2012 07 18 wsu - marketing co-ops for small ag
TRANSCRIPT
NW Co-op Development Center
Marketing Co-ops for Small FarmsWSU – Clark Co Extension, Small Acreage Program
July 18th, 2012
Eric Bowman, Cooperative Development [email protected]
1063 S Capitol Way # 211Olympia, WA 98501
360.943.4241
Marketing Co-ops For Small Farms
1. Intro
2. Overview
3. Ag Co-ops Models
4. Development Process
5. Q&A
6. Exercise
NWCDCThe 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’rea team of co-op developers with skills specific to start-up and organizational business development
Co-ops 101
Investor owned:
Sole proprietor:
Co-ops are member:• Owned• Controlled• Benefited
Corporate Structure
Legal Structure; Duties and Authorities
• 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
Ownership
Member-Owners can be
– Consumers– Producers/Farmers– Workers– Other Businesses
Distributionism
Consumer• Credit Unions• Housing• Retail (e.g. food co-ops)• Farm Supply
Two Schools
Producer• Worker• Farmer• Artisan
Why Cooperate?
…to access resources not individually achievable
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
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
Examples
• Farm Supply: – Seattle Farmers Co-op
• Multi-farm CSA : – Siskiyou Sustainable Co-op
• Marketing Fresh Fruit:– Okanogan Producers Marketing Assn
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
Direct Marketing
• Multi-farm CSA• Goals is a “whole diet CSA”:– Primarily produce– Eggs– Some meats– Getting into grains
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
Who
• Largest member is 8 acres and grosses $150k• 9 producers (3 founders)
Challenges
• Farm stand did not go as projected– Debt– Exodus of founding members
• Recently:– QC/QA – Profitability
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
Markets
• Direct to 160 retail customers:– 11 drop points– 3 CSA share sizes
• $120k gross• People do not choose
products
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.
• 6 fruit growers– First and multi-generational
– 3 to 40 years in business
• Experience/skills– Bank examiner
– Construction
– Marketing
– Refrigeration
Founders
• 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
“the whole purpose is to put more money in
the pocket of the farmer”
How?
“…hold about 500 meetings.”
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
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
“Quality won’t make it work, you also need quantity”
• Farmers depend on co-op to continue farming• Smooth ops = invisible ops• Product mix• Growth
Challenges
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
Estimated Timeline
• 6 to 12 months (or more for each):1. Organizing
2. Planning
3. Implementation
• Total of 1 ½ to 3 years
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
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)
Thank You!
Eric [email protected]
Northwest Cooperative Development Center1063 Capitol Way S # 211 Olympia, WA 98501
360.943.4241 | www.nwcdc.coop
Fostering community economic development through the cooperative business model