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Co-ops in the Food System: Conversions, Start-ups and Supply Chains


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This presentation covers worker and food co-ops in the Northeast and internationally that foster economically and environmentally sustainable food systems. The presentation covers the process for cooperative business development, the advantages of the co-operative model, and steps for
launching a new co-op or converting an existing business.

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Co-ops in the Food System: Conversions, Start-ups and Supply Chains

  1. 1. Co-ops in the Food System: Conversions, Start-ups & Supply Chains Erbin Crowell, Neighboring Food Co-op Association Adam Trott, Valley Alliance of Worker Co-operatives NOFA Summer Conference, 9th Aug 2014 University of Massachusetts, Amherst
  2. 2. Workshop Description We will present worker and food co-ops in the Northeast and internationally that foster economically and environmentally sustainable food systems. Participants will learn the process for co-operative business development, the advantages of the co- operative model, and steps for launching a new co-op or converting an existing business.
  3. 3. Outline 1.  Our Context 2.  What is a Co-op? 3.  Why Co-ops Matter 4.  Regional Impact & Potential 5.  Case Studies: Co-ops in the Food System 6.  Suggested Guidelines for Development 7.  Discussion, Questions, Ideas 8.  Resources
  4. 4. 1. Our Context •  A Broken (Unaccountable) Food System •  Crisis of Global Economic System •  Unemployment •  Dramatic Shifts in Wealth •  Diminished Democracy •  Hunger for Alternatives •  Relocalization & Regional Economies
  5. 5. What If…? There was a business model that... …was democratic? …was accountable to the people it served? …was rooted in our local communities? …was part of a values based movement? …put common good before private gain? …was flexible and innovative? …was successful and more sustainable?
  6. 6. England in the 1800s •  Dislocation of local economies •  Dramatic shifts in wealth •  Concentration of economic control •  Poor working conditions •  Contaminated, low quality food •  Birth of the Co-operative Movement
  7. 7. Rochdale Equitable Pioneers •  Founded 1844 •  Weavers, Unionists, Community Activists •  Member-Owned Store •  Pure, Affordable Food •  Basic Co-op Principles
  8. 8. Co-ops & Food Security “What was the motivation of the Rochdale Pioneers, who codified the values and principles on which the co- operative movement has based since 1844? We know it today as food security.” Dame Pauline Green, President International Co-operative Alliance
  9. 9. Vision: A Co-operative Economy “Co-operative housing, worker co-operatives, even collective agricultural co-operatives, can all look back to the original Rochdale plan for inspiration. In 1844 these pieces were not separate… The Rochdale pioneers conceived in one association of what would now make a multisectoral co-operative movement.” Brett Fairbairn, The Meaning of Rochdale •
  10. 10. 2. What is a Co-op? 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 •
  11. 11. 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 and to accomplish a shared goal or purpose. Any surplus (profit) 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.
  12. 12. Values Based Business Co-operatives are based on the values of self- help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. International Co-operative Alliance, 1995 •
  13. 13. 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 International Co-operative Alliance, 1995 •
  14. 14. A Flexible Business Model: Purpose •  Provide Employment and a livelihood. •  Purchase needed 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.
  15. 15. A Flexible Business Model: Industry •  Food Co-ops •  Agricultural Co-ops •  Fishing Co-ops •  Worker Co-ops •  Artisan Co-ops •  Housing Co-ops •  Credit Unions •  Communications •  Utilities Co-ops •  Health & Insurance
  16. 16. A Flexible Business Model: Stakeholders •  Worker Co-ops: Owned and operated by the people who contribute their labor to the business. •  Consumer Co-ops: Owned by the people who purchase goods or services. •  Producer Co-ops: Owned by producers who process and market their products. •  Community Co-ops: Owned and governed by members of community. •  Multistakeholder Co-ops: Owned and controlled by combination of stakeholders.
  17. 17. Basic Co-op Structure MEMBERS BOARD OF DIRECTORS EMPLOYEES Elect Hire Hire MANAGEMENT Worker Co-op CONSUMERS OR PRODUCERS Consumer or Producer Co-op Product or Service A Multistakeholder Co-op includes a combination of member types in ownership and governance. Collectives flatten organizational layers, emphasizing consensus and group decision-making.
  18. 18. 3. Why Co-ops Matter Co-operatives …are more common than we think •  1 billion members worldwide (1 in 3 in the US) •  More people than own stock in multinationals •  Majority of US farmers are co-op members …are innovative •  Healthy food, organic agriculture, Fair Trade, relocalization, regional aggregation and distribution …are successful •  30,000 co-ops in all sectors of US economy
  19. 19. 2012: UN International Year of Co-ops 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.”
  20. 20. 2014: UN International Year of Family Farming •  Policies conducive to family farming •  Increase knowledge, communication, public awareness •  Understand needs, potential, constraints, support •  Synergies for sustainability - particularly with UN Year of Co-ops
  21. 21. 2014: UN International Year of Family Farming •  Co-ops strengthen bargaining power and resource sharing that lead to food security and poverty reduction for millions of small producers… •  Offer men and women smallholders market opportunities, and services such as training in natural resource mgmt, and access to information, technologies, innovations & extension services. •  “The importance of agricultural co-operatives in improving the lives of millions of smallholder farmers and their families cannot be overstated.”
  22. 22. Co-ops & Local Economies •  Community ownership & control •  Focus on service, meeting needs before profit •  Develop local skills & assets •  Ability to pool limited resources •  Regional economic efficiencies •  Difficult to move or buy-out •  Root wealth in community, not markets •  Member, customer loyalty •  Low business failure rate & are long-lived…
  23. 23. Because they are community owned, co- ops root jobs, wealth and infrastructure locally. Because they are more resilient, co-ops contribute to more stable local food systems, infrastructure, employment, services, and economy over time. Ontario Co-op Association //
  24. 24. 4. Regional Impact & Potential The vision of the Neighboring Food Co-op Association is of a thriving regional economy, rooted in a healthy, just and sustainable food system and a vibrant community of co-operative enterprise.
  25. 25. Neighboring Food Co-op Association •  35 Co-ops & Start-Ups •  90,000+ memberships •  1,700+ employees •  $42+ million in wages •  $240+ million revenue •  $30+ million in local purchases (Updated for 2013)
  26. 26. Opportunities for Collaboration & Development PROCESSING DISTRIBUTION: MARKETING DISTRIBUTION: TRANSPORTATION DISTRIBUTION: SOURCING NFCA Member Food Co-ops CONSUMPTION NFCA Food Co-op Member-owners PRODUCTION WASTE & NUTRIENT MANAGEMENT Based on Components of a Food System (Nickerson, 2008) Where are the key opportunities for collaboration & co-op development? NFCA
  27. 27. •  VAWC: 8 member worker co-ops in Western MA & Southern VT •  Tradition of collective management •  70+ worker members •  $7.5 million revenue (2013) •  Linked to/founded from social justice and/or environmental movements •  Advertises in co-op movement media including food co-op and worker co-op newsletters •  Filling needs and gaps in economy with co-operative businesses Valley Alliance of Worker Co-ops
  28. 28. Mondragón Co-operative Corporation •  Located in Basque region, Spain •  First co-op in 1956 (Started with 5 employees, now has 8,000) •  $22 Billion in Sales (2009) •  103,700 Employees (2009) •  Premised on Import substitution and social entrepreneurship •  System includes agricultural and retail grocery co-ops
  29. 29. The Region of Emilia Romagna •  Italy: Most co-ops per capita •  7,500+ co-ops in E.R. •  30-40% of GDP •  2 out 3 are members of co-ops •  10% employed by co-ops •  Vibrant food culture, small family farms, influential co-op retailer •  Cross-sector collaboration
  30. 30. 5. Case Studies Co-ops in New England: •  1,400 businesses •  Food co-ops, farmer 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:
  31. 31. 5. Case Studies in the Co-operative Food System Production & Aggregation Processing & Marketing Retailing & Consumption
  32. 32. Case Study: Deep Root Organic Co-op •  Founded 1986 •  23 members in VT & Québec •  108,000 cases of produce (2013) •  $2.8 mill revenue (‘13) •  Distribution across Northeast US •  Collaboration with NFCA on frozen vegetables
  33. 33. Case Study: North Country Farmers Co-op •  Began organizing 2008 •  Over 20 members in northern NH (farmers and 2 bakeries) •  Direct distribution to 15 patrons, including restaurants, schools, individuals, and a hospital •  Support local farms, reduce competition, increase collaboration in reaching markets
  34. 34. Case Study: Broadfork Permaculture Co-op •  Two potential worker/member joined current sole proprietor in converting to worker co-operative. •  VAWC support centered on structure and governance; formulation of marketing and advertising programming; facilitating purchase from sole proprietor. •  Broadfork seeks to assemble permaculturists in a format of collective co-operation over individual competition in their industry. Long term support for business co-ownership and financial literacy are important aspects to assert in the establishment of the co-op. •  3 worker/members
  35. 35. Case Study: Stone Soup Farm Co-op •  Previous part owner of LLC wanted clarity in roles, equal partnership, focus on organic CSA •  Joined with three former workers from LLC joined Jarrett to form co-op and buy-out equipment, CSA Members, leaseholdings, etc. •  Incorporated in Massachusetts as co-operative under M.G.L. 157A •  2014 is first summer of co-op CSA shares, also offer fruit, egg and winter shares at variety of pick up sites •  Shift to formal co-op structure addresses farm's succession, •  clarifies employment structures and member participation
  36. 36. Case Study: Real Pickles Co-op •  Founded as sole proprietorship in 2001 •  Naturally fermented foods (pickles, sauerkraut, etc.) •  Incorporated as a worker co-op in 201, with 5 founding members, including original owners •  $500,000 outside investment raised to fund transition •  $700,000 revenue annually •  Core goals: Preservation of mission, local ownership and control, retention of staff over time
  37. 37. Case Study: Hunger Mountain Co-op •  Montpelier, VT •  Founded 1972 •  7,200 members •  160 staff •  $20 million revenue •  $6.7 million local purchases
  38. 38. Case Study: Monadnock Food Co-op •  Began organizing in 2008 •  Opened doors in 2013 •  1,900 members •  57 employees •  $5.8 mill revenue (13) •  $500,000 in local purchase in first year
  39. 39. Case Study: Old Creamery Co-op •  Founded as dairy co-op, 1886; Rural grocery since 1930s •  Recent owners operated for 12 yrs •  Converted to co-op in 2010 •  670 members •  40 employees •  $1.5 mill revenue (‘13) •  $150,000 in local purchases
  40. 40. 6. Suggested Guidelines… For… •  Launching a new co-op •  Converting an existing business
  41. 41. Launching a New Co-op 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 and adopt by-laws
  42. 42. Launching a New Co-op Activities, continued: •  Develop a business plan •  Create membership agreements •  Recruit members and equity investment •  Access necessary debt financing •  Hire appropriate management •  Open for business
  43. 43. Basic Development Process Timeline •  12-18 months to incorporate (varies widely!) •  Open doors – 2 yrs, 4 yrs, 12 yrs •  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 •  Peer support & guidance
  44. 44. Concerns for Co-operators •  Understanding group dynamics •  Facilitation of process, shared vision •  Defining roles and responsibilities early •  Professional standards •  Participatory but focused environment •  Recognizing strengths and weaknesses
  45. 45. Concerns for Co-operators •  Engagement of members •  Encourage and develop broad leadership •  Ongoing training in: •  Co-operative values & principles •  Board leadership and accountability to members •  Fiscal oversight •  Project & strategic planning •  Communication, facilitation, conflict resolution
  46. 46. Conversions Basic Questions: •  Is there a willing seller? •  Are there potential member owners? •  Is the business viable? •  Is there a support system? •  Designing the transaction •  Completing the transaction •  Ongoing investment in education and training •  Linkage with existing co-op networks
  47. 47. Suggested Guidelines for Success •  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 and involved •  Use technical assistance from co-op networks and reputable co-op developers •  Join regional co-op networks and seek out peer support from other co-ops
  48. 48. Legal Statutes From “Growing a Food System for the Future” New England Farmers Union ( Connecticut: Conn. Gen. Stat. 33-183 •  Co-operative Associations •  Co-operative Marketing Associations •  Workers Co-operatives Maine: 13 M.R.S. 1501 •  Consumer co-op •  Agricultural Marketing & Bargaining Co-operative •  Employee Co-operative Corporations
  49. 49. Legal Statutes Massachusetts: ALM GL Ch. 157 •  Co-operative Corporations •  Co-operatives without Stock •  Employee Co-operative Corporations (157-A) New Hampshire: RSA Title XXVII, Ch. 301 •  Co-operative Marketing & Rural Electrification Associations •  Consumers Co-operative (Ch. 301-A)
  50. 50. Legal Statutes Rhode Island: R.I. Gen Laws 7-7-1 •  Producers Co-operative •  Consumers Co-operative Vermont: 8 V.S.A. 31101 •  Marketing Co-operative •  Consumers Co-operative •  Worker Co-operative (Title 11, Ch. 8) Other Options •  Incorporate in neighboring state with appropriate statute
  51. 51. Why a Co-operative Food System? Co-operative enterprises: …put people before profit, …are community owned, …are accountable to their members, …are successful businesses, …strengthen local economies, …are more sustainable and resilient, …build a better, more sustainable food system.
  52. 52. 7. Discussion Your… •  Questions •  Feedback •  Ideas for Future Workshops
  53. 53. Basic Resources Neighboring Food Co-op Association Valley Alliance of Worker Co-operatives New England Farmers Union Erbin Crowell • Adam Trott •