Building a Sustainable Ag Co-op Business Model

While these may not be the worst of times, they are certainly not the best of times for agriculture in the United States. North Carolina is no exception. There is a whole litany of woes that seem to be determining the future of agriculture, a mainstay of the state’s economy. Without a robust farm economy, it is difficult, if not nearly impossible, to have a sustainable rural economy. The need is not just for a sustained farm economy; one that doesn’t lose ground. Our goal needs to be a robust economy that can serve as a cornerstone of the foundation for the rest of our businesses and industries to build upon. 

An agricultural cooperative can provide a framework for success as a form of business. It makes sense: the fundamental premise of a cooperative is collaboration. We can collaborate to save money on inputs and get a better price. The same is true with the other side, to pool production and attract more competition for the goods produced. Unfortunately, through attrition and consolidation firms bidding on input prices and output prices have been allowed to become so few that it is difficult to ensure a just price on either one. In some cases, there are communities that simply don’t have traditional, necessary agricultural services available. Collaboration can help there as well by coordinating scheduling or at least justify the shortfall and assist with recruitment.

Unfortunately, it is usually a catastrophic, sudden and/or urgent event that tests the resiliency of the entire community that necessitates the level of urgency to really come together as a community to find an answer to fill the void. For example, the only feed store in the county closes or the veterinarian closes up his large animal practice. These two scenarios happen daily in the rural communities in this country. Not just the farmers are getting older, the service providers are as well. Sometimes the business being closed is a cooperative operation. The dairy industry has seen the most recent headlines as their outlets for fluid milk dry up. These maladies are not new nor unique, communities that are truly resilient will buckle down, adjust and survive. Others will buckle under, sell the cows and rent out their land or just let it grow up to brush.

Collaboration is not an accident nor is it easy. Even if it is an informal arrangement, it still takes time for two humans to get used to each other. Collaborations and cooperatives are certainly no different in that sense. If this is expanded to a group of individuals, then you might imagine the time required.

An informal collaboration or partnership can take various forms or even an association. Cattlemen’s associations in some states take this form so they can hold education programs, buy mineral supplements and sell cattle together. Cooperatives can provide the same purpose and meet those very same needs but the difference being that residual income has to stay in the association treasury or spent on approved purposes. A cooperative can pay it out as a dividend. What is holding folks up?

There is frequently a deficiency in catalytic leadership. That being the person or people who can get behind the effort and be the catalyst for the project. Sometimes the snowball has to start off small and takes someone to get it moving in order to reach the critical mass and momentum to keep moving on its’ own. (See,  Catalytic Leadership: Reconsidering the Nature of Extension’s Leadership Role,  Morse, Ricardo S., Brown, Paul W., Warning, Jeanne E., Journal of Extension, April 2006. (https://www.joe.org/joe/2006april/a9.php).)

How do you form a cooperative?  Form a steering committee of people with similar interests and needs, work out the details. At the minimum, you will need to seek the assistance of a qualified attorney to file the necessary papers with the state. You may want to hire a cooperative developer to provide assistance with the processes, help work out the operational details and provide technical assistance in how your cooperative will function. They can serve as an advisor.

You will need to line up a cadre of energetic people who are truly committed to the concept. It might not be 30 or 40 people. But it does need to be indicative of the community/potential membership. If there is a feeling of excitement behind the project, then it is likely to be a go!   If not, drop back and talk it up more before you schedule the next meeting. You really can’t risk going back around, as in baseball, for the third time. But if the interest meeting is getting noticed, you’re good to go.

Naysayers are a reality no matter what you do. Some folks just can’t help but grumble. Use them to check your optimism. Who knows what is plucking their nerves, jealousy is usually a part of their opposition. People who aren’t out front will not talk things up. Know and use political or people resources wisely. 

There are 4 stages to small group dynamics forming, storming, norming and performing. All groups go through it if they are to be successful. They must storm for a while to get to know each other. A resilient organization gets past this point after due time but many cannot get past this stage. A catalytic leader will use their skills to get the energy to move in a more positive direction. It may not be the most comfortable seat in the house. But somebody has to help these folks set their issues aside or step aside. That is where a skilled facilitator as a part of the team can be a good idea. They can assist in channeling the energy and assist in handling some of the duties and tasks or organizing the organization.

The development of the vision and mission statements are guiding documents but don’t let them steal the thunder that working together can earn. Become the glowing success of the community, the reservoir of leadership capacity and the well of resiliency for the entire community. Make this new cooperative not only a group that serves its members, but it is also proud and effective enough to influence other groups in the community, then the cornerstone is cemented in place.

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