Prospects in Hard Times: Part 3

Food co-ops and Organic Valley

[“Rootstock” Part 3: 2009, unpublished]

Think organic food. Think childcare and other essential services. Think community economic development and local lending. These are the kinds of things cooperatives are good for.

Public services are shrinking and likely will decline further. So far, in the present political environment, there is too little support for public remedies addressing public needs. An obvious example of such a public program, Medicare, is still delivering services at lower cost, but its funding and future are threatened. Opposition to public health care extends beyond proposals for a single-payer system (which actually is popular with the public at large as well as among medical doctors). Rather than encouraging any competing services, powerful private medical corporations also oppose widespread formation of cooperative health care providers – there are examples in Washington and the Upper Midwest.

There also are other major, successful examples of cooperative services. Rural electric cooperatives, first introduced during the previous great depression, now serve a huge portion of the U.S. In an equally powerful but little supported alternative in the finance sector, we can have public banking and insurance services. This provides more transparency, less abuse of debt financing, and competition that restrains private banks. Interest earnings stay in the public domain and are shared among the citizens (examples in North Dakota and Alberta). Cooperative banks and credit unions, owned by co-op members, are the next best thing.

Cooperative alternatives already are working, but at present there is not enough solidarity or backing to achieve them on a much wider basis. They are up against too much power supporting private banks and private markets and private profit. Yet if public agencies cannot deliver essential services, self-governed enterprise such as cooperatives can help meet community needs.

You ask, what needs and what community? The answer is best if it is inclusive – it is the community you work to build.

What you weren’t taught

In the private economy, the drive for profit and return on investment leads to increased social and business disruption and to decreased sharing of wealth. Cooperatives offer an alternative based on democratic sharing.

In hard times as well as during stability, cooperatives are a proven means of economic self-help, a defined structure that is fair and democratic. A co-op is owned and governed by the users of its services, and it is based in member control. Members are individuals in primary co-ops, while members are businesses in secondary level cooperatives. In the ongoing economic decline, as social needs and business services become more costly or painfully go unmet, cooperatives will become more attractive.

Cooperatives formalize cooperation – sounds simple, but it’s not. Members and their elected board of directors share responsibility for capitalizing the enterprise, and often this is a major challenge. Another challenge is recruiting and retaining good management and excellent staff and other elements of successful business operations.

In cooperatives, people work together to accomplish what they cannot do alone, sharing both the responsibilities and rewards of conducting business. Cooperatives already serve millions of people in farming and food and other business sectors, and opportunities for additional co-op enterprise are numerous.

However, greater interest in cooperatives does not imply widespread understanding. Cooperative ownership is a minor note in the overwhelming mainstream messages about private enterprise. Corporate business abuses are protected by public policy and disguised in the mainstream media, while economic democracy and greater sharing are discouraged.

A little present from the past

Knowing what co-ops are and how they operate improves the chances for expanded cooperative services and ownership. In attempting to advance cooperative enterprise in fields such as agriculture, finance, and consumer goods, co-ops have repeatedly had to struggle against opposition that usually is sponsored by concentrated private capital. In a world dominated by investor-driven corporations and their allies in public office, cooperative principles and practices offer hard-won guidelines.

Co-ops carry out their mission within a set of principles that have been developed over nearly three centuries of experiments. For over one hundred years, cooperatives have been linked through a democratic International Cooperative Alliance. Their expressed values are based in self-responsibility and solidarity, elements that have advanced egalitarian culture for centuries. Today, cooperatives everywhere put these values into practice through seven principles. (See sidebar for the complete statement on cooperative values and principles.)

To summarize those seven principles, a cooperative:
*is a jointly-owned and democratically-controlled enterprise;
*is democratic, governing by one-member/one-vote at the primary level;
*distributes economic rewards in part to the co-op but mainly to member-owners in proportion to each member’s use of the co-op;
*is autonomous, controlled by members of the co-op;
*provides education about cooperatives to the public, members, staff, and the board of directors;
*promotes cooperatives through local, regional, national, and international associations;
*works to strengthen the larger community that the co-op serves.

Cooperatives conduct business, they need to make money, and they need to invest in the future of the co-op and its community. But earnings and return on investment are only measures of performance, not the co-op’s purpose. Its purpose is to provide services to the people who use and own the co-op. The members invest in and receive benefits from the co-op democratically. Thus, and fundamentally, co-ops serve to maintain and expand the democratic control of capital.

Co-ops of many types

The founders of the modern cooperative principles were striking weavers in Rochdale, England in 1844. Yet U.S. cooperative associations actually go back over 250 years. The first one, providing fire insurance and volunteer firemen, was initiated by Ben Franklin and is still in business. Franklin, a true hero in the history of cooperation, helped found several other cooperative associations of longstanding duration. Since that time, cooperatives have been established in most business sectors.

Farmers have formed cooperatives for processing, marketing, and distribution since the 19th century. Their advocates achieved statutory support in both federal and state legislation from the early 1900s onward (especially in northern and Great Plains states). Co-ops have proven essential to defending farmers’ economic position.

Nevertheless, that farmer position has been declining, sometimes with the active connivance of agricultural co-ops that have a narrow purpose. Nearly everyone has been under the sway of a fossil-fueled, capital-intensive industrial agriculture bubble. As a consequence, the farming population has been shrinking for decades – until the recent growth of small-scale and organic farms began to reverse this longstanding trend.
Along with Organic Valley, farmer co-ops range from the small to the gigantic. About thirty percent of U.S. farm products are marketed through one or more of 3,000 farmer-owned co-ops.

Globally, production and marketing cooperatives dominate the food sector in many developing countries. Products sold under the certified Fair Trade label aim to improve the rewards for producers and typically are sourced from farmer cooperatives.

Credit unions also are cooperatives, with more members than any other co-op sector both here and internationally. Originating in 19th century Europe, credit unions have been vital community economic development partners in innumerable places. They provide service-oriented rather than profit-oriented stability for savings, local investment, and lending. In Canada, more than half of the population belongs to a credit union. In the U.S., some 10,000 credit unions serve 84,000,000 members. Credit unions, by comparison with private financial services, repeatedly have been shown to have lower fees and to offer comparable or superior lending terms. The banking industry periodically launches a media and legislative attack on credit unions, usually accompanied by the inaccurate claim that credit unions pay no taxes.

Housing and healthcare cooperatives, manufacturing and production co-ops, childcare co-ops (50,000 families) – all these fields have successful examples. The principle cooperative lesson: shared risk and responsibilities can lead to shared rewards.

Thriving food co-ops

Grassroots organizing and the examples and enabling legislation from prior generations of cooperatives gave rise to a new wave of food co-ops in the 1970s. These co-ops pioneered in spreading organics and food education, and their growth supported the launching of Organic Valley, which has become the largest organic producer cooperative. Food co-ops fueled growth in organics, and co-op stores continue to maintain some of the strongest organic sales trends among grocery stores.

This success has not gone unnoticed, and organic and natural foods now can be found in many supermarkets. But mainstream grocery stores continue to fall short of what many communities and organic customers are seeking. People want more trust and food safety; they want a greater commitment to quality food, and to local food and local ownership.
As a consequence, despite being smaller players in a giant grocery industry, co-ops with strong community roots are thriving and realizing expanded membership and services. The National Cooperative Grocers Association (http://www.ncga.coop) now has over 110 member retail co-ops with 140 stores and total sales of over $1 billion.

In addition, we are presently seeing the strongest wave of food co-op organizing since the natural/organic co-ops founded in the 1970s. Currently, food co-op startup projects are active in some 250 communities across the U.S. (Here’s a link to a map of U.S. food co-op startup projects: http://mapshare.delorme.com/Consumer/V.aspx?p=cqm0jjtp). These are independent efforts, but their chances of success have been bolstered by the examples and professional experience of the three hundred established food co-ops. The best of these co-op business resources have been summarized and are publicly available in a manual, “How to Start a Food Co-op” (http://www.cgin.coop/how_to_start). Additional online and print resources for startup food co-ops are available at: http://www.foodcoopinitiative.coop.

Don’t think that these food co-ops follow a cookie-cutter approach to business formation. On the contrary, they continue to reflect the needs, direction, and capitalization achieved by the local co-op members. Some of these efforts focus on organic and natural foods, while others aim to open a full-service grocery store serving a single community. Some are in urban food deserts where there are no grocery stores; others are established with an explicit focus on the local economy, in contrast to the supermarket.

Especially in areas of lower population density, there is growing interest in a buying/distribution model pioneered by the Oklahoma Food Co-op -- its organizing software is publicly available (www.oklahomafood.coop). Starting out small, this type of co-op requires only a small investment and operates on a low margin. It largely bypasses capital investment in facilities and inventory, using a website-based monthly ordering system and delivery/pickup at community sites. And both food producers and consumers are members of the co-op. The co-op enables producer members to sell directly to consumers and consumer members to buy directly from producers. Overhead is minimal, and the money stays in the local/regional economy.

What will you do?

It’s a big country, with a lot of different circumstances. There will be many different challenges to face as the mainstream food supply proves increasingly unreliable. That system is broken from widespread abuse of soil and animals, from overuse of antibiotics and fossil fuels, from public subsidies for more cheap food commodities. Add water shortages, weather disasters, and a broken credit system. Declining food security is a threat not only elsewhere, it is a growing problem throughout the U.S. This nation has always been an agricultural as well as a military empire – but the empire is staggering, bloated, bankrupt.

Despite generations of cooperative experience and the enthusiasm of the 1960s, few people and few co-ops were ready for the unprecedented demand for organic and natural foods. That expansion of public interest continues today, alongside the general economic decline. If public policy can be moved in the right direction, organic and grass-based farming (plus, it appears, expansion of biochar) offer huge potential for addressing urgent issues of carbon sequestration and global warming, resource depletion, and public health.

A final word about public solutions and our readiness for transition to a lower energy era. It is quite late in this evolving crisis to say we are too busy minding the store or minding the farm. Despite food co-ops’ origins in social change, and despite recent exciting growth in local food networks, very few places and communities are adequately prepared for the disruption and breakdown that is underway in the food system.

Consequently, with cooperative principles and models as guides, we need to advocate and to strengthen efforts to organize secure and sustainable community-based food systems. Let a hundred flowers bloom, let a hundred schools of thought contend!

SIDEBAR:
International Cooperative Alliance: Values and Principles

The International Cooperative Alliance, representing cooperatives around the world, approved the following statement in 1996:

Statement on the Cooperative Identity

DEFINITION


A cooperative 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.

VALUES


Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

PRINCIPLES


The cooperative principles are guidelines by which cooperatives put their values into practice.
First Principle: Voluntary and Open Membership 
Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.
Second Principle: Democratic Member Control 
Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.
Third Principle: Member Economic Participation 
Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any of all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
Fourth Principle: Autonomy and Independence 
Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
Fifth Principle: Education, Training and Information 
Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public -- particularly young people and opinion leaders -- about the nature and benefits of cooperation.
Sixth Principle: Cooperation among Co-operatives 
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures.
Seventh Principle: Concern for Community 
While focusing on members needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.

–Adopted in Manchester (UK) by the General Assembly of the International Cooperative Alliance (ICA). 23 September 1995, on the occasion of the Alliance's Centenary. The Statement was the product of a lengthy process of consultation involving thousands of cooperatives around the world.

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