Growing the Co-operative Food System

Erbin Crowell, Executive Director NFCA NOFA MASS Winter Conference

Worcester, MA // January 12th 2013 www.nfca.coop

Outline

1.  Our Context

2.  What is a Co-op?

3.  Why Co-ops?

4.  Where is the Potential?

5.  Starting a Co-op

6.  Questions, Feedback & Ideas

1. Our Context

•  Crisis of Global Economic System

•  Unemployment

•  Dramatic Shifts in Wealth

•  Diminished Democracy

•  Instability & Change

•  Hunger for Alternatives

What If…?

There was a business model that... •  …was democratic. •  …was rooted in our local communities. •  …was part of a values based movement. •  …put common good before private gain. •  …delivered tangible benefits. •  …was flexible and innovative. •  …was successful and resilient.

England in the 1800s

•  Dislocation of Local Economies •  Dramatic Shifts in Wealth •  Concentration of Economic Control •  Poor Working Conditions •  Limited Access to Healthy Food •  Birth of the Co-operative Movement

Rochdale Equitable Pioneers

•  Founded 1844

•  Weavers, Unionists, Community Activists

•  Member-Owned Store

•  Principles for a Movement

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

Beyond a Grocery Store

Co-ops Today…

Are more common than we think •  1 billion members worldwide (1 in 4 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 Are resilient •  Survived and grew during the global recession

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 • www.ica.coop

The Basic Idea

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, or is reinvested in the business.

Values Based

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 www.ica.coop

Principles

•  Voluntary & Open Membership •  Democratic Member Control •  Member Economic Participation •  Autonomy & Independence •  Education, Training & Information •  Collaboration Among Co-operatives •  Concern for Community International Co-operative Alliance, 1995 www.ica.coop

“User” Focused

•  User-Owned: People who use the co-op’s services also own it.

•  User-Controlled: People who use the co-op control it on a democratic basis (one-member-one-vote).

•  User-Benefit: People who use the co-op receive benefits such as patronage dividends, improved price, goods and services, and employment.

Flexibility: Member Type

•  Community Co-ops: Owned and governed by members of community.

•  Consumer Co-ops: Owned by the people who purchase goods or services.

•  Producer Co-ops: Owned by producers who process and market their products.

•  Worker Co-ops: Owned and operated by the people who contribute their labor to the business.

•  Multistakeholder Co-ops: Owned and controlled by combination of stakeholders.

Flexibility: Activity

•  Purchase needed products or services as a group.

•  Produce a product or service together. •  Process and value to raw materials produced

by members.

•  Market products produced by members or by the co-op.

•  Provide Employment and a livelihood.

Flexibility: Sector

•  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

A Basic Co-op Structure MEMBERS

BOARD OF DIRECTORS

STAFF

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.

Collectives flatten organizational layers, emphasizing consensus and

group decision-making.

3. Why Co-ops? Co-ops & Economic Resilience: •  Community ownership & control •  Focus on service, meeting needs before profit •  Develop local skills & assets •  Ability to assemble 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…

Ontario Co-op Association // ontario.coop

The Result

More stable local food systems,

infrastructure, employment, services, and economy.

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.” United Nations Resolution 64/136

International Year of Co-ops

What the United Nations says: •  Community ownership •  Economic & Social Development •  Poverty reduction •  Employment generation •  Fairness in globalization •  Conflict resolution & reconstruction •  Food security •  Innovation & resilience

“The real opportunity, of course, is to use 2012 to help achieve a longer-term vision. ICA is committed to turning the International Year of Co-operatives into A Co-operative Decade, with the goal of the co-operative being the fastest-growing model of enterprise by 2020.”

Charles Gould, Secretary General International Co-operative Alliance

A Co-operative Decade?

The Neighboring Food Co-op Association

is a network of food co-ops committed to a

shared vision of a thriving regional economy,

rooted in a healthy, just and sustainable

food system, and a vibrant community

of co-operative enterprise.

4. Where is the Potential?

Telling Our Story…

Neighboring Food Co-ops •  34 Co-ops & Start-Ups •  80,000 memberships •  1,450 employees •  $28.6 million in wages •  $200 million revenue •  $30 million in local

purchases

http://nfca.coop/members

…Across the Economy

New England & New York •  8,860 co-ops •  9.5 million members •  Employ 55,000 people •  $2 billion in wages •  $100 billion in assets •  $14 billion in revenue

http://reic.uwcc.wisc.edu/ http://nfca.coop/co-opeconomy

Our Co-ops in the Food System 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)

NFCA

Leveraging the shared impact of food co-ops in the food system…

Opportunities for 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)

NFCA

AS#OF#12/31/2011#

286 F A R M E R S (1,700 TOTAL)

Organic(Valley((Co/op(Member(Farmers(

Connec0cut# 1#

Maine# 30#

Massachuse8s# 2#

New#Hampshire# 9#

New#York# 115#

Vermont# 129#

NFCA(Member(Food(Co/op((Loca:ons(&(Start/Ups(

33 F O O D C O - O P S

•#

Our$co'ops:$Working$together$for$a$more$just,$sustainable$and$democratic$$regional$food$system.$

Deep Root Organic Co-op

•  Founded 1986

•  19 members in VT & Québec

•  84,095 cases of produce (2011)

•  $2.2 million in revenue (2011)

•  Revenue for first half of 2012 up 40%

•  Customers across VT and New England

•  Partner in NFCA Frozen Vegetable Project

Other Examples

•  Production: Arethusa Farm, Diggers Mirth •  Purchasing: Greenfield Farmers Co-op, Intervale Farm

Co-op, Hardwick Farmers Co-op •  Aggregation: Deep Root, Agri-Mark (Cabot), Pioneer

Valley Growers Association, Organic Valley •  Processing: Organic Valley, Green Mountain Spinnery,

Real Pickles (Converting) •  Marketing: Equal Exchange •  Distribution: Valley Green Feast (Conversion), Mass

Local Food Co-op •  Retailing: Franklin Community Co-op, River Valley

Market, Leverett Village, Old Creamery (Conversion)

5. Starting a Co-op

•  Launch a new co-op •  Convert an existing business

Conversion

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 co-op community

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

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

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

Legal Statutes

General Co-op Statutes •  MA, Title XXII, Ch. 157 •  ME: Title 13, Chapter 85: Cooperatives

Worker Co-op Statutes •  VT: Title 11, Ch. 8: Worker Cooperative

Corporations •  MA: Title XXII, Ch. 157A. Employee Cooperative

Corporations •  CT: Ch. 599a Worker Cooperative Corporations

“C” Corp with Co-op Bylaws LLC with Co-op Operating Agreement

Some 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 reputable co-op

developers and industry experts   Seek out peer support from other co-ops

Some Guidelines for Success

  Businesslike meetings

  Sound co-op business practices

  Culture of appreciation, openness, & honesty

  An open hiring process

  Sufficient capital for launch

  Business scaled to market

  If possible, hire project staff

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

Concerns for Co-operators

•  Engagement of members •  Encourage and develop broad leadership •  Ongoing training in:

•  Board leadership •  Fiscal oversight •  Project & strategic planning •  Communication, facilitation, conflict resolution

Why Go Co-op?

Co-operative enterprises: •  …put people before profit, •  …are community owned, •  …are accountable to members, •  …are successful businesses, •  …strengthen local economies, •  …are resilient, •  …build a better food system.

6. Discussion

•  Questions

•  Feedback

•  Ideas

•  Opportunities

Erbin Crowell, Executive Director

Neighboring Food Co-op Association

erbin@nfca.coop // www.nfca.coop

www.facebook.com/neighboring