The Cooperative Story

by Deborah R. Huso, Contributing Writer

When I was a child, I was always fascinated by stories of my grandparents� and parents� childhoods and was particularly enamored by the idea that my mother attended school in a one-room schoolhouse as late as the 1950s and spent the first years of her life on a farm with no electricity. How in one generation had things changed so dramatically? But change they had, and no small part of that change, at least in rural America, was the result of cooperatives that brought everything from electric service to equipment loans to landowners and farmers in the nation�s rural areas.

Michael Sandridge, vice president of BARC Electric Cooperative�s board, is a resident of Rockbridge County and still lives on the farm once owned by his grandfather, a founding member of BARC. Sandridge also remembers the stories of those early days without electricity. His grandfather, Charles William Sandridge, operated a dairy farm in the 1930s without the aid of electricity. He milked cows by hand, while his wife washed clothes and cared for chickens without the benefit of running water. �My grandmother worked as hard as the men,� Sandridge remembers.

The Power to Change Lives

But that workload changed when electricity came to Rockbridge following BARC�s establishment in 1938. �It enabled my grandmother to raise as many as 300 chickens and to sell eggs to Staunton city schools,� Sandridge says. Meanwhile, his grandfather, with the new aid of milking machines, grew his herd of milking cows from 10 to 40. �Electricity brought prosperity,� Sandridge explains. �You could do a whole lot more in a shorter amount of time.�

In the 1930s, nine out of 10 rural families lacked electricity. That meant that economies of rural areas remained dependent on agricultural production � production that was extremely labor intensive. Farmers like Sandridge�s grandfather milked cows by hand, and labor that could not be done by the light of a kerosene lamp was confined to daylight hours. Women cooked on woodstoves, washed clothes with a washboard, and hauled water from wells or springs.

Manley Garber, vice chairman of the board of Northern Virginia Electric Cooperative, remembers those early days of the electric cooperatives in Virginia. �Where I lived, I was one pole away from having electricity, and the power company wouldn�t serve me,� he recalls. But Prince William Electric Cooperative, which had been established about seven years earlier, did.  And that�s really how electric cooperatives and cooperatives of all kinds got started. They offered a service that for-profit companies wouldn�t.

Formed to Serve a Need

�Usually cooperatives start when there is a market failure,� explains Paul Hazen, president and CEO of the National Cooperative Business Association. When traditional businesses, from power companies to grocery stores, won�t serve a community, often because there aren�t enough customers to make a venture profitable, cooperatives often form instead to serve a need. They are not-for-profit organizations established for the benefit of members and often funded by the membership as well.

The first federally supported program to provide electric service to rural areas was the Tennessee Valley Authority (TVA), which was established in 1933 to build transmission lines (and the reservoirs and dams to supply the power) for the purpose of bringing electricity to the farms and small towns of the Tennessee Valley. TVA launched a movement.

When President Franklin D. Roosevelt took office two years later, he established the Rural Electrifica�tion Administration (REA) for the purpose of creating electrical-supply infrastructure in the nation�s rural regions, which remained largely unserved by the electricity that had existed in cities since the turn of the century. In 1936, Congress appropriated $410 million for a 10-year program to electrify America�s farms and rural businesses. Private companies as well as cooperatives could apply for government-subsidized loans through REA in order to bring electricity to under-served areas. Rural electric cooperatives were the prime beneficiary, becoming one of the biggest capital projects of the New Deal. Thanks to REA, more than 90 percent of American farms had electricity by 1953.

The program continues today under the U.S. Department of Agriculture�s Rural Utilities Service, which is the noteholder for some 700 electric system borrowers in almost all 50 states. Today, 99 percent of U.S. farms have electricity.

Co-ops Improve Quality of Life

The General Assembly instituted the Virginia Electric Cooperative Act in 1936, and the predecessor to Rappahannock Electric Cooperative was the first in the state to electrify its lines. �Electrification is probably the thing that had the most impact on this region,� says Richard Oliver, chairman of the board of Rappahannock Electric Cooperative. Oliver, who resides on a 700-acre farm in Orange County, notes, �Older neighbors of mine say the cheapest hand they have is electricity.�

And the relevance of Virginia�s electric cooperatives hasn�t waned, even as some of the countryside the state�s cooperatives serve grows more suburbanized and urbanized. �Rappahannock has 16,000 miles of line,� says Oliver, �but we still only have nine to 10 customers per mile of line.� No for-profit business would provide that kind of service. It just wouldn�t make economic sense. And that�s why rural landowners use cooperatives for everything from telephone and electric service to the establishment of grocery stores and acquirement of farm loans.

Jim Belfield, chief information officer with Colonial Farm Credit in Mechanicsville, Va., one of three farm credit agencies that serve Virginia, says banks have historically not been very willing to lend to farmers and rural landowners because of the risk associated with agricultural production and large acreage, as well as the fact that banks can�t supply farmers with the usual cookie-cutter loans they offer suburban homeowners.

Farm credit agencies began filling the gap under federal authorization in 1960, and today there are 92 such agencies across the country providing $160 billion in loans to rural member/customers. And like many electric and telephone cooperatives, farm credit agencies often return profits to members/ owners in the form of patronage refund checks. And the kind of people farm credit agencies lend to are the kind of people running the show, too. �The people in charge of farm credit agencies are actual farmers,� Belfield points out. �They�re the board of directors. Farmers are running the bank.�

A Business Model That Makes Sense

Thus, the boards of cooperatives understand the unique issues rural landowners face. �Co-ops have a business model that makes sense,� says Oliver. �You don�t have to pay a dividend every year.�

Richard Johnstone, executive editor of Cooperative Living, agrees. �Cooperatives are the perfect blend of public spirit and private enterprise,� he says. �They�re a business model that develops essential services to people at cost and then delivers excess funds, and they�ve allowed rural America to have most of the advantages that people in the city have.�

�Nobody realizes if they didn�t have electricity, they wouldn�t have indoor plumbing,� Oliver adds, and he believes cooperatives will be the key to providing high-speed Internet access to rural locations across Virginia as well. And some locations, including the small, isolated community of Highland County with its population of just over 2,000, have had high-speed DSL for years thanks to the cooperative business model.

�You can drive for miles and miles out west and not see a person or a house,� says Oliver, �but you�ll see electric poles.� Those are cooperatives at work. They offer services where for-profit businesses can�t afford to. Johnstone says that even today there are parts of Virginia that would not be electrified were it not for cooperatives.

When Sandridge considers the impact of electricity on his grandparents � the simple things we take for granted today like having a washing machine and an indoor toilet � he finds himself grateful for the progress cooperatives have brought to rural economies. �I can�t imagine the awe my grandparents must have felt when the electricity came on for the first time,� he says. �It impacted their quality of life tremendously.�