Section 6: Dakota Growers Pasta
In 1990, 1,100 farm families joined their interests to start a new cooperative called Dakota Growers Pasta. The members of the cooperative grew durum wheat which is the best kind for making pasta. Dakota Growers built a durum wheat mill and a pasta processing facility that went into operation in 1993. The plant was located in Carrington.
North Dakota farmers raise more durum wheat than any other state (or country). Durum is the ideal flour for making pasta products such as spaghetti, macaroni, and other noodles. The co-op purchased durum wheat directly from farmers. One of the founders of the co-op and chairman of the board was Jack Dalrymple, a Casselton farmer and now governor of North Dakota.
By 1995, Dakota Growers was making sufficient profit to return a dividend to its members. Members who invested in the cooperative and sold their durum crop to the plant received 31 cents per bushel as a dividend. This amounted to very good 20 per cent rate of return on the members’ investment. The cooperative employed about 230 people.
Dakota Growers became so successful that, in 1996, the co-op decided to expand the plant to double the production capacity. The cooperative purchased another pasta company in 1998. Dakota Growers could increase its production to about 100 million pounds of pasta each year. Production included 50 different varieties of pasta. The co-op marketed pasta to retail stores, food service companies, and to plants that made other products from pasta.
Dakota Growers Pasta cooperative is a good example of value-added agriculture. In the past, farmers sold their crops on the market to a company that would make something different from that product. For instance, wheat was sold to millers who turned the grain into flour that was made into bread. Farmers received the price of the crop, but received nothing from the sale of the bread. The value-added agriculture concept means that farmers find a way to sell something more than the crop they harvest. Members of Dakota Growers built their own manufacturing plant to make pasta. Members of the co-op sell durum, and they also sell pasta.
In 2004, the co-op members decided to become a Class C corporation instead of a cooperative. There were several reasons why this seemed to be a good business decision, including a decline in durum production due to a plant disease. The members also wanted to have the structure that allows corporations to acquire other properties.
The change in the business structure of Dakota Growers generated some controversy. Merle Boucher a member of the legislature and a candidate for the office of Commissioner of Agriculture, said that the pasta cooperative had received some funding from the state-owned Bank of North Dakota and, therefore, the people had a stake in the cooperative. Jack Dalrymple said that the cooperative had repaid its loans and had to adopt the appropriate structure for its best interests.
As a corporation, Dakota Growers sold to a Canadian grain company called Viterra. In 2014, Viterra sold Dakota Growers to Post Holdings, Inc., a company that also makes cereal. The successful co-op became a successful corporation. While the corporation is no longer member-owned, it still provides about 300 jobs and a local processing plant for durum wheat.
Why is this important? Some people have said that North Dakota has had more successful cooperatives than any other state. Approximately 28 cooperatives were started between 1990 and 1997. Most of these cooperatives focused on value-added agricultural products. While there have been some failures, there have also been notable successes such as Dakota Growers and the Bison Cooperative at New Rockford. The successful co-ops have had strong commitment from their members; access to labor, electrical power, and other structural needs; intelligent, educated leadership; and a sound financial plan.
North Dakota has a good history with cooperative organizations. The cooperative business model works well in a state with a small population, strong public support, and a good source of raw materials–in this case, agricultural products. Co-ops are part of our history, and most likely, part of our future.