Spring Newsletter 2025-WEB-update

IN THIS ISSUE:

BAUGHER RANCH ORGANICS: THE COOPERATIVE DIFFERENCE: AN OWNERSHIP MODEL THAT BENEFITS THOSE IT SERVES

Brent Morrison, Founder and Principal, discusses cooperatives and the value the cooperative model may hold for new business ventures.

MORRISON FUNDING ROUND-UP

The Morrison Grants Team shares client projects that received various state and federal funding investments to advance their organizations.

MORRISON OPEN HOUSE

Our team welcomed clients and colleagues to an Open House at our Chico location.

Check out some of the highlights!

CLIENT CORNER

There is always something new happening, so catch up on the latest news from our clients.

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A LEGACY OF SUSTAINABLE FARMING, QUALITY, AND COMMUNITY In the heart of California’s fertile agricultural region lies Baugher Ranch Organics, a beacon of sustainability and quality in the organic almond industry. For decades, Baugher Ranch has dedicated itself to nurturing the land, cultivating the highest quality organic almonds, and building long-lasting relationships with growers and customers. From humble beginnings to its impressive status today, Baugher Ranch Organics is a testament to hard work, innovative thinking, and unwavering commitment to organic farming.

The story of Baugher Ranch Organics begins in the early 1980s when Chris and Marcie Baugher recognized a growing need to invest in sustainable farming practices.

At a time when organic agriculture was still considered a niche industry, Chris and Marcie had the foresight to embrace organic farming long before it became mainstream.

In the early days, transitioning from conventional farming to organic was no small feat. Certification was rigorous and organic growing practices required a deep understanding of the soil, ecosystems, and sustainable cultivation methods. Chris and Marcie and their family remained steadfast in their belief that organic farming was not just a trend but a necessary step to preserve the land for future generations.

By the 1990s, Baugher Ranch had transitioned its operations and became a certified organic farm, processing its own almonds and those of other growers. Their hard work and dedication paid off, with the ranch gaining recognition for producing premium-quality organic almonds. It wasn’t long before Baugher Ranch Organics

grew into a key player in the organic almond industry, known for its ethical practices and dedication to sustainability. What started as a small family farm focused on traditional farming methods quickly evolved into a pioneer in organic almond production.

Today, Baugher Ranch Organics stands as a leading producer of organic and conventional almonds, supplying products across the United States and around the world. The ranch remains family-owned and operated, with a focus on maintaining the core values of quality and community.

At the heart of their success is a commitment to sustainable agriculture.

Every aspect of the operation is designed with the environment in mind, from soil health management to water conservation.

The farm employs cutting-edge techniques to minimize waste, improve efficiency, and maintain the highest standards of farming, processing, and packing. They have also made a significant investment in solar technology that has proved beneficial on multiple fronts as clean energy accounts for over 50%, exemplifying their commitment to innovation and climate conscience practices.

A hallmark of Baugher Ranch Organics is its dedication to producing the highest quality organic almonds. The company prioritizes every step of the production process, from planting and harvesting to processing and distribution. This attention to detail ensures that customers receive almonds that are not only delicious but also meet the strictest standards.

C ONT INUE D ON INSIDE RIGHT PANEL

NEWSLETTER | SPRING 2025

COOPERATIVES 101

THE “WHY” OF COOPERATIVE BUSINESSES

L

ast year, the United Nations General Assembly proclaimed 2025 as the International Year of Cooperatives. I’d guess many folks are only marginally familiar with the cooperative model, but it can be a great way to structure an organization for the mutual interest of its owners.

There are many things to consider when starting or taking an ownership interest in a business, but I would put this one at the top of the list: “Why?”

Making money is certainly important, but you can do that by getting a job. The need to make money is a given in any business but it is often not the overall driver in the decision to start or take ownership in a business. That would be like saying you go canoeing so you can paddle a boat. Yes, you do “get” to paddle, but you get in the canoe because you like the outdoors, need the exercise, or want to get in a little fishing.

There are many types of business entities and the one you choose depends largely on the answer to the “Why” question. For example, a sole proprietorship or partnership is generally formed for the profit of those who own, and presumably work in, the organization. The same may be true of Limited Liability Companies and S Corporations, though there is no requirement that their owners work in or patronize those businesses. C Corporations are increasingly used mainly to attract investors to raise business capital; they also provide protection from personal liability but at the cost of double taxation. S Corporations eliminate the double taxation problem but are restricted to 100 shareholders so limited as far attracting capital investment. As important as these factors are, they barely cover the tip of the iceberg of possible motives for taking ownership in a business.

THE COOPERATIVE DIFFERENCE Then there are cooperatives. As described by the United States Small Business Administration, “A cooperative is a business or organization owned by and operated for the benefit of those using its services.” By contrast, the purpose of most business entities, ultimately, is to earn a profit for those who’ve invested capital in it, whether or not they are directly involved in the business or even patronize it.

still needs capital, borrowing capacity, and to pay market rates for qualified personnel. Cooperatives typically “retain” a portion of member earnings for set periods of time for business capital purposes. These are usually paid (“revolved”) at a time set by policy and in accordance with bank covenants regarding capital requirements.

Following are a few key differences to know when forming or joining a cooperative:

• Cooperatives may be eligible or advantaged for certain grant or other funding opportunities based on their structure.

• The purpose of a grower cooperative is to maximize crop returns (i.e., marketing cooperatives) or minimize farming costs (i.e., service and supply cooperatives) for its members rather than to maximize the profits of investors who may have no other interest in the business.

• Cooperatives frequently track operating results by, “pool” which may refer to the type of crop marketed for the member, the crop year delivered, or the services and/or goods the member have purchased. The pooling system should track results equitably by the type of service used, crop year, etc.

• As with Limited Liability Corporations and S Corporations, cooperative patronage returns (earnings) are taxed at the grower level rather than the cooperative level so no double taxation.

Likewise, the members (owners) have no personal liability for the finances or actions of the cooperative.

• A cooperative may do non-patronage business, which refers to business with non-members. Generally, this is done at a profit, which, unlike member business, is not returned (“revolved”) to the non-member customer. These earnings can be used to increase the overall capital of the organization and reduce the need for borrowing, member retains, etc. Non-patronage net returns are directly taxable to the cooperative, unlike member returns.

• In general, members are required to patronize the cooperative.

There can be exceptions, but keep in mind that if you join a cooperative you commit to patronizing it.

• Cooperative members vote for their board of directors, usually on a one-per-member basis. Directors are generally also cooperative members, though outside directors with specialized experience may also be appointed. Regional and annual meetings are common, allowing for direct member input to the elected board and management teams. This allows significant member participation and input, particularly in small to mid-sized cooperatives.

• As a grower cooperative is not the members’ primary business but rather a way to improve net returns from their real business (farming), it can impact the way critical decisions are made (such as capital improvements, payments to growers, grower retains, and services offered) differently than in business formed for different purposes. It is critical that board and management balance out the expectations of the members and the realities of running a business.

• While profitability of the cooperative is not the goal, a cooperative

• Members can generally quit a cooperative whenever they wish, though there may be conditions and member retains (equity) in the business are rarely returned immediately.

TYPES OF COOPERATIVES While there are many cooperative alternatives for different purposes, the most common types of grower cooperatives are service cooperatives, supply cooperatives, and marketing cooperatives:

Service Cooperatives: Service cooperatives are formed to provide critical services to growers at a minimal cost. As is the case with all grower cooperatives, the goal is not company profitability but rather better overall returns for members.

The services provided will depend on the crop and grower needs, but examples include the drying and storage of crops, transportation, transportation, Pest Control Advisor (PCA) services, harvesting, harvesting, etc. These services help farmers increase efficiency and access expertise they might not be able to otherwise.

Supply Cooperatives: Supply cooperatives allow farmers to pool their purchasing power to buy supplies (e.g., seeds, equipment, fertilizers, etc.). Again, the goal is not the profitability of the cooperative itself but minimizing costs of critical supplies to growers.

Accordingly, supply coops are similar to purchasing cooperatives but focus on essential supplies such as feed for animals, farm equipment, or pesticides. They may also provide niche services or supplies for which there are limited resources due to low overall demand or low profit margins. The intent is to help farmers access inputs at a better net price than they could individually or through investor-owned companies.

Marketing Cooperatives: Marketing cooperatives help farmers pool their products to better market and sell them. This can include everything from crop products to livestock.

Marketing cooperatives may strictly market commodities (e.g., bulk grain, bulk pasteurized milk) or may produce and market valueadded products (e.g., branded juices, dairy products, snack products, cereals, and other consumer packaged goods). Marketing cooperatives commonly market both bulk commodities and value-added products, the latter with the intent of creating higher net returns to growers than possible from commodity sales.

form a federated cooperative to process, market, or dispose of byproduct or waste.

• Credit cooperatives: Credit cooperatives provide financial services such as loans, credit, and other banking needs to farmers with the goal of providing these services at lower net rates.

CONCLUSIONS There is no perfect business entity, but cooperatives can be a good tool to provide needed services, improve farm returns, and allow greater direct grower input than investor-owned companies. Morrison works with many cooperatives and their members, largely (though not entirely), in the food and agribusiness sectors. These range from large organizations with a national presence like Blue Diamond, Farmers’ Rice Cooperative, Pacific Coast Producers, and Sunsweet Growers, to regional and local member-owned cooperatives like Grange Co-op; North Valley Ag Services; and North State Hulling.

Others: Other common cooperative types in the ag world are: • “Mix-and-match” cooperatives: It is common for cooperatives to combine the three major functions and offer their members agricultural services, supplies, and/or marketing. I call these “mix-and-match cooperatives” (don’t Google it, I made it up). Such cooperatives commonly account for their operations in “pools” that benefit the members in accordance with their participation in each business offering. (See also pooling comments above).

• Federated cooperatives: A federated cooperative is a coop whose members are other cooperatives, which join together to meet mutually beneficial needs. For example, service cooperatives that dry and store grain might form a federated cooperative to market their grain. Cooperatives that handle the same commodity may

ABOUT THE AUTHOR Prior to founding Morrison, Brent Morrison worked as a consultant and auditor to cooperatives and other organizations while with Deloitte, then as president of a service and supply cooperative and CFO of a marketing cooperative (both of which remain Morrison clients). Additionally, the Morrison team has many years’ experience working with our cooperative clients. Please let us know if we can help with any questions. Let’s cooperate!

BAUGHER RANCH ORGANICS Baugher Ranch Organics has built a reputation as a grower-friendly company. Partnering with Baugher Ranch is not just a business arrangement—it means joining a family that cares about the success and well-being of its growers. The company offers unparalleled support, fair pricing, and access to a network of resources designed to help them thrive. Growers appreciate Baugher Ranch’s transparent communication, commitment to fair trade principles, and emphasis on long-term sustainability. This has helped the company build a loyal network of growers who share its passion for organic and conventional farming.

While the principles of organic farming remain rooted in tradition, Baugher Ranch is also dedicated to innovation. The almond handler/ processor continues to adopt new technologies and practices to enhance productivity while preserving the environment. From stateof-the-art pasteurization to advancements in packing and processing, the company is at the forefront of agriculture.

As Baugher Ranch Organics looks toward the future, the focus remains on growth and sustainability. The company has ambitious plans to expand its operations, reach new markets, and continue pushing the boundaries of what’s possible in organic almond production. In addition

to its signature organic almonds, Baugher Ranch is exploring opportunities to diversify its product offerings. The growing demand for plant-based foods and sustainable snacks presents exciting possibilities for innovation. By introducing new almondbased products and expanding into international markets, Baugher Ranch aims to reach an even wider audience while staying true to its roots. In their expanded offerings they are also co-packing for other producers.

Baugher Ranch Organics stands as a shining example of what’s possible when passion, innovation, and sustainability come together. With deep roots in the past, a thriving presence today, and an ambitious vision for the future, the company is well-positioned to continue leading the almond industry for years to come.

Morrison has been honored to assist Baugher Ranch Organics, including conducting an organizational analysis, collaborating working with key leadership, and leading key executive recruitments. We look forward to our continued work with Baugher Ranch Organics!

MOR RIS ON OPE N H OUS E On February 10, Morrison hosted a lively Open House for clients and colleagues to connect and enjoy time together.

Since moving into our Ridgewood Drive office in 2022, few have had the chance to visit and tour the new space.

The event was not only a chance for us to connect with guests, but also to host others as they enjoyed meaningful conversations with one another, forming new relationships and strengthening existing ones. We are truly grateful to have a network of amazing people supporting our team that come alongside us as we support the greater community together.

A highlight of the night was awarding one lucky winner a basket of goods from some of our many clients who we are thankful to work with. Special Times Catering provided delicious appetizers and Sonoma County Winegrowers generously supplied a selection of wines for our enjoyment.

The atmosphere was warm and welcoming highlighting our office space, which we look forward to making available to clients and partners in the future who are looking for a professional setting to host meetings or who just want to drop by and say hello. We are thankful for a space that fosters collaboration, innovation, and productivity.

Morrison Grant Roundup The Morrison Grants team was honored to write and submit nearly $90 million in grant applications in calendar year 2024. Here are a few highlights of our recent grant success stories we are pleased to share.

Resilient Food Systems Infrastructure: The U.S. Department of Agriculture (USDA) and California Department of Food and Agriculture (CDFA) announced $21.5 million in Resilient Food Systems Infrastructure (RFSI) funding to California farms and food businesses, funded by the American Rescue Plan Act (ARPA) and administered through each US state and territory to build resilience in the middle of the food supply chain. Projects submitted by Morrison on behalf of our clients received more than 55 percent of the total funding awarded in California. Among the successful Morrison projects were six infrastructure projects and eight equipment-only grants. These include: • Farmers’ Rice Cooperative received $3 million to purchase rice extrusion and value-added processing equipment for its facility in Sacramento.

• Lundberg Family Farms received nearly $90,000 to acquire and install state-of-the-art robotic technology needed to advance operational enhancements.

• Farmers Brewing will leverage $100,000 in CDFA RFSI funds to install a carbon dioxide (CO2) capture system to capture, clean, and reuse CO2 from the rice beer fermentation process.

Local Meat Processing Capacity Grant: Two Morrison clients were among 97 recipients nationwide of the Local Meat Processing Capacity (Local MCap) grants, out of nearly 1,000 applicants. This USDA program helps independently owned meat and poultry processing businesses to improve processing options for local livestock producers. Fallon Livestock Processing, LLC in Fallon, Nevada will use the funds to expand its processing capacity by purchasing and updating processing equipment. Five Marys Custom Meat Co. will leverage Local MCap funds to improve waste handling and increase packaging options at its Fort Jones, California facility.

WaterSMART Planning and Project Design Grant: Western Canal Water District in Richvale, California won a $400,000 grant from the Bureau of Reclamation to fund engineering and project design of a water management construction project that will improve efficiency of water delivery. By replacing aging infrastructure on Little Butte Creek with state-of-the-art fully-automated water regulation gates, tthis project will result in greater water savings, increased water quality, and enhanced habitat for fish and wildlife in the Butte Creek Watershed.

Broadband Infrastructure Grant: The California Public Utilities Commission (CPUC) awarded the City of Chico $12.7 million to bring high-speed fiber-optic internet to the Chapman neighborhood in south Chico, closing the digital divide for this low income community. With this investment, residents will have access to reliable, high-speed internet for just $40 per month— perfect for streaming, Telehealth, remote work, and online education.

Workforce Accelerator: The Jesus Center learned it will receive $150,000 to equip Butte County’s unhoused and veteran populations with unique resources and skills needed for occupations in the City of Chico’s Public Works and Chico Animal Shelter departments. The grant is part of the Workforce Accelerator Fund 13 grant program through the California Workforce Development Board. The Jesus Center’s project will include oneon-one job readiness services, on-the-job training and career counseling, and no-cost workforce training and certifications in technical skills for designated positions.

For more information on these and other grant programs, please check out the Grant Opportunities page on the Morrison website at morrisonco.net/blog/category/grant-opportunities, or email us at grants@morrisonco.net.

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C L I E N T CORNER The Morrison Client Corner is a regular feature of our newsletter.

Here, you’ll find updates on what a number of our clients are up to, their achievements and milestones, and the generally great things happening in their companies or organizations.

ALLISON JORDAN HONORED FOR WINE INDUSTRY LEADERSHIP

Allison Jordan, Executive Director of the California Sustainable Winegrowing Alliance and Wine Institute’s Vice President of Environmental Affairs, was recognized as one of Wine’s Most Inspiring People 2025. Wine Industry Advisor, a leading North America industry publication, conferred the honor on Jordan, who was recognized as a “forward-thinking leader and educator, a global influencer and, above all, a pragmatic optimist.” Allison has been with Wine Institute for more than two decades and helped to found the California Sustainable Winegrowing Alliance here she has been responsible for leading the award-winning California Sustainable Winegrowing Program and Certified California Sustainable Winegrowing since 2007. Congrats Allison!

If you’re a client of ours, we’d love to stay up to date with what is going on within your organization and invite you to share your highlights in this space. Feel free to send any press releases, newsletters, or happenings to Hana Dill at hdill@morrisonco.net.

PARADISE IRRIGATION DISTRICT WELCOMES NEW CHIEF FINANCIAL OFFICER

Paradise Irrigation District, which delivers water to approximately 5,200 municipal, residential, and commercial customers in Northern California, recently welcomed a new Chief Financial Officer. Darleen Sowers brings nearly two decades of finance, accounting, procurement, payroll, data analysis, budgeting, and operations management to her new role and joined the Paradise Irrigation District in February, following a successful executive recruitment led

by Morrison. Welcome Darleen!

CALIFORNIA OLIVE RANCH LAUNCHES NEW MARKETING CAMPAIGN

California Olive Ranch, the largest grower of olives for extra virgin olive oil in the state of California, has launched a new marketing campaign sharing “The Real Taste of California” through a new a tiny farmer character named Cal. The advertisements highlight the premium growing conditions and quality of California grown olive oil and are running on Hulu, Disney+, Max, Peacock, and Paramount+. You can see Cal make an appearance on California Olive Ranch’s Instagram account at @californiaoliveranch.

WELCOME NEW CLIENTS CALIFORNIA GOLD FAMILY FARMS

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NEWSLETTER | SPRING 2025