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Cooperatives

Cooperatives. AG BM 102. Tuscarora Organic Growers. A few organic vegetable growers Market access problems Formed cooperative Jointly plan production Cooperative develops markets, makes deliveries, collects money. What is a cooperative?.

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Cooperatives

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  1. Cooperatives AG BM 102

  2. Tuscarora Organic Growers • A few organic vegetable growers • Market access problems • Formed cooperative • Jointly plan production • Cooperative develops markets, makes deliveries, collects money

  3. What is a cooperative? A business voluntarily owned and controlled by its member-patrons and operated for them on a non-profit or cost recovery basis

  4. Introduction • Why are cooperatives helpful? • How do cooperatives work? • Examples of cooperatives • What they mean for farmers

  5. Why have a cooperative? • Work together to meet common needs • Access to quality supplies and services at reasonable cost • Increased clout in marketplace • Share in earnings of related business • Political action • Enhance local economy

  6. How do cooperatives work? • Farmers act as a group to solve a problem • Each invests some money in the business • Elect the Board of Directors • Goods sold at regular retail prices • Distribute earnings to members • One member, one vote

  7. What does this mean to farmers? • Provides market access • Provides more power in marketplace • Helps them control their own destiny • Helps them work as a group • Helps them to consider new ideas

  8. What a cooperative cannot do • Make a bad idea into a good idea • Survive without good management • Survive if it is not run like a business • Do well if members do not share the dream

  9. Examples of cooperatives • Farm inputs – Cumberland Valley Coop. • Marketing cooperatives – Land O’Lakes, Mt. Joy Coop, Knouse Foods • Service cooperatives – Valley Rural Electric • Cooperatives for cooperatives - CoBank • Financial Services – AgChoice Farm Credit • Business Cooperatives – Ace Hardware • Consumer cooperatives – Mariposa, Weaver’s Way (Philadelphia)

  10. Cooperative principles • User benefits – provide services otherwise not available, provide market access • Members share benefits proportionately to their use of the cooperative’s services • User owner – members own business • User control

  11. Related practices • Patronage refund – profits shared on the basis of the volume of business done • Limited return on equity capital • Cooperation among cooperatives

  12. Responsibilities of members • Patronize the coop • Be informed • Vote wisely • Provide capital • Evaluate performance of coop

  13. Role of directors • Make broad decisions • Hire manager • Develop policy • Plan strategy • Monitor finances • Approve budget • Hire auditor • Hold annual meeting • Determine patronage refund and retained earnings

  14. Directors • Must work as group • Must put individual interests aside • Provide the officers • President • Vice president • Secretary • Treasurer

  15. Manager • Must work with the Board on the goals of the cooperative • Hire and supervise other employees • Provide Board with information necessary to make strategic decisions, monitor performance

  16. Employees • Must understand purpose and objective of coop • Must perform duties • Must understand relationship to members/owners • Must favorably represent the cooperative in business dealings

  17. New cooperatives • Must have shared need and shared vision • Should get help: USDA, Keystone Center • Need a business plan • Need leaders! • Need enough members to gain some economies of size

  18. Some failures • Lancaster County Mini–Dairy Coop • Southwest Vegetable Coop • Agway

  19. When considering a new cooperative • Will group action achieve a goal that individual action won’t? • Can you work as a group? • How will it be financed? • Who will manage it?

  20. New Generation Cooperatives • Limited membership • Greater capital requirements • Try to act like a regular corporation • Ability to control production • Very market oriented

  21. Dakota GrowersPastaCooperative • Wheat farmers trying to add value • Started to organize in 1990 • Third largest pasta maker in America • Now make pasta for some of the country’s biggest names • Bought out by private firm in 2010 for $240 million

  22. Conclusions - what is required for success? • Management – must be forward looking • Directors – must be willing to put cooperative’s interests first • Members – members must share the vision & patronize the cooperative • Member development – must be grooming next generation of leaders • Must be run on sound business principles!

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