Federated observes 100 years of growth, consolidations

Federated Co-ops Inc. general manager Tim Kavanaugh has a constant reminder of the history of the century-old cooperative he works for every time he goes to his office in downtown Princeton.
His office is like a museum with memorabilia of the co-op, displaying  pictures from bygone days and co-op souvenirs, lining his bookshelves. His office also happens to be where the cooperative began, in Princeton, in that part of the downtown.
Federated Co-ops has  commemorated its centennial by producing a video chronicling the company’s history. The video is steeped with comments from Kavanaugh and others about Federated Co-op’s dedication to serving and building trust with their customers.
Federated Co-ops has facilities mostly in east Central Minnesota, but the territory goes beyond that. It spreads as far north as Two Harbors, south to Annandale, west to Little Falls, and east to Gordon, Wisconsin.
Federated Co-ops has not only expanded its territory and taken on many operations with mergers, but it has a different makeup in other ways from the days of Princeton Cooperative.
During its earliest years in downtown Princeton, the co-op had a grocery store, a hardware and farm goods store, a John Deere implement dealership, a fertilizer plant, a fuel delivery business, a credit union and even a funeral home.
The funeral home was in the area of where ReMax Realty now sits a block west of Rum River Drive and south of First Street. The late Irv Kaun was hired to run the funeral home for Princeton Co-op, and he later bought the funeral business.
The John Deere implement business the co-op owned, and which also had the co-op brand of tractors, sat on the east side of Rum River Drive. All of that block has changed over time. The co-op grocery store has been gone for many decades as well, though the co-op’s hardware and farm goods business continues. The hardware and farm goods store it had in downtown Princeton actually lasted into the 1980s, along with its downtown Princeton gas station. Its main station was where Coffee Corner is, and for a short time the co-op had a gas station in the now vacant gas station building south of Hy-Tech Auto.
Federated Co-ops still has five Cenex gas stations today: two in Rush City and one each in St. Cloud, Chisago City and Isle.
The credit union that the co-op had is now Spire Credit Union.
Among the longtime residents of Princeton who remember the earlier co-op businesses in downtown Princeton is retired dairy farmer Pete Kronbauer Jr., of Princeton.
Kronbauer, 80, said he bought his pipeline milking system in 1978 or ‘79 from the Princeton Co-op hardware and farm store, and it brought Kronbauer’s milking operation into the modern age.
Princeton Cooperative, as the co-op was called then, even had a specialist to install and service the milking equipment and “sold a lot of stuff,” Kronbauer noted.
While many might think the co-op creamery that operated in Princeton until about 35 years ago was part of Princeton Co-op, it was actually part of another co-op.
Federated Co-ops eventually moved its downtown hardware store to its fertilizer plant that it had across the street from the entrance to Mark Park. The fertilizer plant and hardware store eventually closed  and the building was torn down to make way for a housing development.
Federated Co-ops replaced its Princeton area hardware store with its Country Store located 3 miles north of Princeton on Highway 169. By that time, Princeton Co-op had become Central Rivers Co-op. But the name didn’t last long. When Central Rivers later merged with Federated Propane of Cambridge, it all became Federated Co-ops Inc. in 2001.
The co-op still has the basic framework that existed in the early 1900s in America in which some patrons are given shares and receive some of the profit. Kavanaugh explained that the big customers, such as the large farm operations buying tons of fertilizers and other products from Federated Co-ops, receive these patron checks. Co-ops like Federated are patron-owned and have an elected board of directors, Kavanaugh said.
Federated Co-ops has five fertilizer plants. A large one that the co-op put a tremendous amount of capital into is the one in Ogilvie, Kavanaugh said.
A history of the co-op’s early days shows that Louis Rust purchased the first share of Princeton Cooperative on April 25, 1914. His nephew Henry Rust later became manager of the cooperative’s farm machinery department. Another Rust family member, Art Rust, was the first manager of the MIK Trucking Association that the co-op had to haul fuel. MIK stood for the counties of Mille Lacs, Isanti and Kanabec.
Princeton farmer George Townsend, who was active in the Princeton Cooperative, is credited with helping the co-op over many rough spots in its early days.
Records show that some of the community’s prominent business people opposed the forming of a cooperative store, some of them concerned it wouldn’t last long. The founders of Princeton Cooperative struggled early on to secure the start up funds, but through working together, they succeeded. A banker named G.A. Eaton is credited with helping by loaning the co-op $2,000.
It is also recorded that when farmers made purchases jointly, it brought prices down in the local stores. The cooperative got a boost from the rising demand for farm goods and machinery during the advent of World War I.
Federated Co-op mirrors agriculture
To examine the co-op’s evolution into today’s Federated Co-ops means talking about the changes in agriculture. Neither Federated nor farming can be separated in the first place, since farmers were the biggest customers of the co-op in its early days and continue to be a main customer. Agricultural producers purchase fuels, feeds, fertilizers, crop protection chemicals, hardware and more from Federated Co-ops.
Also, agriculture was once made up of many thousands of small farms across rural landscapes. As time went on, more farmers either got out of the business or made their farms larger, milking ever more cows, for example.
Federated Co-ops closed smaller operations or facilities, consolidated them into fewer locations, and merged with other companies. Princeton Co-op merged with Isanti County Co-op and Chisago Lakes Co-op, for example.
“There were a lot of mergers with Princeton Co-op during 1990-2001, Kavanaugh said.
“One of the things co-ops are good at, though reluctantly, is consolidating,” he added.
One of the big names that has been associated with the co-op was Midland. Kavanaugh said that Midland formed in 1926 to supply petrol to local co-ops and that Princeton Co-op was one of its first owners. Midland folded in about 1985 and was acquired by Land O’ Lakes, Kavanaugh noted.
Looking back on why co-ops first formed, Kavanaugh said it had to do with distribution and markets in which ag facilities had to be close to the farmers.
“Certainly there were a lot of private competitors, but co-ops filled a void,” Kavanaugh said. That was especially true for the cooperative creameries that once existed in so many towns across America, Kavanaugh said. He explained that in the earliest days of agriculture, farmers had to bring their cream or milk into the creamery before there were milk haulers that came out to the farms. Having the feed mills close to the farms made it convenient for farmers to bring their grains in for grinding.
Federated Co-ops, through consolidating and merging, is just responding to the changing agricultural scene, and through its larger holdings can add value by buying in greater bulk, Kavanaugh said.
Sometimes people “remember what they like and not what is today,” Kavanaugh continued.
“There are fewer farms, so the need for some of the services is just not what it was. We’ve adapted to what people actually need. We’ve heard so many times about 32 wagons that were lined up the block at the feed mill. That’s all gone now.”
Kavanaugh lives in Elk River, but is like one of the Princeton locals with his working in Princeton. Kavanaugh, a native of Fergus Falls, started his co-op job in Princeton after having managed co-ops elsewhere including in Hayfield, Minnesota, and Blanchardville, Wisconsin.
“My experience in Princeton is far and away the best experience of my life,” Kavanaugh said. “Princeton is my base. This area has really good people, and there isn’t a better group of people to work with than people in agriculture. I grew up on a farm, but I didn’t set out to be in agriculture. It was just pure luck.”