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 Electrification 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
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.”