The Federation of Southern Cooperatives: Hard Times & High Hopes

Black and white drawing of male farmer picking crop

Drawing from F.S.C. proposal

This article originally appeared in Southern Exposure Vol. 2 No. 2/3, "Our Promised Land." Find more from that issue here.

That old sayin, "Them that's got are them that gets"

Is something I can't see.

If you gotta have something before you can get something.

How you get the first is still a mystery to me.

— Ray Charles


Recent American history dating from the government's rediscovery of poor people in the early 1960's demonstrates that the "cycle of deprivation" has successfully repulsed almost every offensive from the War on Poverty to the Salvation Army. The battlefield, which has never really moved from the tenements into the banks and corporation offices where it rightly belongs, is strewn with misused taxes, blasted hopes, and scarred lives. Obviously some poor people have benefited from poverty programs, but the clearest beneficiary is the army of well-meaning poverty workers — the researchers, academicians, government bureaucrats, foundation officers, journalists, and social workers who make their living ostensibly helping those who, perhaps not so mysteriously, remain trapped in the cycle.

Nowhere is the cycle more insidious and more entrenched than among black poor people in the rural South, not only because of long-standing institutional racism and antagonistic agricultural policies, but also because of the chronic lack of adequate education, health care, housing, and job training. Over 90 per cent of the nation's rural blacks live in the South, the great majority of them poor, and every available index reveals their place on the bottom rung of the nation's economic ladder.

Even successful programs have usually been ad hoc and piecemeal, but there is at least one organization which is attempting a more wholistic approach on a regional scale. The Federation of Southern Cooperatives, the subject of this article, is composed of 134 low-income co-ops across the South. Headquartered in Sumter County, Alabama, the Federation provides its member co-ops with centralized bookkeeping services, technical and financial assistance, and resource development.

Similar efforts to organize the rural poor in the South date back as far as the 1880's and 1890's with the all-white Farmers Alliance and the Colored Farmers Alliance and Cooperative Union. More recently, the Farm Security Administration, a New Deal program begun in 1937, established a large number of poor people's cooperatives and even collective farms. While some blacks benefited from from FSA programs, most were excluded.1

The most recent wave of low-income cooperatives is a by-product of the civil rights movement of the sixties. Field staff workers of SNCC, SCLC, and CORE organized many of the early co-ops with assistance from groups like the National Sharecroppers Fund, Southern Regional Council, OEO, the Cooperative League, and Credit Unions National Association.

Catholic priests and Protestant ministers also organized cooperatives. The Delta Ministry, sponsored by the National Council of Churches, assisted various co-ops and established its own cooperative community, “Freedom City,” near Wayside. Perhaps the best known of the early organizers is Father A.J. McKnight, a black Catholic priest based in southern Louisiana. Father McKnight, a native of Brooklyn, N.Y., organized the Southern Consumers Education Foundation and the Southern Consumers Cooperative. Working closely with Father McKnight was Charles O. Prejean, a native of Lafayette, La. Prejean, who had been teaching adult literacy classes with McKnight, became general manager of Southern Consumers Cooperative. 

In February, 1967, representatives of 22 low-income co-ops formed the Federation of Southern Cooperatives and elected Prejean its first president. A year later Prejean became the executive secretary of the Federation at the age of 27.

Meanwhile, economists Ray Marshall and Lamond Godwin had convinced the Ford Foundation of the potential for rural development that existed with the cooperatives, and in June, 1967, Ford gave $578,000 to the Southern Cooperative Development Program to demonstrate the feasibility of low-income co-ops. Under the direction of McKnight and New York-born civil rights worker John Zippert, SCDP helped organize new co-ops and provided technical assistance to existing ones. SCDP was merged into FSC in 1969.

In seven years the FSC constituency has grown to 30,000 low-income families in 134 co-ops in 14 states, stretching from the eastern shores of Virginia to the Rio Grande Valley in southern Texas. While 97 per cent of its membership is black, the FSC co-ops also represent native Americans in Mississippi; whites in Kentucky, the Carolinas, and Tennessee; and Chicanos in Texas.

The cooperatives vary from memberships of twelve people in small handicraft co-ops to 2,000 families engaged in farming over a ten-county area. About one-third of the co-ops in FSC are agricultural marketing and purchasing concerns. The rest include consumer groups and buying clubs, credit unions, a health center, and handicraft, housing, fishing, and light manufacturing co-ops(e.g. sewing, metal stamping, a bakery, building materials). Each member co-op is owned and controlled by its constituent members who elect a board of directors. FSC itself is a cooperative of cooperatives, chartered under the Cooperative Association Act in Washington, DC.

Low-income cooperatives have been plagued by a host of problems, including poor management, under-capitalization, and difficulty in obtaining credit. Even in those rare instances where a co-op might be considered a safe "risk'' for traditional lending institutions, they have had difficulty obtaining loans. Commercial banks, savings and loan associations, and even the Bank for Cooperatives (established in 1933) have all closed their doors to low-income co-ops. As FSC newspaper cartoonist Aldox puts it, "You have to prove you don't need the money before you can get it!" Loan packaging and credit assistance alleviated this situation somewhat, but FSC saw a need to establish its own lending institution. When McKnight's Southern Cooperative Development Program was phased into FSC in 1969, the Southern Cooperative Development Fund (SCDF) was created with McKnight as president. As it was originally conceived, the Fund was to be the lending arm of FSC, allowing the Federation to concentrate on technical assistance. However, FSC and SCDF now operate independently of one another.


Cooperatives, Agribusiness, and the USDA

A cooperative is a business enterprise governed by certain principles, including open membership, democratic control, membership education, limited interest on stock, restrictions on number of shares owned, and services at cost. Social consciousness and human relations, ideally, are critical components.

In the United States alone there are approximately 7800 cooperatives of all stripes and colors, and a number of regional and national associations and federations. Some of these have grown quite large through merger, and seven of them rank in the Fortune Magazine list of the top 500 industrial corporations of 1972. The largest (Fortune No. 133) is Associated Milk Producers, Inc. (AMPI), of Watergate fame. The Agribusiness Accountability Project has documented the increasing trend toward loss of membership control to cooperative management, which then tends to operate the cooperative according to strictly business rather than cooperative principles.2

While the volume of business handled by the traditional American farmer cooperatives is very small compared to the large agribusiness concerns, even the least successful of these conventional cooperatives have excluded the poor farmer, especially if he is black, precisely because he is poor and therefore a liability. When the Federation and other groups began organizing co-ops, they were unsuccessful in their attempts to obtain assistance from established cooperatives in the region.

Poor farmers and low-income co-ops are further crippled by the rapid growth of agribusiness. AAP reports that "nearly a quarter of total U.S. agricultural production is integrated by processing and marketing corporations, with many of our foodstuffs solidly in the hands of food middlemen.”3 AAP listed the top 25 U.S. corporations like Standard Oil of California, General Motors, Exxon, RCA, ITT, Greyhound, and Sears, Roebuck involved in agriculture at three levels: production, input (chemicals, machinery, feed), and outputs.4

Small farmers face a swarm of disadvantages visa-vis agribusiness power: the spiraling cost of land, driven upwards by speculation and development; the resulting higher taxes, with land over-taxed for agricultural purposes and under-taxed for development; inability to compete against economies of scale; inability to obtain credit; and U.S. agricultural policies which subsidize capital over labor. Corporations, of course, can cover huge losses in farming operations and stay in the food business, whereas the small farmer can be wiped out by one bad crop.

There is a wide difference of opinion over just how effectively low-income cooperatives can assist small farmers in competing against large-scale farming, whether by corporations, large cooperatives, or wealthy families. Ray Marshall and Lamond Godwin point out that many authorities believe mechanization and agricultural technology have made small farms obsolete and inefficient.5 They contend, however, that it is the U.S. Department of Agriculture which has done the most to erode the competitive ability of small farmers. "Our agricultural policies have done more damage to small farmers and black farmers than anything else, period," Godwin says.

The land grant college system, which includes the agricultural colleges, the State Agricultural Experiment Stations, and the Extension Service is a prime example of how federal policies have neglected the small farmer. With an annual budget of $750 million, this complex has devoted itself to "efforts that have worked to the advantage and profit of large corporations involved in agriculture." In its important 1972 report Hard Tomatoes, Hard Times, the Agribusiness Accountability Project demonstrates the ways in which land grant research has benefited chemical and farm machinery companies to the detriment of almost every other segment of American society, from the small farmer to the consumer. The most graphic illustration appears in the research priorities of the experiment stations. According to USDA research classifications, nearly 6,000 scientific man years (smy) were spent on doing research on all projects at state experiment stations in 1969. Only 289 of those years focused on "people-oriented” research. Thus 1,129 smy were spent to improve the biological efficiency of crops, and only 18 smy to improve rural income; 842 smy on control of weeds, insects, and diseases in crops, and 95 smy to insure food products free from toxic substances; 88 smy to improve management systems for livestock and poultry production, and only 45 smy for improving rural institutions.6

The Extension Service, the out-reach arm of the colleges and the experiment stations, has also failed in its goal to help the people of rural America "identify and solve their farm, home, and community problems through use of research findings of the Department of Agriculture and the State Land Grant Colleges.” The Extension Service, in addition, is a crucial link between farmers and accessibility to USDA programs like credit and subsidies. Yet it, too, is preoccupied with efficiency and production of the large-scale farms rather than servicing its intended constituency.

In addition to favoring large corporation over small farmer, the land grant college system also favors white over black. Funding tells the story. The land grant colleges were established by separate Morrill Acts in 1862 and 1890. The 1890 act created separate schools for black students in states which desired dual systems, and 17 southern and border states did. Not only has that legislation never been altered, but the blatantly racist funding policies have never changed either. In 1971, of the $76.8 million in USDA funds which went to the agricultural colleges in the dual system states, 95.5 per cent went to the white schools.7

In the same year, all $28.8 million for agricultural and forestry research at state experiment stations went to the white colleges. "The basic, substantive, and essentially permanent programs of southern agricultural research and education remains firmly and exclusively in the hands of the white land grant colleges, colleges which have concerned themselves largely with the promotion of agricultural technology and the interests of white, relatively prosperous farmers," charges Peter H. Schuck of the Center for the Study of Responsibilities in Washington, D.C.8

These federal policies have made a lasting impact on black farmers in the South and, indeed, on the entire nation. The migration of blacks from the rural South to the northern cities during the 1940's is, of course, legend. Yet the dispossession of black farmers continued unchecked through the next two decades. Since 1954 black people in the South have been losing their land at the rate of 333,000 acres per year.9 In 1950 there were 560,000 black-operated farms; in 1971 there were 98,000 left. Black farm population dropped over two million during the same period, from 3,158,000 to 938,000.10 Black Farmers have been displaced at a much greater rate than whites: three blacks for every ten whites in 1950, down to less than one black for every seven whites on farms in 1969.11 The outpouring of the rural dispossessed into the nation's cities is the prima causa of the urban crisis of today. The experience of the last decade alone is evidence enough to suggest the significance of building viable rural alternatives for people and not just the sprawling farms of the food giants of agribusiness.

These conditions point up the importance of the Federation of Southern Cooperatives. As Lamond Godwin says:

Small farmers are not going to make it unless it is through some kind of cooperative arrangement. The co-ops organized through and with the support of the Federation are the best of all the organizations currently on the scene, as far as small black farmers in the South are concerned. The significance of FSC must be viewed from that perspective. Whatever their short  comings, FSC represents the best that is available to small black farmers in the South, in terms of both expertise and experience.


Federation Projects and Programs

FSC currently maintains a staff of 120 persons on an annual budget nearing $2 million. Eighty of the staff members comprise a Business Development Network funded by the Office of Minority Business Enterprise, U. S. Dept, of Commerce. Through 11 outreach offices serving over 100 counties in the deep South, the network secured $11 million in loans for 114 minority businesses during the first contract year. A portion of the ventures assisted are members of FSC. OMBE granted FSC an additional $1.4 million to continue the network through March of 1975.

Regular FSC staffers provide the co-ops with marketing assistance, bookkeeping and accounting, management training programs, classes in cooperative economics, and technical training in production of livestock and new crops. Much of this training takes place at the FSC Rural Research, Training, and Demonstration Center in southwest Alabama, near the small town of Epes in Sumter County. Located on a 1,325-acre tract of land, the center includes a demonstration farm, greenhouses, dormitory, classroom building, administration building, and media center. Over $350,000 has been invested in these facilities.

The farm operation includes a mix of beef cattle, swine, vegetables, soybeans, and grains. The goal is to make the farm self-supporting so that it covers its own expenses, pays off the mortgage on the land, and even provides profits for the overall operations of the Federation.

In November, 1973, the FSC training center was licensed by the Alabama Department of Education as a private vocational school. The center has sponsored a wide variety of training programs, including:

• a $700,000 MDTA Section 241 Contract to train 90 cooperative managers and 400 cooperative members between 1971 and 1973.

• During the past year, the center trained 100 men in heavy construction skills for job openings on the Tennessee-Tombigbee Waterway, which borders federation land for of a mile along the Tombigbee River.

• Handicraft production and management training sessions for 14 women in June and July, 1974,to

sharpen skills in crocheting, sewing, quilting, ceramics, and jewelry-making, as well as improving design and marketing skills.

FSC plans to seek accreditation for its training center as a two-year technical college. One element

in upgrading its facilities for accreditation is already under negotiation with a Texas university: opening a computer terminal at the Epes center.

Recognizing the fact that most small farmers in the South derive at least a portion of their income in non-farm labor and the additional fact that most of the rural poor are non-farm, the Federation has organized the Minority People's Council on the Tennessee-Tombigbee Waterway, a coalition of some 30-40 minority groups who seek to insure full participation of minority people in all phases of this $500 million project which will connect the Tennessee River to the Tombigbee River in Alabama and form a navigable system to the Gulf Coast. (FSC has recently landed a $100,000 contract from the Recruitment-Training-Program of New York City to identify, recruit, and place manpower in construction and other employment created by the TTW project, upon which construction has already begun.) In addition, FSC has been instrumental in organizing a Minority Contractors Association and several skilled trade associations in southwest Alabama.

In the area of health, FSC organized the Black Belt Family Health Care Center (BBFHCC), an ambulatory preventive health care cooperative, to serve residents of a multi-county, medical-scarcity area within a radius of 25 miles of Epes. Intended as a prototype rural health care delivery system, BBFHCC was originally funded by HEW in July 1972. Local pressure from politicians and medical societies, however, succeeded first in getting funds to BBFHCC stopped and then, when HEW bowed to local outcry, in obtaining HEW funds foranother center controlled by local doctors and politicians.

BBFHCC, whose whole 11-member consumer board is independent of FSC, decided to proceed with its own medical facility at Epes. The 72 x28' building, now under construction with volunteer labor and materials, will include three examining rooms, an X-ray room, laboratory, and drug dispensary. Two local doctors have pledged to work with the BBFHCC, with or without pay. Medical school shave been contacted to provide students and residents, and BBFHCC is seeking to fulfill qualifications to utilize Medicare and Medicaid programs. FSC hopes to extend its experience in establishing BBFHCC to other community-sponsored health care ventures by the Federation.

Thus the Federation of Southern Cooperatives is developing a multidimensional program for the rural poor (agriculture, handicraft industry, non-farm labor skill training, health delivery, etc.) along with a regional resource network. It is a program which is as specific as an $85,000 program to raise the incomeof 100 small farmers by $1000 in one year in three co-op locations, and as broad as a regional marketing network to eliminate middlemen between small farmers and the consumer.

The idea of black people organizing anything in the South has been a difficult concept for rural white folks to accept peacefully. The Federation and its member co-ops have often encountered stiff opposition from local "court house gangs," governors, congressmen, and bureaucrats at all levels. Back in 1967, for example, when the Southwest Alabama Farmers Cooperative Association (SWAFCA) was just getting started, the major processors in the area, Whitfield Pickle and King Pharr, were forced to raise their prices for peas and cucumbers by 50 per cent because of competition from SWAFCA. In its company jet, Whitfield Pickle flew politicians and probate judges from the ten counties served by SWAFCA to Washington, D C., where the group, joined by Gov. Lurleen Wallace and the entire Alabama congressional delegation, descended on Sargent Shriver's office to demand the co-op not be funded by OEO. Gov. Wallace vetoed the grant because of SWAFCA's "Black Power" and "Communist" connotations, but Shriver over-rode her veto and a second one later by Gov. Albert Brewer.12

The Federation itself has received similar opposition in its organizing efforts in health and job training in the Sumter County area of west Alabama. Yet, strangely enough, the major hassle of its seven-year history came not from local politicians but from OEO and the Ford Foundation, its major funding sources.


Funding Controversies

By far the most serious threat to the life of the Federation emerged in the fall of 1971 and the first half of 1972 when OEO and then the Ford Foundation withdrew their critical financial support. In one season FSC lost one million Ford-OEO dollars, a one-two punch which temporarily crippled its services to cooperatives and from which it has never fully recovered. The blow did not, however, doom the Federation to extinction, as many people at that time predicted.

Over two years have passed since FSC lost the OEO-Ford support, but the side effects from that controversy, for better or worse, continue to embroil the cooperative movement. Basically, the Federation was defunded because it refused to bow to Ford pressures and OEO demands which FSC felt were contrary to the principles of cooperation and self-determination. Those principles and the issues raised by the application to the relationship between FSC and its funding sources have not diminished in significance.

Much more damaging than the financial squeeze on FSC was the split that developed between FSC and its lending arm, the Southern Cooperative Development Fund (SCDF, or the Fund). When FSC quarreled with OEO and Ford and lost their support, SCDF stepped in and accepted the money that FSC refused "on principle." While OEO and Ford did not actually create the philosophical differences that existed between the two organizations, they did exacerbate those differences enough to drive the two groups apart.

OEO began funding FSC in 1969 under Section 232 (research and pilot programs for community action) of the Economic Opportunity Act of 1964. Altogether, FSC received some $2 million in OEO funds, including $515,000 to support SCDF. This compares with $1.4 million per year or a total of $7 million which OEO trickled into rural development between 1967and 1971. Section 233  of the same act provides "for the continuing evaluation of programs . . . including their effectiveness in achieving stated goals, their impact on related programs, and their structure and mechanism for the delivery of services.”

Accordingly, in the summer of 1971, OEO awarded a staggering $385,000 research contract to ABT Associates, a white-owned consulting firm in Cambridge, Mass., to evaluate the rural cooperative programs funded by OEO. FSC/SCDF was the only regional program included; the rest were individual cooperatives funded directly by OEO.13 The crucial and controversial goal of the study was "to determine the effectiveness of a rural cooperative strategy to alleviate rural poverty.”

Although the evaluation was technically legal under the terms of the grant, FSC, SCDF, and the individual cooperatives to be evaluated formed an Association of Cooperative Directors to oppose the study. Their opposition was based on a number of grounds. They were consulted on neither the selection of the firm nor the criteria for the evaluation. They were appalled by the $385,000 price tag, which they deemed a waste of public money. Another study, they claimed, would merely duplicate previous efforts and internal evaluation mechanisms operating under the terms of the grant. It was particularly galling that the contract had been awarded to a white-owned, New England firm composed of individuals who had most likely never been significantly exposed to the rural South. The ABT study was merely the latest in a seemingly endless series of evaluations of FSC and rural low-income co-ops by firms and individuals who "have become rich and successful from the contracts they received to work with cooperatives.” Since 1969 OEO, Ford, and other private foundations have spent over $2 million for monitoring, advising, and evaluating low-income coops.14

"Black folks do not need to be studied by white folks like they study rats and pigs,” Prejean wrote in early 1972. "We don't exist as inmates in white folks' laboratories for their personal, scientific, or other grotesque aggrandizements. We are human beings forced in a situation of servitude . . . and this situation was caused and is being perpetuated by white folks, not us. How in the hell can they study us and come up with any findings that will help our situation when the causes of our basic problems are not internal, are not with us? Our problems are caused by them and will not cease to exist by studying us, but will stop when they stop causing them.”15

Respect for the integrity of poor people and their right to determine for themselves what they need, emerged as a central issue of the controversy. In addition, many people felt that the stated purpose of the study — to test the economic viability of co-ops as a tool for economic development among the rural poor — had already been demonstrated in this country and overseas. Extant literature and experience supports this position for cooperatives generally. Data on marginal, low-income co-ops in the rural South is necessarily limited since the current movement is less than ten years old. Their future in a largely hostile economic and political environment is not at all secure. That cooperatives (or CDC's, or similar ventures) are crucial to the survival of the rural poor, both farm and non-farm, both black and white, is virtually unassailable. But their immediate "effectiveness” depends, for now anyway, as much on government policies and external support as on the cooperatives themselves. Moreover, no one, least of all the cooperatives, claims that co-ops can fight rural poverty alone. Thus for OEO to order a sweeping evaluation of their ability to "alleviate rural poverty,” was more than enough to cause FSC and its companion groups to be "somewhat leery” of the ABT study when it was first unveiled.

Their skepticism changed to "genuine alarm” when, on the basis of conversations with OEO Director Frank Carloucci and other government staff, they concluded that the primary purpose of the evaluation was to justify a severe cutback in OEO's commitment to low-income co-ops.

The cooperative directors learned from official OEO publications and OEO staff people themselves that OEO was contemplating a reduction in its research and development budget. Although he was later to reverse his position, Father McKnight of SCDF opposed the study in his August 17, 1971, "Progress Report” in which he described an initial meeting with OEO representatives; "From the discussion we were informed that OEO had already made the decision to stop funding rural cooperatives . . . " It was not difficult to ascertain that the real purpose of the study was to help OEO justify its decision to stop funding rural cooperatives. . . " Long before the national media exposed the infamous attempt to dismantle OEO, FSC staffers were getting the word. "We had been told by some officials in the government that Nixon was thinking about shutting up OEO entirely and discontinuing support for programs like cooperatives,” Prejean recalls. "What else could it (the evaluation) have been other than a need on the part of the administration to justify our defunding?"

Dr. Lamond Godwin, a one-time consultant to the Ford Foundation on rural cooperatives, concurs. "In reality,” he says, "the OEO cut-back came because OEO itself was being eliminated. The study was designed to help them close the books. What OEO wanted was to have somebody show a lot of money was wasted. They were doing this systematically for all OEO programs. It was important politically to demonstrate these programs were not working, so that OEO itself could be destroyed.” 

As it turned out, the Nixon attempt to disband OEO was revealed in the press and finally halted by federal court order in April, 1973. As for ABT Associates, it did eventually proceed with the study. Their final conclusions, lavishly fitted in charts, tables, and endless pages of sociological verbiage, were basically no different from previous, smaller, and less expensive investigations into rural cooperatives. "When you boil it all down," says John Zippert of FSC, "ABT got $400,000 to. discover that 'Cooperatives are a good thing, but they have to be managed well.'"

In any event, every source then available strongly suggested that OEO was asking the cooperatives to collaborate in their own defunding. The Association of Cooperative Directors drafted a position paper detailing their objections. They were finally granted an audience in January, 1972, with new OEO Director Phillip V. Sanchez (now U.S. ambassador to Honduras) who, according to McKnight, assured the directors that they could help shape the guidelines for the study (but not replace ABT). Sanchez also intimated that if they cooperated with the evaluation, they would continue to receive OEO support. After receiving inquiries from a number of Senators and Congressmen whose support had been enlisted (including Sparkman of Alabama, Cook of Kentucky, Talmadge of Georgia, and Hollins of South Carolina), Sanchez finally committed that statement to writing. With his promise on paper, SCDF and the individual co-ops, seeing no practical reason for opposing the study, agreed to go along.16 Prejean and FSC continued to resist, feeling that the funding was less important than the need to establish greater respect for their integrity and ability to plot their own future free of unnecessary governmental interference. McKnight and SCDF, on the other hand, apparently felt that the greater priority was to channel as much money as possible into the cooperative movement while funds were available, so long as the strings attached were compatible with their goals.

In any case, OEO moved quickly to defund FSC once it was isolated in its refusal to go along with the study. In mid-February OEO gave FSC until March 15, 1972, to agree to the evaluation and submit a proposal for refunding. FSC asked for an extension until May 30 to allow time for further consultation with its membership, which had opposed the study in its December annual meeting. By the end of March FSC had submitted two proposals — one for $590,000 to provide technical assistance to the co-ops and another for $500,000 for SCDF loan packaging. But on April 4 OEO telegraphed FSC that it would not be refunded for 1972-73 because it had violated the terms of the grant by not agreeing to the evaluation.

Meanwhile, the Fund, either on its own or at the suggestion of OEO, had submitted its own proposal, and their application for $650,000 was approved in June, 1 972. (OEO's support did not end there. A year later, in May, 1973, SCDF received another $1.4 million for a two-year period ending in June 1975.) Thus the Fund broke away from its parent organization, signaling the beginning of a painful and often bitter dispute between the two organizations, a rift that was widened and exploited even further by the Ford Foundation.


Ford Foundation: Does Father Know Best?

When FSC submitted its first funding proposal to the Ford Foundation in 1969, it asked for $30 million, a ludicrous figure by any standard except what was actually needed for human resource development in the rural South. The request represented about ten per cent of the total Ford giveaway that year, and the Foundation gently suggested a second, less ambitious proposal. Even so, when the Foundation began funding FSC for about $500,000 per year, the Federation emerged as one of the chief recipients of Ford money in the South.

The partnership lasted four years. In the spring, 1972, in the middle of the hassles with OEO, Ford informed FSC it would lose its support unless FSC concentrated Ford's money on a fewer number of cooperatives. It was Ford's view (shared by both Father A.J. McKnight of SCDF and economist Ray Marshall of the Task Force on Southern Rural Development) that limited funds are most effectively used by establishing a respectable “track record" among a few co-ops, i.e. building ''success stories" which would then have a "multiplier effect" in generating massive public and private funds for more co-ops. This "model" approach, a foundation favorite, is deemed safest to insure success for co-ops at a time when the poor need anything but more failures and dashed hopes. Marshall, for example, contends that the poor are actually skeptical of co-ops and turn to them out of desperation, not faith.

While the "model" theory has its merits, there is certainly no guarantee that major private and public support would materialize even if the models are successful enough to please potential funding sources. Moreover, to help small farmers pool their resources so they can compete against the larger volume mounted by agribusiness and large farms, a regional marketing network is needed. Such a program is not possible in the "model" approach.

FSC believes its limited resources are more wisely employed in building a broad-based, general support program for co-ops across the entire South. "Raising the income of 30,000 families in 14 states by $100 a year has more impact than raising the income of 3,000 families by $1000," asserts John Zippert. Individual co-ops might achieve financial independence in the prevailing economic climate, he says, but co-ops in general cannot reverse current trends until U.S. agricultural policies are revamped. To force a change in those policies, requires a strong support constituency "in the backyard of every Congressman and Senator.”

Yet Ford maintained (and supposedly had maintained all along) that it was a misuse of money to spread a half million dollars over the entire FSC membership. "We were not able to put up enough money to support 125 cooperatives," said Bryant George, the controversial program officer in charge of the FSC file, "and we couldn't sit by and fund 1 25 with too little money."

In fact, FSC was already concentrating Ford's half million on agricultural co-ops, which comprise about one-third of the FSC membership. According to Zippert, FSC offered to concentrate two-thirds of the Ford money on 12 agricultural co-ops and use the remainder on an agricultural marketing program which would benefit the twelve but whose success would depend on involving as many co-ops as possible. Ford apparently rejected this offer. 

George claims that when Ford first began funding rural cooperatives in 1967 a number of other sources had promised up to $30 million to FSC and SCDF, sources which "vanished" as the economy began to falter in 1969. "Ford and OEO stayed and maintained their commitment," he says, "but now the game had changed. Before, we were going to be part of a much larger funding package, and no doubt a great deal of very good work could have been done with very needy organizations .... Instead of having about $30 million to do this with, they now had about a million dollars."

One wonders how Bryant George thinks the "model" approach will generate massive support ("real money, big money,” as he calls it) when it so mysteriously de-materialized in 1969 after a successful, Ford-funded demonstration program of two years' duration. The fact is, no-one else but Mr. George remembers commitments totaling $30 million. That was the amount of the original FSC request to Ford, but the figure rings no other bells. 

Foundations like to use their grants as a "leverage” to generate other funding for the groups they support, and applicants are well aware that foundations and government agencies follow each other around. Bryant George apparently thought Ford's money was not having this effect at FSC and he uses it as one justification for abandoning ship. Yet FSC did, in fact, continue to receive new and substantial grants from both government and private sources (mostly for specific programs) after Ford's departure, and had Ford remained FSC probably could have generated even more support for their general budget.

Charges of collusion between Bryant George's office and certain individuals within OEO were never proven. George himself says Ford would have bailed out even if OEO had not. A more likely explanation for George's growing dislike for FSC was his own enchantment with the Community Development Corporation idea which came into vogue about the time he joined Ford around 1970-71.

Ford not only wanted the Federation to concentrate its money on five co-ops, but it also wanted to name which five. FSC felt this constituted internal manipulation and a violation of their own self-determining powers. Their distrust of Ford was deepened by pressures they felt from Bryant George to change board and staff members and to merge with SCDF. "We tried everything we could within reason, as reasonable men, to be able to continue to fund the Federation," George intoned. "We suggested that perhaps they would want to have structural changes, change in personnel." Asked if he had advocated the resignation of Charles Prejean as executive director, George replied, "Let's put it this way, I don't think that would have resolved anything .... The FSC board simply could not change their position. They felt thay had to go with their whole membership.”

No one denies that foundations have a right and indeed an obligation to see that their money is being spent honestly and in the most effective manner. The Tax Reform Act of 1969, in fact, holds the foundations accountable for how its funds are spent by certain types of organizations. Moreover, as Ford board member Vivian Henderson says, "If a group doesn't want to abide by the guidelines, they don't have to accept the money." Yet, taking all of this into consideration, was Ford justified in insisting that FSC concentrate its funds on five co-ops which Ford wanted to hand-pick? Was Bryant George justified in even suggesting structural and personnel changes in FSC? "Foundations don't necessarily have all the answers," says Charles Prejean. "Until foundations can allow people they assist to determine how those resources should be spent, then we're going to have the problems with them we have right now. Just because a person has needs but not resources, does not mean he has to be manipulated by folks who have the money, especially by an organization which pretends to assist the under-privileged. Certainly they are accountable, and they should be accountable first to the persons they are supposed to be serving."

Perhaps the worst offense Ford committed in the whole affair was putting Prejean and his board into an impossible bind. The Ford ultimatum (concentrate or die) placed FSC in a no-win situation. To accept Ford's conditions meant not only abandoning the weakest co-ops to help the strongest five (and creating political havoc internally), but also forsaking its own strategy for a regional resource network. To reject Ford's conditions, of course, meant kissing good-bye a half million bucks — a move which, given OEO's recent departure, could prove suicidal.

But in the end FSC had no choice, and its time ran out. In mid-summer 1972, less than four months after OEO had pulled out, Ford informed the Federation that the objectives of the two organizations were "no longer compatible." Like OEO, Ford switched its support to SCDF, which organized a Southern Development Foundation the following November to channel $450,000 for technical assistance to five selected cooperatives.


The Aftermath

FSC was in no position to lose $1 million, and the loss hit them hard, requiring severe cut-backs in technical assistance and developmental capital for co-ops, floating field staff, educational programs, and demonstration projects at the Epes center. Hardcore staff remained, but salaries were divided and belts tightened, recalling the earlier civil rights days when people worked 70 hours for $40 a week. As various grant proposals (e.g. the Business Development Network) were approved, FSC began to bounce back, but it is still hampered by a lack of funds for technical assistance and developmental capital for co-ops.

As mentioned earlier, a much more serious development was the rift between FSC and SCDF, which has never really been resolved, although leaders on both sides continue to hope for some accord. Various attempts to bring the two groups closer together have not borne much fruit thus far, and now about all they share are one board member (it used to be several) and their attorney, George Howell of Atlanta.

During 1973 Charles Prejean took a "leave of absence" from his post as executive director, returning in January, 1974, at the request of staff and board. Jim Jones was executive director for part of that year, and Jones feels the Federation staff aware of the "danger of getting sucked into the grant syndrome." The period of hardship, he said, forced the staff to think about its priorities and to realize its primary goal is independence, not survival-at-any-cost.

Partly as a result of its experience with OEO and Ford, the Federation is exploring ways to become less dependent on external resources. While most cooperatives, community groups, and minority businesses are still unable to pay for such FSC services as marketing, bookkeeping, purchasing, and research studies, they are expected to do so when they are able. Too, the Federation is developing business enterprises in which it will share in the profits created. One vehicle for this is PanSco Inc., a wholly-owned, for-profit corporation which presently operates concessions at Epes and leases equipment to FSC and other groups. It is also hoped that farm operations at Epes will one day generate needed monies; the proximity of FSC land to the Tennessee- Tombigbee Waterway holds great promises for industrial and recreational development. Possibly the most ambitious attempt at self-reliance is the Forty Acres and A Mule Endowment Fund which FSC hopes to capitalize with grants, bequests and long-term no-interest loans. Funds will be invested in rural banks and the interest proceeds used for general programming. FSC projects a $10 million FAAM Endowment by 1980, but no major donors have yet materialized. Finally, the best example of the FSC staff's desire for independent success for their organization is their Staff Contribution Fund. Each staff person contributes at least one per cent and up to ten per cent of his income to this fund, which is currently covering the $16,142 yearly mortgage on the 1,325 acres at Epes. The $28,000 administration building at the Epes center was financed entirely by the fund.

For the forseeable future, however, financial self-sufficiency is about as remote as a pot of rainbow gold, and the scarcity of resources for general services means that FSC and its struggling member cooperatives are not out of the woods yet — not by a long shot. Perhaps it is because of this relative fragility that FSC is turning with greater frequency to outside technical assistance and far-reaching marketing/resource/service strategies.

When Prejean returned to his post as executive director in January, 1 974, one of the programs he revived was the Technical Advisory Board which, as its name implies, is intended to provide the Federation with highly sophisticated technical advice from agronomists, horticulturists, marketing specialists, transportation and logistics experts, systems analysts, and the like. The Cummins Engine Foundation has loaned FSC one of its executives to put this board together, identify available resources, and create a program for internal income generation. In addition, FSC has obtained the assistance of several other advisory boards, including a Cornell University "Ag Team" composed of blacks with post-graduate training in a variety of fields who will serve as adjunct and full-time staff to the Federation. Some of these team members were originally FSC staffers who were encouraged to seek advanced technical training.

Marketing may prove another source of financial support for the Federation. During its seven-year history FSC marketing specialists have traveled from co-op to co-op advising managers on crops, prices, available market volume, planting and harvesting, and prices and quality. They contacted buyers and served as brokers between buyers and co-ops when harvests came in. Thus the Federation did not actually market the produce and indeed has found it difficult to penetrate the markets in a meaningful way. Yet for the first time last year the Federation took possession of some of the crops its member farmers produce, in order to command better prices for the products sold and to keep brokers' charges within the FSC structure. For these same reasons, FSC hopes to be recognized eventually as the marketer for all agricultural and handicraft products its members produce. FSC estimates, for example, that if it were able to market the 985 acres and $1.7 million worth of tomatoes, watermelons, and green beans produced by its Florida and South Carolina members, it could save the farmers $170,000 in middlemen charges. Eliminating the middleman will become an increasing concern for FSC. 

To accomplish this kind of marketing capability, FSC is moving on several fronts, notably in negotiations with several Japanese corporations engaged in international food production and marketing. In October, 1974, FSC embarked on a joint venture with Taiyo Americas, Inc., whereby FSC will distribute TA's fish products and Taiyo Americas will export FSC-produced soybeans, beginning with the 1976 crop season.

The Federation hopes to decentralize its services by increasing the role of the eleven state associations. Member cooperatives in each state elect the State Association boards, which in turn send representatives to the FSC board. FSC wishes to see the Associations become increasingly involved in delivery of services; identifying, utilizing, and coordinating available resources; and creating economic development enterprises, or community development corporations, which would be involved in such areas as agricultural marketing, storage, transportation, housing, rural health delivery, and vocational training. They "would be tied directly to the economic needs and potential of the community.”

FSC has recently submitted a proposal to OEO (giving them "another chance”) to fund State Association staffs to put these ideas into action. Probably the most comprehensive proposal FSC has ever compiled, it calls for a "regional information-assistance-resource matrix” centered on the state associations. The cost is estimated at $1 million and would generate 25 times that amount in the results achieved by the local community development units. Naturally FSC is not overly optimistic about OEO approval, even though the proposal follows the CDC approach which OEO is funding now. If rejected, the proposal will be broken into separate parts and re  submitted to other agencies and foundations.



As FSC increasingly moves toward more complicated structures, as it strikes agreements with international corporations and depends more heavily on technical advice, what happens to the small farmers and other poor people in whose name fancy proposals are drafted and business ventures created? How does FSC insure their control and participation?

Jim Jones points out that it "would be the easiest thing in the world” for the Federation to abandon the low-income co-ops and marginal farmers in favor of farms and businesses which could insure quick financial success. "We're more interested in creating a financial instrument that can consider the basic needs which a majority of the people have in our society,” Prejean says. "Successful businesses won't mean anything if they are more advanced than the people they are working with."

Membership education is mentioned as the primary vehicle for avoiding loss of membership control to managers and experts. But this component of "human resource development" is lost without a corresponding ability to come through for the membership. "How do you talk to a person about education and training unless you can show him there are other resources available he can use once he gets the training?” Prejean asks.

Commenting on the dangers inherent in agreements with private corporations and government agencies, Prejean goes on to say: "Their values and ours are certainly much different. It is a question right now of trying to further cooperative principles despite the other partner's values. We realize there is a risk of being subsumed by their values, but I think there is enough strength within the cooperative movement to avoid being co-opted.”

And further:

"I think we can deal with the Japanese and the industrialists and their capitalistic tendencies (and still) encourage cooperative development. But once we lose sight of human and cooperative development, we will be lost. So far, we've been able to keep it in the forefront.”

Anyone who hangs around Charles Oran Prejean long enough will hear him use one of his illustrative tree or baby analogies to describe the often slow, deliberate stages of growth and development a movement like FSC must pass through on its way to maturity. And that is exactly how Prejean and the other FSC staffers see their work, as a movement for social and economic change which will require a lifetime of personal commitment. And judging from their experience and tenacity during the period following the OEO-Ford controversy, they are in Epes, Alabama, for the long haul.

Prejean sometimes speaks of the Federation as a kind of "holy remnant” or prophetic voice in the wilderness, and certainly there is room for some satisfaction in knowing one is intensely engaged in an historic struggle for freedom. But there is also a refreshing sense of the South and of the integrity of the southern consciousness:

"There is a tremendous amount of talent in the South,” Prejean says. "We don't have the glibness that some of our counterparts and friends have in the Northeast, but the people who are most capable of dealing with problems in the rural South are people who are products of those environments. The serious folks — black and white — would stand a much better chance in dealing with our problems if we were allowed to deal with them ourselves.”

Enough said.



1. Ray Marshall and Lamond Godwin, Cooperatives and Rural Poverty in the South, Baltimore, Johns Hopkins Press, pp. 29-42. The historical summary given here is taken from these pages as well as from interviews with Charles Prejean and Lamond Godwin.

2. Linda Kravitz, Who's Minding the Co-op?, Washington, Agribusiness Accountability Project, p. 8-9. AAP is located at 1000 Wisconsin Avenue, NW, Washington, D.C. 20007. Write for their list of excellent publications.

3. Ibid., p. 4.

4. A.V. Krebs, "A Summary Report on Major U.S. Corporations Involved in Agribusiness," Agribusiness Accountability Project.

5. Marshall and Godwin, op. cit., pp. 21-25.

6. Jim Hightower, "A Summary of Hard Tomatoes, Hard Times," Agribusiness Accountability Project, p. 4.

7. Peter H. Schuck, "Black Land Grant Colleges: Separate and Unequal," testimony before the Sub- Committee on Migratory Labor of the Committee on Labor and Public Welfare, United States Senate, Part 4A, p. 2352. Write drectly to the committee to obtain the record of these hearings, which contains a wealth of useful information.

8. Ibid., p. 2361.

9. Lester M. Salamon, Black-Owned Land: Profile of a Disappearing Equity Base, Durham, N.C., Institute of Policy Sciences and Public Affairs, Duke University p. vii. This report was commissioned by the Office of Minority Business Enterprise, U.S. Department of Commerce.