Transcript Housing Co-ops 101

Solidarity as a Business Model
The use of multi-stakeholder cooperatives in a
sustainable food system
What is a multi-stakeholder co-op?
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Co-op with at least two different membership
classes
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Users
Workers
Supporters
Consciously built on common mission but
heterogeneous base
“solidarity co-ops” are the fastest growing
kind of co-op in Quebec
Different potential classes of members
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USER membership classes
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Consumers
Clients
Families of clients
Institutional purchasers
Producers
Groups of producers
Intermediaries – processors, distributors etc.
Different potential classes of members
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WORKER membership classes
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Workers
Professional employees (social workers,
physicians, managers etc.)
SUPPORTER membership classes
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Community members
investors
Variations between different classes of
members . .
Short Term
Need
Long Term
Objective
Non-financial
Contribution
Equity
Contributio
n
Generally
Low
Stake in
Outcome
Consumers
Accessible
location and
price
Access to
specialized good
or services;
predictable
pricing, supply
Purchasing
power
Producers
Production costs
covered
Reduced risk;
sustainable
source of income;
market
development
Industry
knowledge;
specialized
product
Medium –
high
Low – High
depending on
alternate
distribution
channels
Workers
Reliable work;
fair wage
Safe, respectful,
gainful
employment
Industry
knowledge; firm
specific
knowledge
Possible special
expertise
Lowmedium
High
Community
Members
Existence of
resource in
community
Healthy and
vibrant local
economy
Low –
sometimes
quite high
Low - Medium
Low-High
depending on
alternative
supply sources
Balancing Interests . . .
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Allocation of governance rights
Distribution of surplus
Transfer rights
Dissolution
Transformational vs. Transactional
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Built upon relationships – relationships themselves
are seen to have value
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Dependent upon transparency, free flow of
information
Patient, striving for mutual best long term
interests as much as short term gains –
alignment of interests at a higher level
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Systemic perspective – allows for joint
consideration of supply and demand
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Inclusive
Other ways to invite participation . . .
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Preferred stock
Advisory boards
Labor/management committees/Works
councils
Partnerships
Limited liability companies (LLCs)
What does the research say? . . . (not
that much but perhaps some surprises)
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Theory – high transaction costs, inefficient
decision-making, ultimately unstable
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No real data to support this view
But . .the jury is out on institutional partners
Alternate theory – highly evolved
mechanisms for the collection and
coordination of disparate information in the
pursuit of common objectives – + trust
relationships = lower transaction costs
What does the research say?
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Theory – membership classes will compete
for resources (“zero sum” game)
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Data --- Italian study of 300 social co-ops found
addition of supporter class did not take a way from
ability of worker class to achieve goals on pay and
meaningful employment
What does the research say?
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Theory: differences = conflict
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Data – survey of 79 MSC in Quebec found high
level of satisfaction with governance
MSCs in Quebec do not use mediation services
more than any other kind of co-op
Ostrom research – face-to-face communication
increases the level of cooperation
What does the research say?
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Robert Putnam – “Bonding” and “Bridging”
social capital
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Both are important
Bridging is the harder one to do, absolutely vital to
keeping a diverse democracy vigorous and
inclusive
MSC are a natural ground for building bridges
“social capital represents not a comfortable alternative to
social conflict but a way of making controversy
productive”
Value(s) Chain vs. Supply Chain
Typical Food Industry Supply Chain
Producer
Processor
Distributor
Wholesaler
Retailer
Consumer
Characteristics of supply chains . .
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Inputs are interchangeable
Relationships are transactional
Participants are competitive
Price rules
Zero sum game (you win, I lose)
Advantage is manifested through control of
inputs, dominance of markets or both
Benefits are unevenly distributed
Risk is born by the least powerful
“Value” Chains
Business concept from mid-1980’s
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Look at whole process together and in order
At each stop/activity the product gains some
value
The chain of activities gives the products more
added value than the sum of the independent
activity's value
In food, “value-added” could be productionoriented (milk to cheese) or based upon attribute
differentiation (organic, local)
Cost of activity not the same as value
Advantages of the value chain approach
. .Assist in strategic planning
Encourage information flow upstream and
downstream
 Support quality enhancement activities
 Vertical coordination rather than vertical
integration is more flexible
However . . . .
 Does not fundamentally challenge power/risk
relationships
 “partnering” may be profound or superficial
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“Values-based” Supply Chain
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Takes into consideration both the
characteristics of the product and the
characteristics of the business relationship . .
Characteristics of a values-based
supply chain
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Links are between strategic partners (not necessarily
every link is a partner . )
Long term relationships with win-win orientation
High levels of collaboration and trust
Partners have articulated rights and responsibilities in
regard to information, risk-taking and decision-making
Commitment to “fairness” and welfare of all in terms of
pricing, wages, contracts etc.
Often decentralized (respect for local input, control)
Need for common values, vision
Advantages of a values-based
approach
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Can combine scale with product
differentiation
Can achieve high levels of quality, consumer
trust
Can outperform other business models in
rapidly changing markets – high level of
information, learning
A perfect environment for multistakeholder cooperatives!
Where do co-ops fit in?
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Horizontal collaboration may be needed to
assemble sufficient volumes
Co-ops may be needed to provide missing links
between existing actors in a system
Co-ops can provide a specific role for community
supporters
Can add a link to employees which is missing in
both supply and value chain models
Can articulate and reinforce a specific set of
values along a continuum . .
A community solution to a community issue
Co-ops could fit in anyplace along
here . .
Producer
Processor
Distributor
Wholesaler
Retailer
Consumer
In a single-member model, co-op exists at one
juncture . . .in a multi-stakeholder model, can
exist at more than one if desired . . .
Recent USDA local Food Hub study .
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Majority has started within the last 5 years
Over a quarter were started as cooperatives
Another 20+% were formed as LLCs
Changing market -- significant percentage of
new food hubs formed during the year of the
study
Are we a marketplace or are we an
ecosystem?
Examples of MSCs in Sustainable foods . .
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Local Roots – producers and consumers
Fifth Season – producers, producer groups, processors,
distributors, buyers, workers
Weavers Street Market – workers, consumers
Maple Valley Co-op – producers, buyers, workers,
community supporters/investors
Eastern Carolina Organics – producers, managers
Sandhills Farm to Table -- Producers, consumers,
workers
Eastern Carolina Organics
Eastern Carolina Organics (ECO)
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Started in 2004 as a project of a local nonprofit
with a mission to support organic farmers
Issue was established “foodie” culture but lack of
volume, variety and seasonality of product
“Farmer-owned” is key element of identity
2005 there were 13 growers and 2 staff owners;
2011 - ECO has 17 farmer-members, 40
growers
Members are farmers and two managers who
oversaw the launch of the business
No desire to involve customers in actual
ownership . – “simplicity is key to our success”
Value-add of ECO
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Provide a stable market for organic product
for farmers (growth more from expansion of
existing members than adding more members)
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Key to attracting larger producers needed to
meet customer demand for organic
Can mix producers, product and provide
seasonal food choices throughout the year
Facilitate collaboration with customers,
planning for each season
Value-add of ECO
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Field to customer in matter of days
Can assist farmers in transition to organic
Quality control is vital and having employees
engaged and empowered as part of the
organization helps facilitate this
Support farming as a dignified living
Lots of related ancillary activities – biofuels,
CSA, composting, solar panels, local
currency, foundation
Iowa Valley Food Co-op, Cedar Rapids, IA
Iowa Valley Food Co-op
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270 consumer members, 55 producers
Internet-based orders, monthly pick-up
Open source software, developed by
Oklahoma food co-op
2 producers, 2 consumers on board, rest can
be mixed
Patronage split half and half
Plans for growth – more pick-up sites, more
often; no plans for a store
Local Roots, Wooster, OH
Local Roots
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Storefront operates as almost a year-around
farmers market
Farmers bring their own products, sell on
consignment
Artisans can also be members, sell product
Consumers, producers, businesses are
members; same cost
No specific board representation, but most
are farmers
Next step – kitchen in back for value-added
Weaver Street Market
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Hybrid worker-consumer cooperative since its
founding in 1988
Cost for worker members is $500; about half
join.
Patronage can add $1 an hour in good years
Seven member board – 2 workers, 2
consumers, 2 appointed by the rest and GM
Advantage: “grounding the board in reality”
Case studies . .
Industries
• Local food production and distribution
• Brewing
• Healthcare
• Social services
• Arts, photography
• Retail grocery
• Forestry/lumber milling
Countries
US – France – Spain – Italy - Canada
Learnings . .
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Can combine formal ownership-sharing with
meaningful partnerships – no “perfect” MSC
“Form follows function” --what is the problem
you are trying to solve? -- A complication to
one is an enhancement to another
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Information, communication (facilitator),
sunshine all are necessary for success
Want to learn more?
See the real thing . . .
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Case study session at 3:45
Forthcoming . . .
“Multi-stakeholder Cooperatives: Engines of
Innovation for Building A Healthier Local Food
System and a Healthier Economy” by Margaret
Lund
In the special “Green Economies” issue of the
Journal of Cooperatives, UK
“Solidarity as a Business Model: A
Multi-stakeholder Cooperative
Manual”
http://oeockent.org/index.php/library/category/4
6/cooperatives Publication # 20 on the list
Margaret Lund
612-750-1431
[email protected]