Tracking the Co-op’s Local Impact

It’s a common story. My family started one of the oldest farms in our region, and up until 1988 my uncle ran a dairy business that sold its milk through a local marketing cooperative. Now there is a strong possibility that this 100-acre farm, which has been working to produce food for people for 185 years, will become a suburban development within my lifetime. I live in Buffalo, a rust belt city that has lost 60 percent of its population over the past 40 years as manufacturing jobs fled the region and we failed to react.

So the fact that the co-op that I manage has as part of its mission to “nurture the local economy and the environment” really resonates with me. I consider it my challenge as general manager to strive continuously to increase the tangible, positive impact that the co-op has on the success of local farmers, businesses, and residents.

To that end, five years ago, we started tracking the percentage of sales that we return to the local economy each year through farmers, food producers, service providers, and staff. We include this number in our annual report to our member-owners each year, and it gets a standing ovation every year. Obviously it is a stat that resonates with them as well.

The mechanism we use to track our local impact is simple:

In the “vendor type” slot in our Peachtree accounting software, we enter a code if it is a local company—LF for local farmers, LD for distributors, LP for producers, and LS for service providers. If they are not a local vendor, we leave the vendor type blank.

At the end of the year, we run a vendor ledger report and enter XXX in the vendor type category. This gives us a gross dollar amount for vendor purchases for the year.

We add in dollar amounts that are not tracked through our vendor ledgers—payroll dollars, member-owner discounts—anything that flows directly to a local person first.

Divide the total by total annual sales—this gives you a rough approximation of the percentage that you returned to the local economy that year!

Normally, we run at about 40% of sales—or $40 for every $100 spent at the co-op. Last year, the number was 50%, largely because of the fact that we are working on an expansion project, using local contractors, architects, etc.

We use this report in marketing to our member-owners, but we also use it as a management tool. We track our produce department’s performance separately and push our produce manager to increase that percentage every year—through better sourcing and working more closely with farmers.
See other articles from this issue: #112 May - June - 2004