Early models of success
The increase
in cooperative activity in North Dakota and Minnesota is partly attributable
to the fact that a handful of cooperatives formed in the early 1970s served
as role models for later cooperative development. As well, people
who were involved in the formation of these early cooperatives used their
experience to help form other cooperatives later on (Cobia). Three
sugarbeet cooperatives formed during the 1970s, American Crystal Sugar
Company, Minn-Dak Farmers Cooperative, and Southern Minnesota Beet Sugar
Cooperative, were early new generation cooperatives to form. Minnesota
Corn Processors, a corn wet-milling cooperative formed in the early 1980s,
has also been a role model for subsequent cooperative development (Sjerven).
American Crystal Sugar Company
American Crystal
Sugar Company, with headquarters in Moorhead, Minnesota, is typically viewed
as the “parent” new generation cooperative model in the Northern Great
Plains region. 
The
company originated in 1899 as a private corporation with factories located
in California and Nebraska. It expanded its operations into Minnesota
and North Dakota in 1926 and 1965, respectively. But after
the industry went through a large expansion in the 1960s, American Crystal
began to close several of its plants and neglect existing ones. With
facilities shutting down, growers in the region saw the market for their
sugarbeets threatened. In response, a group of beet growers who belonged
to the Red River Valley Sugarbeet Growers Association offered to buy American
Crystal in 1972. By owning their own company, the growers felt that
they could maintain the market for their sugarbeets and improve the company’s
operations. Over 1,300 beet growers paid $86 million for the company
in 1973, transforming American Crystal from a publicly-traded, New York
Stock Exchange listed company to a farmer-owned cooperative (American Crystal
Sugar Company web site). Minn-Dak Farmers Cooperative and Southern
Minnesota Beet Sugar Cooperative formed at roughly the same time.
As a cooperative, American Crystal based its structure on a California
cooperative model that called for producer delivery agreements and equity
capital provided up-front by members (Patrie). Producers paid $100
for each share that gave them the right and obligation to sell sugar beets
produced from one acre of land to the cooperative. By 1994, it was
reported that American Crystal shares were selling at a price as high as
$2,100 an acre (Egerstrom). Today, the three sugar cooperatives jointly
own the largest beet sugar marketing company in the United States (American
Crystal Sugar Company web site).
Although Minnesota
Corn Processors was formed in 1980, new generation cooperative formation
did not really occur on a significant level until 1991, with the establishment
of Dakota Growers Pasta Company. Bill Patrie, the rural development
director for the North Dakota Association of Rural Electric and Telephone
Cooperatives, attributes the lag in activity to the occurrence of several
failures in between. In particular, several failed ethanol cooperatives
and a failed potato processing cooperative made producers hesitant to provide
capital to start-up businesses (Patrie).
References
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