Tilth 11 15 09
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Eric Bowman from the Northwest Cooperative Development Center gave a presentation on cooperative businesses and case studies. He discussed how cooperatives are member-owned and benefit and controlled. Case studies included Organic Valley, a large organic dairy cooperative, Country Natural Beef, a meat marketing cooperative, and Montana Bunkhouse Working Ranch Vacations, a cooperative that connects ranchers with tourists. The key points were that the case cooperatives were formed out of economic need, market their values and philosophy, and have innovated and reinvented themselves successfully.
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Tilth 11 15 09
- 1. NW Co-op DevelopmentNW Co-op Development CenterCenter Tilth Producers Annual Conference Nov 15th , 2009 Eric Bowman; Cooperative Development Specialist eric@nwcdc.coop 1063 S Capitol Way # 211 Olympia, WA 98501 360.943.4241
- 2. Presentation OverviewPresentation Overview 1. Intro 2. Co-ops 101 and Overview 3. Case Studies ◦ Organic Valley ◦ Country Natural Beef ◦ Montana Bunkhouse Working Ranch Vacations 1. Conclusion 2. Q&A Innovative Marketing Co-ops
- 3. NWCDCNWCDC 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-op RoleCo-op Role U.S. Facts: ◦ 3,000 farmer co-ops market 30% of farmers’ products ◦ 6,400 housing co-ops provide 1.5 million homes ◦ 10,000 credit unions provide services to 84 million members ◦ 1,000 rural electrics operate half the nation’s distribution ◦ 47,000 co-ops serve 43% of the population Top 100 co-ops’ 2007 revenues = $173 Billion!
- 5. Co-ops 101Co-ops 101 Investor owned: Sole proprietor: Co-ops are member: ◦ Owned ◦ Benefited ◦ Controlled
- 6. OwnershipOwnership Member-Owners can be ◦ Consumers ◦ Producers/Farmers ◦ Workers ◦ Other Businesses
- 7. DistributionismDistributionism Two Schools Producer ◦ Worker ◦ Farmer ◦ Artisan ◦ Business Consumer ◦ Credit Unions ◦ Housing ◦ Retail (e.g. food co-ops) ◦ Farm Supply
- 8. Co-op to Co-op Supply ChainCo-op to Co-op Supply Chain
- 9. Why Cooperate?Why Cooperate? …to access resources not individually achievable Marketable Co-op Benefits; “Goodwill” Keep profits, ownership and control local Accountable Trusted
- 11. Relationships and AuthorityRelationships and Authority
- 12. Unique Characteristics of Co-opsUnique 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
- 13. Why form entity at all?Why form entity at all? Creating Something bigger and beyond oneself; legacy Formal structure to work together (governance/conflict resolution) Solid foundation for growth Legitimacy Commitment Limited liability Economy of scale
- 14. Organic ValleyOrganic Valley Wholly Owned Subsidiaries “Un-Corporation” o 1,398 members (64 in NW) o ~ 10% of organic farm community o Largest organic co-op Philosophy: o “Crafting new vision of foods/farms” o “More than delicious” o Adding value thru values
- 15. Jon Bansen - Monmouth, ORJon Bansen - Monmouth, OR This is as big as I ever want to be. Working with a co-op has allowed me to produce good milk that receives a premium price, giving me a great livelihood, so I don't have any reason to want more…
- 16. Country Natural BeefCountry Natural Beef 14 farmers in Brothers, OR “we were going broke” (1986) o Economics: increasing interest rates, land prices o Social: cholesterol fears, “enviros” Product is more than beef…
- 17. CNB – Business philosophyCNB – Business philosophy …it’s about the people • Selling direct = value added • Shinrai • Consensus
- 18. MT Bunkhouse Working RanchMT Bunkhouse Working Ranch VacationsVacations 20 cattle ranchers Co-op: ◦ Matchmaker ◦ Co-marketing ◦ ”geo-tourism” ◦ Point of contact
- 20. Case Studies ReviewCase Studies Review Key Points: 1. Born out of need/adversity 2. Marketing values and philosophy 3. Successful innovation/reinvention
- 21. NW ag is very diverseNW ag is very diverse
- 22. Thank You!Thank You! Eric Bowman Northwest Cooperative Development Center 1063 Capitol Way S # 211 Olympia, WA 98501 360.943.4241 eric@nwcdc.coop | www.nwcdc.coop Fostering community economic development through the cooperative business model
Editor's Notes
- <Remember: slooooooowwww and be natural> I appreciate the opportunity to be here… Very timely event!
- <Go slow> My role is to provide general info and Watershine will follow with specifics about OMPA
- <…slowly…> Intro self and sectors
- <ehm, breath> What does this mean: the equity owners of a co-op are the same people who: - democratically govern the business thru 1-member = 1-vote - are the beneficiaries of the services provided Co-ops = 40K co-ops in U.S. 102 MM member = >1/3 of Americans Co-ops are dynamic and relevant in today’s economy
- <are you going slowly enough> Co-ops are defined by ownership In this collection of cooperative business’s logo’s, I see groups of people who had a need: - they could not meet individually and - which was unfulfilled by the traditional investor-owned private sector
- Demonstrates a Co-op to Co-op economy is possible Contrast co-ops are meet needs in the “market” Co-ops intimately engage the stakeholders We participate in the economy because we want stuff, Maslow kind of stuff: - food - shelter - work - community - entertainment Not because we want to accumulate a bunch of stuff (well some of us do…)
- <S.L.O.W.> Because co-op businesses are: - comprised of the community - they are representative of the community - and they are a part of the community Co-ops: - Keep profits, ownership and control local - Are less vulnerable to take-over and closure by outside decision-makers; often stay long after others leave - Are trusted business partners; people like to deal with the producer Co-ops have an innate edge on investor-owned corporations and they have an opportunity to sell it!
- Note how co-ops can leverage producers “up” the chain This helps co-op members retain a chain of custody for members
- Building blocks of economic cooperation Authority: - basic authority and responsibility imposed by law, in other words the incorporating statute - Bylaws and policy provide guidance and clarify authority Ultimate authority from 2 places: Comes from members and this overall system The co-op is theirs and without their desire to create and perpetuate co-op, the board wouldn’t exist Members place their needs, trust and Board of their choosing.
- To close on the general info…
- Why not just go it alone? For one reason, we know where that road goes Why not just to it informally and not incorporate at all? Need UBI for business bank account
- - 1988 - CROPP (Coulee Region Organic Produce Pool) = 7 farms selling produce expanded into distro of fruits, veg and dairy - "CROPP" was adjusted to Co-op Regions of Organic Producer Pools The Un-Corporation In an era where corporations dominate all facets of business including government, global energy, ag and global food supply, Organic Valley serves small farmers and rural community health by combining two alternative business models - the family farm and the co-op. Our co-op was founded to nurture local communities by keeping farmers on the land, farming. We understood from the beginning that we would need to pool our product in a cooperative fashion to accomplish that goal. How it Works Farmer members establish equity thru joining: - elect national Board national Board of Directors is elected - regional executive committees carry opinions to Board In addition to a member-determined pay-price and equity ownership in a leading national food brand, members receive numerous benefits including support in production, certification, farm planning, feed sourcing, veterinary consultation and more. Adding Value thru values! With the customer, building a new vision Building our base of loyal customers allows us to bring more farm families into the co-op, along with the land, water, and animals that they protect.
- It’s the smell of sage after a summer thunderstorm, the cool shade of a Ponderosa Pine forest. It’s the 80 year old weathered hands saddling a horse in the Blue Mountains, the future of a 6 year old in a one room school on the High Desert.It’s a trout in a beaver built pond, haystacks on an Aspen framed meadow.It’s the hardy quail running to join the cattle for a meal, the welcome ring of a dinner bell at dusk.
- Member Dick Bradbury: ..we've realized that the people part of it is much more critical than the cows. The rancher-to-consumer connection is what gives us the uniqueness of our product. Also, the idea that the consumer feels they are dealing directly with the people who actually grow their food. Mary Bradbury: The people who eat the product need to be partners Doc Hatfield, founder: Most of the ranchers are rural, conservative, Republican, heterosexual and religious. And most of the customers are urban, secular, Democratic, liberal, and you'd think they wouldn't mesh. Connie Hatfield on Berkeley, CA Customers: They have a lot of piercings, tattoos and colored hair and different things. But it's really interesting to mix our cultures and be able to stay on the land because we started to market our products. Adding value by selling more directly to consumers and thru connecting Thereby ranchers could set their price to cover the cost of production, plus a reasonable return on investment, and a reasonable profit.
- “Travelers come to the ranches as guests… but they go home as advocates for family ranching” Says founder Eco-tourism uses revenue to promote conservation and geo extends ethic to culture and history
- How can we come together to compete with corporate ag.