Central Minnesota Buckwheat Growers

December 1998
Interview with: Tom and DeEtta Bilek
Goal: Pool buckwheat sales to access volume premiums and promote sustainable farm management.
Date Established: June 1997
Area Served: Central Minnesota
Number of Members: 16
Key Challenges: Quality Control
Helpful Resources: Minnesota Department of Agriculture, Agriculture Utilization and Research Institute, and local accountant

Central Minnesota Buckwheat Growers is a coop- erative of 16 small-scale farmers who produce, clean, and collectively market buckwheat. "Each member raises a fairly small buckwheat crop," says member DeEtta Bilek. "We have a better chance of selling the buckwheat on contract and at a higher price by pooling it after harvest and marketing larger loads."

Why market collaboratively - identifying a need and an opportunity

Typically, grain buyers and processors prefer to contract only when large-scale supplies can be guaranteed - a reality that has made value-added bulk commodity sales difficult for small-scale growers. This was the problem faced by buckwheat producers in Central Minnesota. "My husband and I couldn’t sign production contracts directly with buyers because we didn’t produce the volume desired by processors," recalls Bilek.

Prior to forming the cooperative, the Bileks and other Central Minnesota farmers were selling their buckwheat at near-cost to a local, large-scale producer for approximately $0.09 per pound. The grower could afford to store the grain and then pool it for sale at close to $0.30 per pound in some years to individual buyers.

In 1993, Bilek and her husband, Tom, began talking with other small-scale growers about collective marketing. "We knew that if we could pool our buckwheat, we could sell in larger loads at a higher price," she recalls. At first, the group’s conversations focused not on formal cooperative development, but rather on informal networking that would enable pooled grain sales in semi-truck loads (1200 bushels). "We didn’t really want to organize a formal cooperative at first," says Bilek. "A lot of the guys wanted to remain independent."

Exploration of an idea

As the group’s marketing vision expanded, they recognized the benefits of more formal organization. "Based on conversations with an accountant, we realized the need to make legal and financial transactions," Bilek explains. "We decided to form a cooperative since we would need to pool investments, sign contracts, file taxes, and purchase cleaning equipment for grain that comes off the farms." Moreover, the group believed that by formally organizing they would acquire more credibility when talking with brokers and lenders - a critical success factor since the group would require access to loans to finance storage, transportation, and cleaning equipment.

Once the decision to form a cooperative was made, the Bileks and 13 other growers began working out organizational and planning details. "The biggest issue of trying to market together was finding someone who understands articles, bylaws, taxes, and accounting, and is someone you can trust," says Bilek. "We got lucky. We found a local accountant who has worked with cooperatives to help us prepare for incorporation."

Beginning operations

Following the development of bylaws and articles of incorporation, the group filed as the Central Minnesota Buckwheat Growers in June 1997 with the Minnesota Secretary of State. Less than one year later, the Cooperative purchased previously leased cleaning equipment with a low-interest loan from the Minnesota Department of Agriculture (MDA) and the Agricultural Utilization and Research Institute (AURI), hired cooperative member Tom Bilek to run the cleaning equipment, signed a renters agreement for two 1,500-bushel capacity storage bins, added two new members through word-of-mouth promotion, and shipped their first semi-load of buckwheat to a local flour processing plant for a premium above traditional market prices. At the same time, the Cooperative developed a small market for buckwheat as a plow-down green-manure crop. "There’s been a lot of interest in buckwheat seed for plow-down among farmers who are coming out of the Conservation Reserve Program and need to get their land ready for planting," Bilek says, explaining that buckwheat improves soil-tilth, suppresses weeds, and reduces soil run-off.

Member responsibilities

Whether buckwheat is used as plow-down seed or for processing, it must be cleaned, stored, and marketed. In addition to a one-time $100 membership fee, the Cooperative charges members $0.30 per bushel for cleaning and a total of $0.02 per bushel for storage and marketing services. Additional income is generated by the Cooperative through grain-cleaning services to non-members (cleaning screens were purchased for rye, wheat, and oats in addition to buckwheat). Members who market through the Central Minnesota Buckwheat Growers pay for cleaning up front to cover the Cooperative’s costs.

Once cleaned and graded, members’ buckwheat is stored in bulk bins that are rented from a local grower or on members’ own farms. Grain is stored until the Cooperative has enough volume to fill one semi-truck load. At this point Growers’ member Warren Roberts, who actively communicates with buyers, will contact Cooperative Chair Tom Bilek and other members for a vote on when and at what price the group will sell its buckwheat. "We share cash market risks as a group by storing our grain and waiting to see what the market brings," explains Bilek. Growers receive a check from the Cooperative after the grain has been sold and delivered.

Future opportunities

In the future, Bilek says Central Minnesota Buckwheat Growers hopes to sign production contracts with Japanese brokers for container-loads (4,000 bushels) at a premium market price. Expanding sales to the Japanese market, however, will require more than increasing the group’s volume of production. "We will need to improve further on quality," Bilek says. This means running grain through an additional cleaning process to remove other types of weed seeds and communicating with growers about ways to improve planting, harvest, and storage to ensure desired quality levels. "We won’t sign contracts until we have more than enough high-quality grain to fill a container," Bilek cautiously adds. "With a little more membership and organizational operating experience, we’ll be ready to sign and fulfill container contracts."

Member benefits

In the meantime, members will continue selling plow-down seed to producers and semi-truck loads to processors on a spot basis, while adding value to their buckwheat, expanding cooperative equity, and sharing market risks in the process. At the same time, this will build on what Bilek considers one of the Growers’ biggest successes - the circulation of marketing and production knowledge that can increase profits, improve soil quality, and conserve resources.

December 1999 update

In the last year, the Buckwheat Growers have worked on strengthening relationships with MNDAK, a buyer who processes the buckwheat into flour and sells it to Japanese buyers, focusing in particular on meeting their quantity and quality requirements. The 1999 growing season was the first that the group was able to meet MNDAK’s quantity requirements of producing at least a container load of grain. They have worked to improve quality by acquiring a new cleaning machine and setting higher standards for the grain they accept. They have also made contact with a buyer from Washington, who is interested in buying train car loads for further cleaning and shipment to Japan.

next >>