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Co-op shuts down after 60 years

July 28, 1997


Staff Writer

CHEWSVILLE - The Chewsville Cooperative Association's mill stands silent and its store is closed. In a few days, the last two employees will be gone and a community landmark for more than six decades will fade forever.

Then attorney Roger Schlossberg, who was appointed receiver by the court last week, will begin the process of preserving the assets of the store - and another in Smithsburg - and selling them.

"It's a mainstay out there in that community," said Schlossberg, who represented six shareholders who brought suit to force its closure.


"This is a business which has been in decline for many years. To some extent, it's a victim of its history," he said.

The shareholders filed suit charging the co-op both of violating rules governing farming cooperatives and failing to cover debts. Schlossberg, of Schlossberg & Associates, said all the employees, including five full-time workers and several part-timers, will lose their jobs.

Co-ops get tax and organizational benefits in exchange for adhering to certain regulations. One of them, according to the suit, is that they must sell more to members rather than non-members.

But he said the co-op has failed to meet that standard for the last several years.

The co-op has also failed to break even for the last several years, Schlossberg said. He said the books are incomplete but estimated the co-op is "many tens of thousands" of dollars in debt.

Gerald E. Frey, whose father was one of the founding shareholders, said several shareholders tried to vote it out of existence about two years ago, but couldn't muster the necessary percentage.

"It just wasn't making money," he said. "It used to be, everyone had some chickens (and needed products the co-op sold). But we don't do that anymore."

William M. Schildt, an attorney for the co-op, admitted to most of the allegations in the suit. The court ordered the corporation dissolved last Monday and appointed Schlossberg receiver, according to court records.

Schlossberg said he will now evaluate the assets and then try to sell them off. All money generated will pay creditors first and then the shareholders if there is anything left over, he said.

The Chewsville Cooperative Association was formed about six decades ago - Schlossberg said he does not know the exact date - by farmers in the Smithsburg-Chewsville area.

It provided mill services to member farmers and sold feed, seed, fertilizer and other farming supplies and products from an adjacent a store.

Schlossberg said the arrangement worked well during an era when there was less competition and travel was not as fast or easy.

Recently, however, he noted that large, modern mills have made competing difficult. He added that department stores like Lowe's and Hechinger's sell many of the same products the co-op did.

"That's who they're competing against," Schlossberg said. "Some of these things aren't that hard to find anymore."

Schlossberg said poor management, antiquated equipment and other factors contributed to its demise.

"They still have to be effectively managed and react to changing demands. This one didn't react to all those things," he said.

Lisa L. Keller, a spokeswoman with the National Council of Farmer Cooperatives, said co-ops have faced many of the same competitive pressures confronting other segments of the economy. She said many smaller co-ops have either merged with larger one or gone out of business.

"What's happening, is there is more competition out there," she said. "There's a lot of mergers, downsizing and consolidation. That's going on throughout the entire economy.

"The trend has been, these smaller co-ops find it harder to compete. They merge and consolidate. We've seen that for the last 40 to 50 years."

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