National co-op leaders express concern over USDA reorganization
March 19, 2015
The National Cooperative Business Association, CLUSA International, the National Council of Farmer Cooperatives and the National Farmers Union are expressing concern that the Agriculture Department's quiet proposals for reorganizing the Rural Business-Cooperative Service within the Rural Development mission area will lead to a reduction in services that USDA has performed for co-ops since 1926.
Using authority under the farm bill, the Agriculture Department is making plans to include the Rural Business-Cooperative Service in a reorganization under which the RBCS will be the lead agency in creating a "community economic development" approach that will include housing, community facilities infrastructure and business and cooperative programs.
USDA officials have said that the inclusion of co-ops in community development will strengthen their role, but co-op leaders are worried that the services such as statistics and research could be lost in the reorganization.
The concerns were heightened by the reassignment of John Wells, the head of the Education and Research Division of Cooperative Programs, and the issuance of two notices to employees seeking a successor that did not mention knowledge of co-ops as one of the "key requirements" for the position.
The first notice — formally a "letter of interest" — noted that "the reassignment of John Wells will open a supervisory GS-15 position," and stressed that the employee should have strong organizational skills across divisions within Rural Development.
An employee got the job, but she soon went on maternity leave and a second notice seeking a temporary placement for her also did not mention anything about co-ops in the job description. Applications were addressed to Justin Hatmaker, a political appointee who has just been named chief of staff of the RBCS.
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(The Hagstrom Report obtained copies of the letters of interest.)
Longtime followers of the RCBS noted that the division has shrunken dramatically since 1994, when the Agricultural Cooperative Service, a separate division within USDA, was made a part of the newly formed Rural Development mission area.
One former employee said the number of USDA employees working on co-ops has declined from 65 to fewer than 10 as successive administrations have reassigned employees to other tasks.
But longtime co-op advocates note that under the 1926 Cooperative Marketing Act, USDA is required to provide support services to co-ops. They added that they fear USDA may be trying to avoid notifying Congress or labor unions about the scale of the reorganization.
On March 6, the National Cooperative Business Association, CLUSA International and the National Council of Farmer Cooperatives wrote Agriculture Undersecretary for Rural Development Lisa Mensah a letter that "many in the cooperative community have been concerned about what a possible reorganization might entail, how vital services will get administered, and how cooperatives ultimately will retain dedicated resources for purposes of education and development."
The signers of the letter, NCBA and CLUSA International President and CEO Michael Beall and NCFC President Chuck Conner, said that they were seeking "more detailed information" on how USDA would continue to fulfill "responsibilities of USDA to cooperatives in mandated legislation such as but not limited to the Cooperative Marketing Act of 1926, and how the new structure provides that critical information, research and support."
Beall and Conner also said that any renaming of the division should still include the word "cooperative."
In a telephone interview, Conner said he had on his desk four USDA reports that he considers vital to co-ops.
"This the only organization that aggregates statistics relevant to the co-op business model," Conner said. "This is huge in terms of the community and knowing what is going on out there in the co-op business world."
"Farmer-owned co-ops are a unique business structure — we are owned by the very members that we serve," Conner added. "We have different taxation policies, government, legal and antitrust issues."
"Historically USDA has been a partner in making sure this educational and research system is meeting the needs of a unique business structure," he said.
Conner, who served as Agriculture deputy secretary in the Bush administration, acknowledged "That has been getting less and less over a long period of time. That was happening when I was at the department, but there is still a big research function occurring."
It is important, he added, that employees working on co-op matters have the specialized knowledge to do that work.
The National Farmers Union, a farm group long active in the co-op movement, also expressed concern.
"NFU supports a robust cooperative research and extension service at USDA," Chandler Goule, the NFU senior vice president of programs, said in an email to The Hagstrom Report.
"Any efforts to reduce their capacity or services would be of great concern to NFU," Goule said. "Co-ops provide much-needed buying and selling power to family farmers and ranchers and it's important to continue to keep this program funded and effective."
Asked today by an NFU member at the group's convention in Wichita about USDA's plans to reorganize the co-op function, Agriculture Secretary Tom Vilsack said, "This is what drives me nuts about Washington. Congress says 'we are going to cut your budget.' They don't cut the programs you like, they cut the salaries and expense lines."
The Rural Development mission area, Vilsack said, "decided to look at how they have structured their offices" and "because they begin that conversation, folks start rumors that we are not interested in co-ops."
"We obviously understand the important role of co-ops and the role they have," he said. "If we were going to go out and significantly change everything, obviously the [supporters] would run to the Hill. Why do they do that, why don't they pick up the phone?"
Vilsack said the letter from Beall and Conner is a "fair request" and he will inform them of what the department is planning.
–The Hagstrom Report