Pacific Northwest Cheese: A History

Chapter 4: Expansion and Innovation

83 Chapter 4 Expansion and Innovation The World War I economic boom ended with the 1918 Armistice, sending the war-prosperous Pacific Northwest production engine into an economic slide. Thousands of lost jobs in the timber, shipbuilding, and aircraft industries contributed to a precipitous rise in unemployment and many who had migrated to the region for its wartime industry jobs simply left for greener pastures. The regional employment vacuum created an enormous problem for thousands of soldiers returning from wartime service and looking for work. Oregon officials held a Reconstruction Convention in 1919 to address the state’s future in the face of feared postwar economic and social upheaval. Oregon Governor Withycombe, incidentally the former head of the Experiment Station at Oregon Agricultural College, proposed in his biennial address that the state purchase private lumber lands, subdivide them, and sell tracts to returning war veterans. The state of Washington held its own Reconstruction Congress, which recommended a wide-ranging slate of programs including the development of hydroelectric power to stimulate the economy. The postwar years also ushered in what then-Secretary of Agriculture Henry Wallace ominously termed an “agricultural depression” in the United States. Previously astronomic export levels of agricultural commodities plunged, sending farm production into a tailspin. High wartime prices plummeted and crop production dropped as a result. Farmers who had expanded to accommodate (and profit from) increased wartime demand found themselves severely overextended during peacetime and many lost their farms. Severe drought conditions during 1918-1920 only exacerbated problems for farmers in the Pacific Northwest. Nationally, cheese production dropped 12 percent between 1919 and 1920, and did not reach 1919 levels again until nearly a decade later. In the Pacific Northwest, the previously rapid pace of growth in cheese production slowed considerably. Tillamook production levels increased 10 percent from 1919 to 1921, but dropped slightly in 1922 and remained essentially level until the mid-1930s. 84 CHAPTER 4 Postwar economic instability contributed to the rapid growth of the agricultural cooperative movement in the United States. Though by no means a new concept, farmer-owned agricultural cooperatives became increasingly common during this period and were organized by wheat and fruit growers, egg and poultry producers, and cotton farmers across the nation. At the peak of the cooperative movement in the United Sates during the 1920s there were as many as fourteen thousand agricultural cooperatives across the country, over two thousand of which were dairy cooperatives. Congress enabled the cooperative movement’s expansion by enacting the Capper-Volstad Act of 1922, which protected cooperatives against accusations of price fixing and anti-trust litigation. Perhaps one of the more appealing aspects of cooperative organization was that, until 1951, agricultural cooperatives were treated as tax-exempt entities by the Internal Revenue Service. Though on its face the term cooperative suggests a communal system of sharing work and profit (in fact, the whiff of socialism implied by the name made cooperatives suspect to the conspiracy-minded of the period), agricultural cooperatives were and are legal entities that resemble traditional corporations capitalized with money from members who, in this context, happen to be farmers. Cooperatives differ from traditional corporations in some key respects, however. They are organized specifically to benefit the member/ owners rather than shareholders, and member/owners participate directly in the ongoing operation and management of the corporation. Unlike stock corporations, profits are shared through patronage dividends, with members receiving a payment based on the proportion of business transacted with the cooperative. Several different types of cooperatives emerged in the dairy context. A manufacturing cooperative consisted of a group of farmers who banded together to establish a production facility that pooled milk from member dairies into dairy products from which all members would profit. The manufacturing cooperative possessed a number of clear advantages to individual dairy farmers , most obviously the savings gained by operating one collective facility using one set of equipment. In addition, cooperation solved many of the problems inherent in the handling and distribution of milk: since milk spoils rapidly and production is naturally cyclical, a number of farmers working together could breed their cows at different times of the year and even out seasonal production cycles that could prove fatal to an individual farmer’s livelihood. Cooperatives also established quality standards for members that improved the overall quality of milk and dairy products. As the farmers of Tillamook, Oregon, already knew, with cooperation, overall consistency of milk and dairy products, and thus their marketability, greatly improved. [18.227.24...