in our state’s progress,” explains Doug Sombke, President of South Dakota Farmers Union.

When Sombke, a fourth-generation Conde crop and cattle producer begins to name off the cooperatives he and his family belong to, the extensive list includes a telecommunications co-op; an electric co-op; a fuel and energy co-op; two agriculture grain and agronomy co-ops; a banking cooperative and a rural water cooperative.

"Those of us living in rural South Dakota benefit from the cooperatives our forefathers founded when private companies decided it would not pay to invest in the infrastructure necessary to bring electricity, telephone service, fuel and agriculture inputs to the countryside," Sombke says.

The development of electric cooperatives illustrates Sombke's point.

In the 1930s, 85 percent of all American households were without electricity due to lack of investment by private electric companies in rural America. To bolster investment in electric infrastructure, Pres. Franklin Delano Roosevelt signed an Executive Order creating the Rural Electrification Administration  which offered government loans to rural electric cooperatives.

In 1937 the first South Dakota rural electric cooperative was formed in Burbank. "Even today, most rural South Dakotans receive their electricity from a rural electric cooperative because other than large load facilities, like ethanol plants, private investors are not interested in coming to rural areas," explains Scott Parsley, Assistant General Manager at East River Electric Power Cooperative and Dist. 8 South Dakota Legislator.

Because cooperatives operate under a non-profit business model, Parsley says they not only return profits locally, but when private providers do enter the picture, cooperatives keep prices in check. "We serve as a yard stick for pricing. Because we are member owned and the rates are set by the board of directors, those paying the rates are setting the rates," Parsley explains. "As cooperatives, we aren't satisfying some investor who may live in another state or country; it is our job to work for the people who own us."

Member ownership carries many benefits, one of which being exceptional service, says Bill Troske, a semi retired cow/calf and crop farmer from Turton who has served on the board of directors for James Valley Telecommunications for several years. "Service is the name of the game. Because we are locally-owned, we excel at service. When members call in, they don't get a recorded voice; they get a real person."

Exceptional service led the 60-year-old cooperative to move into providing cell phone service. "Our members wanted it and the larger companies were not providing service to this part of South Dakota," Troske says.

Responding to customers' needs leads the cooperative, which has already expanded to provide high speed internet and broadband services to the rural communities it serves. "If rural communities are going to thrive, residents need access to the latest communications technology," Troske said.

James Valley Telecommunications recently expanded their coverage area to include non-member territory. Today they provide broadband and cell phone services to residents and companies in Aberdeen and Redfield. This move has strengthened their bottom line in a day and age when many rural communities are losing residents to South Dakota's urban centers.

"The declining population of rural areas is a large challenge for  South Dakota cooperatives," says Jeff Nelson, retired General Manager of East River Electric Power Cooperative.

In response to fewer farms and people, Nelson explains that many cooperatives have adapted their business practices and consolidated. "By joining together, cooperatives are better able to overcome the costs of serving rural areas."

Educating today's cooperative membership is yet another challenge Nelson says cooperatives face. "Many cooperative members are so far removed from the days before electricity and telephone services, that they tend to take cooperatives for granted. This is where rural advocacy organizations, like Farmers Union, play a valuable role as they look at ways to sustain and bring in the next generation of cooperative members."

Supporting cooperative development has been a focus of South Dakota Farmers Union, which was established in the state a century ago for the very purpose of founding cooperatives. (Read more about S.D. Farmers Union's role in establishment of cooperatives in South Dakota at www.sdfu.org.) Cooperative education is key to Farmers Union education programming, which reaches more than 3,000 youth each year through school visits, day camps and leadership camp programs.

"Even though I served on our co-op board for more than 20 years and attended numerous annual meetings of all the cooperatives we are members of, I could have done a better job of emphasizing the importance of being actively involved in our co-ops to my sons," Sombke, 54, said. "We recognize this as a trend, so during Farmers Union Leadership camp, teens actually establish and run cooperatives. This hands-on participation helps develop future generations of active cooperative membership.

Cooperatives Provide a Local Voice in A Global World

Like many farmers with deep roots in South Dakota, the Dirty Thirties weren’t kind to David Kayser’s family. His grandpa, Felix Kayser, lost his Emery farm and his grandpa, Art Jarding, had to invest his own money to save the local cooperative he helped establish.

“Those were tough times for agriculture,” says Kayser, 55, who raises corn, soybeans and cattle with his sons near Alexandria.

In the end, both grandpas saw their sacrifices pay off. Felix was able to get a fresh start in 1943 when he purchased a farm near Alexandria and Art saw the local cooperative thrive.

Three generations later, Kayser honors his grandfathers’ legacies, farming Felix’s land and first serving on the board of the local cooperative and now serving on the CHS national board of directors. “Cooperative participation is part of our family’s story. We appreciate the voice cooperatives give farmers,” Kayser says.

He explains that before cooperatives, farmers were at the mercy of the large monopolies which provided inputs and bought commodities when it was to their advantage. “The private companies who purchased grain and sold inputs did not listen to farmers’ needs. By forming cooperatives, farmers gained a voice in how and when their commodities would be sold and inputs delivered.” Kayser says this voice holds value today. It is the reason he continues to purchase 100 percent of his inputs from Farmers Alliance of Mitchell. “The cooperative business structure provides us with a voice on not only the goods and services we receive, but also in the cooperative’s governance,” Kayser says.

David Kayser raises corn, soybeans and cattle with his sons near Alexandria. He has been a member of the local agriculture cooperative his grandpa, Art Jarding, helped found.

Kayser is not alone in his thinking. More than 80,000 South Dakotans are cooperative members ­ whether they belong to an agriculture, electric, banking or telecommunications cooperative, if they are members of a cooperative, their voice is heard, explains Lucas Lentsch, S.D. Secretary of Agriculture.

“It’s about having a local voice that is reflective of the needs of friends and neighbors,” Lentsch says. “Cooperatives unite those with common interests and provide them with access to products or services they need.” Lentsch goes on to say that for many South Dakota communities, the solutions provided by cooperatives continue to drive economic prosperity.

He explains that when private industry didn’t deem rural populations large enough to establish needed infrastructure such as electricity, water, high speed internet and cell service, or services like banking, fuel stations, grain storage and marketing, community members formed cooperatives to fill the need. “Together we are more powerful than alone,” Lentsch says. “Anyone who does not understand the value of cooperatives today needs to sit down with those who fought the battles to provide the services many of us take for granted.”

Member Ownership

Unlike private industry, to become vested or gain ownership, members simply need to do business with their cooperative. “I don’t think there is a farmer alive who doesn’t value ownership,” says Randy Knecht, a Houghton farmer.

“Ownership of the supply chain brings value.” Knecht’s cooperative, Full Circle Ag, is one of many local cooperatives which are members of the national cooperative, CHS, Inc. “CHS is a great logistics company. It provides our local cooperative with ag inputs and fuel in a timely fashion and connects our commodities to the global marketplace.” Because the cooperative business model is member-focused, cooperatives are only successful as long as they are able to meet their member/owners’ needs.

“We have to remain competitive in the marketplace to return value to our customers,” says Jeff Dragseth, General Manager of CBH Cooperative. “As we grow, change and look for new opportunities, our members reap the benefits through much more than patronage.” Dragseth references a recent conversation he had with one of his members.

“This member said patronage doesn’t matter to him. What matters is the fact that he can depend upon his cooperative to invest in the assets he needs on his large farming operation when he needs them ­ whether that is people or equipment.” Since 2010, CBH Cooperative has expanded its service territory to serve members in Montana and Wyoming.

Relevant for the Next Generation

“You can’t beat the cooperative model,” says Doug Sombke, President of South Dakota Farmers Union.

A fourth-generation Conde crop and cattle farmer, Sombke says his cooperative loyalty was inherited from his father and grandfather. His grandpa, Alvin, was a founding member of the Farmers Union Oil Company of Ferney and both men served on the board of directors.

Today, he encourages his three grown sons, who farm with him, to remain actively involved. “I hope I’ve instilled the same level of respect for cooperatives in my sons,” Sombke says. “This can be challenging because they are so far removed from the challenges we faced before cooperatives came to rural South Dakota,” Sombke says.

Educating the next generation of cooperative members has been key to S.D.

Farmers Union youth education curriculum. Each year more than 2,000 South Dakota youth attend district and state camps where they learn about how cooperatives work and the value they bring to their local communities.

“The value captured from cooperatives isn’t always monetary,” adds Kayser, also a member of S.D. Farmers Union. “I look at our local cooperatives as providing employment, fire fighters, emergency responders and other services to rural South Dakota. Really, the cooperative is an extension of my community.” Like Sombke, Kayser encourages his four sons to embrace their local cooperative. “I can only hope I have taught them to value the cooperative system because it has only been in recent years that agriculture has attracted private industry to sell inputs locally,” Kayser said. “And, in bad times, what is there to keep private industry from moving on. My grandfather understood this ­ that’s the reason he invested his own money in sustaining the local co-op.” The value of cooperatives has not been lost on higher education. Lake Area Technical Institute and South Dakota State University are among post secondary programs across the state which offer classes focused on the cooperative business model.

“We feel it is important to expose this business model to young people,” said Barry Dunn, South Dakota Corn Utilization Council Endowed Dean of the SDSU College of Agriculture & Biological Sciences, SDSU Extension Director.

“It is a great model for us to stand on our own and be responsible for our own community today and into the future.”