1. NW Co-op Development Center
Marketing Co-ops for Small Farms
WSU – Clark Co Extension, Small Acreage Program
July 18th
, 2012
Eric Bowman, Cooperative Development Specialist
eric@nwcdc.coop
1063 S Capitol Way # 211
Olympia, WA 98501
360.943.4241

2. Marketing Co-ops For Small Farms
1. Intro
2. Overview
3. Ag Co-ops Models
4. Development Process
5. Q&A
6. Exercise

3. NWCDC
The Center
a 501(c)3 nonprofit which provides development services
for new and existing co-ops
Our mission
to foster community economic development through the
co-op business model
We’re
a team of co-op developers with skills specific to start-up
and organizational business development

4. Co-ops 101
Investor owned:
Sole proprietor:
Co-ops are member:
• Owned
• Controlled
• Benefited

5. Corporate Structure

6. Legal Structure;
Duties and Authorities

7. • 250 purchasing co-ops procure for 50,000 businesses
• 3,000 farmer co-ops market 30% of farmers’ products
• 8,000 housing co-ops provide 1MM homes
• 7,500 credit unions provide services to 90MM members
• 1,000 rural electrics operate ½ the nation’s distribution
• 29,000 co-ops serve 43% of the population
Top 100 co-ops’ 2010 revenues = $194 Billion!
Role in U.S. Economy

8. Ownership
Member-Owners can be
– Consumers
– Producers/Farmers
– Workers
– Other Businesses

9. Distributionism
Consumer
• Credit Unions
• Housing
• Retail (e.g. food co-ops)
• Farm Supply
Two Schools
Producer
• Worker
• Farmer
• Artisan

10. Why Cooperate?
…to access resources not individually achievable

12. Why form an entity?
To Create:
• Something bigger and beyond oneself
• Economy of scale
• Solid foundation for growth
• Legitimacy
• Commitment
• Limited liability
• Formal structure to work together

13. When not to form…
• Too small to cover admin
• Dependant on volunteers and/or grants
• Less than 3 members
• Don’t need structure
• No compelling economic need

14. Examples
• Farm Supply:
– Seattle Farmers Co-op
• Multi-farm CSA :
– Siskiyou Sustainable Co-op
• Marketing Fresh Fruit:
– Okanogan Producers Marketing Assn

15. Farm Supply
• “locally grown/milled, certified organic, non-
gmo feeds at affordable prices”
• Also:
– worm bins
– Feeders and waterers
– Hay, straw
– Canning supplies
• 2012 - 62 inaugural members

16. Direct Marketing
• Multi-farm CSA
• Goals is a “whole diet CSA”:
– Primarily produce
– Eggs
– Some meats
– Getting into grains

17. Why Formed
• Formed in 2003
• Big Dreams!
– Marketing
– Value-added
– Roadside farm stand
– Buying health insurance
• Complex business plan authored by MBA
• Year 3 was CSA

18. Who
• Largest member is 8 acres and grosses $150k
• 9 producers (3 founders)

19. Challenges
• Farm stand did not go as projected
– Debt
– Exodus of founding members
• Recently:
– QC/QA
– Profitability

20. Benefits to Members
• Number 1: Market access and coordination
– not a bunch of small CSAs
• Number 2: Social capital
• Equipment Sharing
• No dividends
• No exclusivity

21. Markets
• Direct to 160 retail
customers:
– 11 drop points
– 3 CSA share sizes
• $120k gross
• People do not choose
products

22. Wholesale Marketing
• 7 members:
– Primarily apples
– Other tree fruit: apricots, cherries, etc.
– Some other fruits and veggies: garlic, berries, etc.
– Some value added: apple chips, jellies, etc.

23. • 6 fruit growers
– First and multi-generational
– 3 to 40 years in business
• Experience/skills
– Bank examiner
– Construction
– Marketing
– Refrigeration
Founders

24. • Founded in ’05 with the purpose of marketing:
– Explored bricks and mortar
– Transport to farmers market on coast
– Recently bought a reefer van
Why Formed

25. “the whole purpose is
to put more money in
the pocket of the
farmer”

26. How?
“…hold about 500 meetings.”

27. 2011 sales = $300k; 20% growth
• Specialty food retailers
• Product now included CSA boxes
• Cost to farmers
– Marketing @ 11% of sales
– Transportation @$4.25 box fee
Markets

28. Benefits to Members
• “This is the only way to make it work, the stores just
don’t want to talk to a solo farmer”
• “Side effect of sharing info and skills”
• Rent a staging area
• No dividends
• No exclusivity

29. “Quality won’t make it
work, you also
need quantity”

30. • Farmers depend on co-op to continue farming
• Smooth ops = invisible ops
• Product mix
• Growth
Challenges

31. Unique Characteristics of Co-ops
• Owned/controlled by members, not outside investors
• Exist solely to serve members
• Return surplus to members based on use, not
investment
• Pay taxes on income kept for investment/reserves;
surplus revenue returned to members who pay taxes
• Economy of scale = valued added

33. Estimated Timeline
• 6 to 12 months (or more for each):
1. Organizing
2. Planning
3. Implementation
• Total of 1 ½ to 3 years

34. Co-op Development Stages
• Identify a need a co-op could
meet
• Form Steering Committee
• Research Feasibility
• Review Findings (Go/No Go)
• Membership Drive
• Planning and Financing
• Begin Operations (Go/No Go)
Project Lifecycle

35. How We Assist
• Facilitate identifying mission and
goals
• Train founding Board members
• Market and feasibility research
• Assist with organizing
• Professional, 3rd
party perspective
• General business consulting
Project Lifecycle
Co-op Development Stages
• Identify a need a co-op could
meet
• Form Steering Committee
• Research Feasibility
• Review Findings (Go/No Go)
• Membership Drive
• Planning and Financing
• Begin Operations (Go/No Go)

36. Thank You!
Eric Bowman
eric@nwcdc.coop
Northwest Cooperative Development Center
1063 Capitol Way S # 211
Olympia, WA 98501
360.943.4241 | www.nwcdc.coop
Fostering community economic development through the
cooperative business model