Farmer Coops for More Efficient Marketing Northeast Organic

Farmer Co-ops for More Efficient Marketing Northeast Organic Farming Association New Jersey UMASS Amherst // Amherst, MA

Presenter Roger Noonan • President, New England Farmers Union • Organic Farmer, Middle Branch Farm • Member, Local Harvest CSA Co-op • Board member, National Farmers Union 2

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. 3

Outline 1. 2. 3. 4. 5. Our Organization What is a Co-operative? Examples Guidelines for Launching a Co-op Discussion & Ideas 4

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 5

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) – 69 th on Fortune 500 list by revenue (2012) – 25 th largest convenience store chain in US 6

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 7

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 8

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 9

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. 10

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 11

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 12

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. ” 13

UN Year of Family Farming (2014) “The importance of agricultural cooperatives in improving the lives of millions of smallholder farmers and their families cannot be overstated. ” 14

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) 15

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. 16

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. 17

Co-ops in New England • 1, 400 businesses • Farmer co-ops, food coops, 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/ 18

A Basic Co-op Structure MEMBERS Elect BOARD OF DIRECTORS Worker Co-op Hire MANAGEMENT Producer or Consumer Co-op Hire EMPLOYEES A Multistakeholder Co-op includes a combination of member types in ownership and governance. Product or PRODUCERS OR CONSUMERS Collectives Service Flatten layers, and emphasize consensus decision-making. 19

3. Case Study: Organic Valley / CROPP Co-operative • 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 20

4 VERMONT 121 30 23 135 1 NEW YORK 3 1 3 PENNSYLVANIA MARYLAND 4 1 13 WEST VIRGINIA NEW JERSEY 2 MAINE 9 3 NEW HAMPSHIRE 2 1 1 11 154 34 1 493 farm families Northeast Dairy Pool Beef Pool Egg Pool Produce Pool Grower Pool

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 23

Case Study: North Country Farmers Co-op • 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 24

Case Study: Local Harvest CSA Co-op • Established 2002 • Six NH member organic farms • Three season CSA • Members coordinate production, enabling specialization while offering broad range of produce to customers 25

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 26

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 27

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. 28

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 29

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 30

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 31

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 32

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) 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 cooperative statute 33

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 34

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 35

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. 36

Local Resources • 2018 NJ Revised Statutes Title 4 Agriculture and Domestic Animals Chapter 13 – https: //law. justia. com/codes/new-jersey/2018/title 4/chapter-13/ • USDA Rural Development Cooperative Service – https: //www. rd. usda. gov/programs-services/allprograms/cooperative-programs • Key Stone Development Center – Kdc. coop 37

Discussion • Questions • Feedback • Ideas for Future Workshops 38

Resources & Contact Info Roger Noonan president@newenglandfarmersunion. org Erbin Crowell erbin@nfca. coop New England Farmers Union www. newenglandfarmersunion. org Neighboring Food Co-op Association www. nfca. coop 39