SARE’sSARE’s2020thth anniversary anniversary

NEWNEWAMERICANAMERICAN

F A R MF A R MCONFERENCECONFERENCE

““Why CO-OP”Why CO-OP”By: Ben F. Burkett, Marketing SpecialistBy: Ben F. Burkett, Marketing Specialist

Federation of Southern Cooperatives/Land Assistance FundFederation of Southern Cooperatives/Land Assistance Fund

MARCH 25-27, 2008MARCH 25-27, 2008

Mississippi Mississippi Association Association

of Cooperativesof Cooperatives A state association of the A state association of the Federation of Southern Federation of Southern Cooperatives/Land Assistance Fund Cooperatives/Land Assistance Fund (FSC/LAF)(FSC/LAF)

Established in 1972 with a purpose Established in 1972 with a purpose to serve limited resource and to serve limited resource and minority cooperatives throughout minority cooperatives throughout the statethe state

MAC Continued…MAC Continued…

Parent organization of the Mississippi Parent organization of the Mississippi Center for Cooperative DevelopmentCenter for Cooperative Development

Chartered in 1997Chartered in 1997 Allows MAC to expand education, Allows MAC to expand education,

training, and technical assistance to training, and technical assistance to participating cooperativesparticipating cooperatives

Regional CropsRegional Crops

WatermelonWatermelon Assorted GreensAssorted Greens SquashSquash Culinary HerbsCulinary Herbs

WHAT AREWHAT ARECOOPERATIVES?COOPERATIVES?

A cooperative is a business A cooperative is a business that is owned and controlled that is owned and controlled by the people who user it- its by the people who user it- its

member-owners.member-owners.

Who owns the business?Who owns the business? Who controls the Who controls the

business?business? Who uses the business?Who uses the business? Who gets the profits?Who gets the profits?

A Type of Business A Type of Business Dependent OnDependent On

WhoWho sparkssparks the coop the coop Idea?Idea?

A compelling need and a few A compelling need and a few leaders can spark the idea of leaders can spark the idea of

forming a cooperative.forming a cooperative.

What makes a What makes a successful coop?successful coop?

Successful cooperatives bring people Successful cooperatives bring people together who: ( 1) have a common need together who: ( 1) have a common need or problem (2) want to do something to or problem (2) want to do something to help themselves; (3)are willing to help themselves; (3)are willing to support the cooperative by supplying support the cooperative by supplying capital; and, (4) patronize the capital; and, (4) patronize the cooperative by using it when organized. cooperative by using it when organized. In addition, a successful co-op must have In addition, a successful co-op must have competent management.competent management.

What can cooperatives do What can cooperatives do for people?for people?

They market what people grow or They market what people grow or produceproduce

They obtain production supplies.They obtain production supplies.

What does the coop do for the What does the coop do for the members?members?

Cooperatives help improve the Cooperatives help improve the quality and reduce the cost of quality and reduce the cost of supplies and services members use.supplies and services members use.

Cooperatives help improve net Cooperatives help improve net returns to members from products returns to members from products they market and goods and they market and goods and services they provide.services they provide.

What members do for the What members do for the coop:coop:

Members finance their cooperative. If the Members finance their cooperative. If the cooperative needs more money than the cooperative needs more money than the members can provide, the co-op may borrow members can provide, the co-op may borrow at least part of it from outside sources, such at least part of it from outside sources, such as banks.as banks.

Members control their cooperative through a Members control their cooperative through a board of directors, that they elect. Directors board of directors, that they elect. Directors set policy and hire a manager to supervise set policy and hire a manager to supervise the day-to-day cooperative operation.the day-to-day cooperative operation.

MembershipMembership

Members, are the reason the Members, are the reason the cooperative is organized. (owner-users). cooperative is organized. (owner-users). They justify the existence of the coop They justify the existence of the coop through their patronage, capital through their patronage, capital investment and decision making investment and decision making participation. They should show an participation. They should show an interest in all the cooperative’s affairs, interest in all the cooperative’s affairs, present ideas to improve performance present ideas to improve performance and promote it to others who can benefit and promote it to others who can benefit by using it.by using it.

SurvivalSurvival

Cooperatives Are a Type of Cooperatives Are a Type of CorporationCorporation

Multiple owners who are user Multiple owners who are user membersmembers

Variety of goods and servicesVariety of goods and services Physical facilitiesPhysical facilities State charteredState chartered Members are investorsMembers are investors Owned and controlled by Owned and controlled by

members who use its servicesmembers who use its services

CooperativesCooperatives Are primarily controlled by a board of Are primarily controlled by a board of

directors elected by and from membersdirectors elected by and from members Derive equity from member ownersDerive equity from member owners Operate for the benefit of member Operate for the benefit of member

ownersowners Allocate earnings to members based on Allocate earnings to members based on

useuse Earnings from member business is taxed Earnings from member business is taxed

onceonce Have perpetual existenceHave perpetual existence

The Cooperative Form The Cooperative Form of Business Is Prevalentof Business Is Prevalent

47,000 cooperatives in the 47,000 cooperatives in the United States United States

Serve 100 million people, 40 Serve 100 million people, 40 percent of the populationpercent of the population

There are several types of There are several types of cooperatives serving many cooperatives serving many sectorssectors

Types of CooperativesTypes of Cooperatives

Financial Financial Consumer Consumer

ServiceService BusinessBusiness

Cooperatives Have Unique Cooperatives Have Unique PrinciplesPrinciples

User - OwnerUser - Owner

User - ControlUser - Control

User - BenefitUser - Benefit

User-Owner PrincipleUser-Owner Principle

The people who own and finance the cooperative are those who use it.

User-Control PrincipleUser-Control Principle

The people who use theThe people who use the

cooperative are thosecooperative are those

who control the who control the cooperativecooperative

Members Exercise Members Exercise Control ByControl By

Voting at annual and Voting at annual and membership meetingsmembership meetings

Electing Board of Electing Board of DirectorsDirectors

Making decisions on Making decisions on major cooperative major cooperative issuesissues

User-Benefit PrincipleUser-Benefit Principle

The cooperative’s sole purposeThe cooperative’s sole purpose

is to provide and distributeis to provide and distribute

benefits to members on the benefits to members on the

basis of their usebasis of their use

User-BenefitsUser-Benefits

Market Access

Bargaining Power

Reduced Costs

Quality products and services

CommunityStrength

EconomicEnhancement

Competitive Yardstick

Political Action

Cooperative PracticesCooperative PracticesImplement and Facilitate Basic PrinciplesImplement and Facilitate Basic Principles Patronage RefundsPatronage Refunds - - distribute earnings to distribute earnings to

members based on usemembers based on use Limited Return on Equity CapitalLimited Return on Equity Capital - - members members

form cooperatives for service, not for a monetary form cooperatives for service, not for a monetary return on investmentreturn on investment

Cooperative CooperationCooperative Cooperation - - joint ventures, joint ventures, MAC’s, networks, alliances, working relationships, etc.MAC’s, networks, alliances, working relationships, etc.

Cooperative EducationCooperative Education - - promote the promote the cooperative way of doing business and educate cooperative way of doing business and educate members, directors, and employeesmembers, directors, and employees

Cooperative Governance Cooperative Governance System StructureSystem Structure

Based on membership structure and Based on membership structure and essentially defines who the members are and essentially defines who the members are and how the cooperative is organized to serve how the cooperative is organized to serve them. them.

Centralized StructureCentralized Structure - Individuals are direct - Individuals are direct membersmembers

Federated StructureFederated Structure- Cooperatives are direct - Cooperatives are direct membersmembers

Mixed StructureMixed Structure - Individuals and - Individuals and cooperatives both are direct memberscooperatives both are direct members

Centralized StructureCentralized Structure

Cooperative

Member MemberMember

Federated StructureFederated Structure

Cooperative

LocalCooperative

MemberMember

LocalCooperative

Member Member

Cooperative FunctionsCooperative Functions

Three Core FunctionsThree Core Functions MarketingMarketing - extend control of - extend control of

members’ products through members’ products through processing, distribution, and saleprocessing, distribution, and sale

PurchasingPurchasing - providing affordable - providing affordable supplies and goodssupplies and goods

ServiceService - provide needed services - provide needed services

Participation RolesParticipation Roles

Cooperatives operate Cooperatives operate through the roles of through the roles of principal partiesprincipal parties

MembersMembers DirectorsDirectors ManagerManager EmployeesEmployees

Organizational Make-UpOrganizational Make-Up

Members

Board of Directors

Manager

Employees

CONTACT CONTACT INFORMATIONINFORMATION

BEN BURKETTBEN BURKETTMarketing SPecialistMarketing SPecialist

Federation of Southern Cooperatives/ Federation of Southern Cooperatives/ Land Assistance FundLand Assistance Fund

Post Box 22786Post Box 22786Jackson, MS 39255Jackson, MS 39255

(601) 354-2750 OFFICE(601) 354-2750 OFFICE(601) 354-2777 FAX(601) 354-2777 FAX

benburkett@earthlink.netbenburkett@earthlink.net