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Farmer Co-ops for More Efficient Marketing
Northeast Organic Farming Association Summer Conference // 13 Aug 2016
UMASS Amherst // Amherst, MA
Presenters
Roger Noonan • President, New England
Farmers Union
• Organic Farmer, Middle Branch Farm
• Member, Local Harvest CSA Co-op
Erbin Crowell • Vice President, New
England Farmers Union • Executive Director,
Neighboring Food Co-op Association
• Board Member, National Co-operative Business Association
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Farmer Co-ops for More Efficient Marketing
Learn how co-operative enterprise is a powerful tool for farmers seeking more efficient marketing and a more sustainable food system. We will explore examples from our region, steps to establishing a co-op, advice for effective governance and collaboration, and opportunities to access grant resources to support your ideas.
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Outline
1. Our Organizations 2. What is a Co-operative? 3. Examples 4. Guidelines for Launching a Co-op 5. Discussion & Ideas
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New England Farmers Union NEFU is a six-state membership organization that advocates for federal policy that benefits family farmers. We are a chapter of National Farmers Union, the second-largest agriculture organization in the country. Co-operative development has been a priority for Farmers Union since its founding in 1902. www.newenglandfarmersunion.org
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NEFU Co-operative Heritage • Officially known as the “Farmers' Educational and
Cooperative Union of America” (1902) • Key role in passage of Capper Volstead Act in
1922 & Cooperative Marketing Act of 1926 • Founded Farmers Union Central Exchange in
1931; merged with Harvest States Co-operative to form CHS: – Largest US-based co-op by revenue (2012) – 69th on Fortune 500 list by revenue (2012) – 25th largest convenience store chain in US
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Neighboring Food Co-op Association
NFCA is a network of 35 food co-ops and start-ups in New England that are working together toward a shared vision of a thriving regional economy, rooted in a healthy, sustainable food system, and a vibrant community of co-operative enterprise. As an affiliate member of NEFU, the NFCA partners with our region’s family farmers and fishermen to support a more sustainable food system, grow the co-operative economy and influence food policy. www.nfca.coop
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2. What is a Co-operative? “A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.”
International Co-operative Alliance www.ica.coop
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What is a Co-operative?
“Co-ops are producer- and user-owned businesses that are controlled by — and operate for the benefit of — their members, rather than outside investors.”
United States Department of Agriculture
www.usda.gov
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In Other Words… A co-op is a business that is equitably owned and democratically controlled by its members for their common good, the good of the community or to accomplish a shared goal or purpose. Any surplus (profit) after expenses is distributed among members in proportion to their use of the business (purchases, labor, or supply), as a discount on purchases, or is reinvested in the enterprise for the mutual benefit of members.
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Co-operatives… …are more common than we think
• Majority of US farmers are co-op members
• 1 billion members worldwide (1 in 3 in the US)
• More people are members than directly own stock in corporations
…are innovative
• Co-operatives are pioneers in organic agriculture, healthy food, Fair Trade, relocalization, regional aggregation and distribution
…are successful
• 30,000 co-ops in all sectors of US economy
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Co-operative Business Principles
• Voluntary & Open Membership • Democratic Member Control • Member Economic Participation • Autonomy & Independence • Education, Training & Information • Co-operation among Co-operatives • Concern for Community
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United Nations Year of Co-ops (2012)
Co-ops “in their various forms, promote the fullest possible participation in the economic and social development of all people, including women, youth, older persons, persons with disabilities and indigenous peoples, are becoming a major factor of economic and social development and contribute to the eradication of poverty.”
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UN Year of Family Farming (2014)
“The importance of agricultural co-operatives in improving the lives of millions of smallholder farmers and their families cannot be overstated.”
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UN Sustainable Development Goals (2016)
“Co-operatives contribute to food security by helping small farmers, fisher folk, livestock keepers, forest holders and other producers to solve numerous challenges that confront them in their endeavours to produce food.” International Labour Organization (2016)
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A Flexible Business Model • Purchase needed inputs, equipment,
products or services as a group. • Produce a product or service together. • Process and add value to raw materials
produced by members. • Market products produced by members or
by the co-op. • Provide employment and a livelihood.
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Co-op Sectors Benefit the Regional Food System
• Farmer-owned co-ops help members market and process their crops and livestock, and secure needed supplies and services.
• Rural utility co-ops provide electrical power and telecommunications services.
• Financial co-ops and credit unions provide credit and financial services.
• Food co-ops provide community owned retail outlets for producers, etc.
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Co-ops in New England • 1,400 businesses • Farmer co-ops, food co-
ops, worker co-ops, credit unions, etc.
• Locally owned by 5 million members
• Earn $9 billion in annual revenue
• Employ 22,000 people • Pay $1 billion in wages
Source: http://reic.uwcc.wisc.edu/
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A Basic Co-op Structure
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MEMBERS
BOARD OF DIRECTORS
EMPLOYEES
Elect
Hire
Hire
MANAGEMENT
Worker Co-op
PRODUCERS OR CONSUMERS
Producer or Consumer Co-op
Product or Service A Multistakeholder Co-op includes a combination of member types in ownership and governance.
Collectives Flatten layers,
and emphasize consensus decision-making.
3. Case Study: Organic Valley / CROPP Co-operative
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• Founded 1985 • 1,800 members in US,
Canada & Australia • Dairy, eggs, soy,
produce, feed, and meat
• Avg dairy herd is 80 • 13% of US organic
farmers are members
Dairy Pool Beef Pool
Egg Pool
Produce Pool
Grower Pool
493 Northeast farm families
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4
2
34
11
1
1
1
3
4
9
23
135
30
1
1
2
3
121
154 3
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NEW YORK
PENNSYLVANIA
WEST VIRGINIA
VIRGINIA
MARYLAND
NEW JERSEY
MAINE VERMONT
NEW HAMPSHIRE
26 Years of Sustainable Farmer Pay Midwest Mailbox Dairy Pay Price
CONVENTIONAL DAIRY PAY PRICE
Graphic thanks to Organic Valley
Case Study: Deep Root Organic Co-op
• Founded 1986 • 22 members in VT &
Québec • 85-100,000 cases of
produce annually • ±$2.5 million ann rev • Distribution across
Eastern US • Support specialization,
reduce competition, access markets
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Case Study: North Country Farmers Co-op
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• Began organizing 2008 • Over 20 members in
northern NH • Direct distribution to 15
restaurants, schools, individuals, and a hospital
• Reduce competition among members, increase collaboration in reaching markets, support specialization
Case Study: Local Harvest CSA Co-op
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• Established 2002 • Six NH member organic
farms • Three season CSA • Members coordinate
production, enabling specialization while offering broad range of produce to customers
Opportunities in the Food System
• Strengthen bargaining power of small producers in the marketplace
• Achieve scale while and efficiency while supporting small family operations
• Enable producers to specialize and increase efficiency
• Farmer members can focus on core business and delegate services without giving up control
• Root food system infrastructure in our region • Increased recognition of social, economic and
environmental benefits of co-ops
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Challenges for Co-operative Enterprise
• Democracy can be both an asset and challenge to the business
• Limited business, legal and technical support for co-ops
• Lenders may be unfamiliar with model • Balancing individual and mutual interests
of members
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Some Suggestions • Before launching a new co-op, explore
whether an existing co-op can meet your needs.
• Is there an existing business that could be converted to a co-operative? For example, a farmer interested in sharing infrastructure or an owner interested in retiring?
• If a new co-operative is the answer, collaborate with existing co-ops and learn from their experiences.
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Launching a Co-operative Activities: • Define overall purpose or goal • Create steering committee • Raise pre-development funds • Hire a coordinator, if possible • Conduct feasibility study • Establish the founding board • Incorporate using appropriate co-op statute • Adopt by-laws
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Launching a Co-operative
Activities, continued: • Develop a business plan • Create membership agreements • Recruit members and equity investment • Access necessary debt financing • Hire appropriate management • Open for business
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Basic Development Process Timeline • Allow for 12-18 months to incorporate (varies widely!) • Open doors – 2 to 10 years • Existing facility or business can be faster Resources Needed • Committed, visionary leadership • Co-op business, legal, and financial support • Member equity investment • Start-up financing • Support & guidance from other co-ops
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Co-operative Statutes CT: Conn. Gen. Stat. 33-183 • Co-operative Associations • Co-operative Marketing
Associations • Workers Co-operatives ME: 13 M.R.S. 1501 • Consumer co-op • Agricultural Marketing &
Bargaining Co-operative • Employee Co-operative
Corporations
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Growing a Food System for the Future:
a manual for co-operativeenterprise development
Six States with One Voice at the National Table
Co-operative Statutes MA: ALM GL Ch. 157 • Co-operative Corporations • Co-operatives without Stock • Employee Co-operative
Corporations (157-A) NH: RSA Title XXVII, Ch. 301 • Co-operative Marketing &
Rural Electrification Associations
• Consumers Co-operative (Ch. 301-A)
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RI: R.I. Gen Laws 7-7-1 • Producers Co-operative • Consumers Co-operative VT: 8 V.S.A. 31101 • Marketing Co-operative • Consumers Co-operative • Worker Co-operative (Title
11, Ch. 8) Other Options • Incorporate in a neighboring
state using appropriate co-operative statute
Concerns for Co-operators • Engagement of members • Encourage and develop broad leadership • Ongoing training in:
– Co-operative values & principles – Board leadership & accountability to members – Fiscal oversight – Project & strategic planning – Communication, facilitation, conflict resolution
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Some Guidelines for Success • Support strong, committed member leadership • Set realistic goals and focus on them • Base decisions on concrete market research and
business planning • Invest in member education and keep members
informed, engaged and involved • Use technical assistance from co-op networks and
reputable co-op developers • Join regional networks (such as NEFU) and seek
out peer support from other co-operatives
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Why Co-operatives? Co-operative enterprises… • …enable small producers to achieve scale, • …improve market access for multiple producers, • …enable members to focus on core business, • …prioritize service to members before profit, • …root infrastructure in our region, • …strengthen local economies, • …are more sustainable and resilient, • …are democratic and accountable to members, • …build a more sustainable food system.
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Discussion
• Questions • Feedback • Ideas for Future Workshops
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Resources & Contact Info Roger Noonan
Erbin Crowell [email protected]
New England Farmers Union
www.newenglandfarmersunion.org
Neighboring Food Co-op Association www.nfca.coop
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