NW Co-op Development NW Co-op Development CenterCenter

Tilth Producers Annual Conference

Nov 15th, 2009

Eric Bowman; Cooperative Development Specialisteric@nwcdc.coop

1063 S Capitol Way # 211Olympia, WA 98501

360.943.4241

Presentation OverviewPresentation Overview

1. Intro2. Co-ops 101 and Overview3. Case Studies◦ Organic Valley◦ Country Natural Beef◦ Montana Bunkhouse Working Ranch Vacations

1. Conclusion2. Q&A

Innovative Marketing Co-ops

NWCDCNWCDC

The Centera 501(c)3 nonprofit which provides development services for new and existing co-ops

Our mission to foster community economic development through the co-op business model

We’rea team of co-op developers with skills specific to start-up and organizational business development

Co-op RoleCo-op Role

U.S. Facts:◦ 3,000 farmer co-ops market 30% of farmers’ products◦ 6,400 housing co-ops provide 1.5 million homes◦ 10,000 credit unions provide services to 84 million members◦ 1,000 rural electrics operate half the nation’s distribution◦ 47,000 co-ops serve 43% of the population

Top 100 co-ops’ 2007 revenues = $173 Billion!

Co-ops 101Co-ops 101

Investor owned:

Sole proprietor:

Co-ops are member:◦ Owned◦ Benefited◦ Controlled

OwnershipOwnership

Member-Owners can be◦ Consumers◦ Producers/Farmers◦ Workers◦ Other Businesses

Distributionism Distributionism

Two Schools

Producer◦ Worker◦ Farmer◦ Artisan◦ Business

Consumer◦ Credit Unions◦ Housing◦ Retail (e.g. food co-ops)◦ Farm Supply

Co-op to Co-op Supply ChainCo-op to Co-op Supply Chain

Why Cooperate?Why Cooperate?

…to access resources not individually achievable

Marketable Co-op Benefits; “Goodwill”Keep profits, ownership and control local AccountableTrusted

Relationships and AuthorityRelationships and Authority

Unique Characteristics of Co-opsUnique Characteristics of Co-ops

Owned/controlled by members, not outside investors Exist solely to serve membersReturn surplus to members based on use, not

investmentPay taxes on income kept for investment/reserves;

surplus revenue returned to members who pay taxesEconomy of scale = valued added

Why form entity at all?Why form entity at all?

CreatingSomething bigger and beyond oneself; legacyFormal structure to work together

(governance/conflict resolution)Solid foundation for growthLegitimacyCommitmentLimited liabilityEconomy of scale

Organic ValleyOrganic Valley

Wholly Owned Subsidiaries

“Un-Corporation”o 1,398 members (64 in NW)o ~ 10% of organic farm communityo Largest organic co-op

Philosophy:o “Crafting new vision of foods/farms”o “More than delicious”o Adding value thru values

Jon Bansen - Monmouth, ORJon Bansen - Monmouth, OR

This is as big as I ever want to be. Working with a co-op has allowed me to produce good milk that receives a premium price, giving me a great livelihood, so I don't have any reason to want more…

Country Natural BeefCountry Natural Beef

14 farmers in Brothers, OR

“we were going broke” (1986)o Economics: increasing interest rates, land

priceso Social: cholesterol fears, “enviros”

Product is more than beef…

CNB – Business philosophyCNB – Business philosophy

…it’s about the people• Selling direct = value added• Shinrai• Consensus

MT Bunkhouse Working Ranch MT Bunkhouse Working Ranch VacationsVacations

20 cattle ranchersCo-op:

◦ Matchmaker◦ Co-marketing◦ ”geo-tourism”◦ Point of contact

Case Studies ReviewCase Studies Review

Key Points:1. Born out of need/adversity2. Marketing values and philosophy3. Successful innovation/reinvention

NW ag is very diverseNW ag is very diverse

Thank You!Thank You!

Eric Bowman

Northwest Cooperative Development Center1063 Capitol Way S # 211 Olympia, WA 98501

360.943.4241

eric@nwcdc.coop | www.nwcdc.coop

Fostering community economic development through the cooperative business model