Transcript Document

Marketing
Agreements/Cooperatives
United States Department of
Agriculture, Rural Development
USDA Rural Development
Delivers over 40 programs that provide a variety of:
• loans and loan guarantees,
• grant programs,
• technical assistance
In the areas of:
• business;
• economic development
• cooperative development;
• rural housing;
• community facilities;
• water and waste disposal;
• electric power;
• telecommunications (distance learning and telemedicine)
Hawaii State Office
Program Delivery
• State of Hawaii
• American Samoa
• Western Pacific
– Guam, CNMI, Republic of Palau,
Federated States of the Micronesia,
Republic of the Marshall Islands
Cooperative Program
Specialize in technical
assistance to rural groups
interested in organizing a
cooperative, and to existing
cooperatives.
$$$$$
Cooperative
A COOPERATIVE IS A FOR-PROFIT
CORPORATION
It has:
• a corporate board of directors,
• a profit motivation,
• a service orientation,
• single tax treatment.
SERVICE
What is a COOPERATIVE Business ?
A cooperative is a user-owned
and user-controlled corporate
business in which benefits are
received in proportion to use.
A Type of Business Dependent On
Who owns the business.
• Who controls the
business.
• Who uses the business.
• Who gets the profits.
What is a COOPERATIVE Business ?
• It is a fair way for producers to go into
business together
• It is a locally owned and controlled
corporation
• Its business purpose depends on its
members
Types of Cooperatives
• Producer-owned cooperatives
are owned by farmers, producers or small
businesses.
• Consumer-owned cooperatives
enable consumers to secure a wide array of
goods and services.
• Worker-owned cooperatives
are businesses owned and controlled by their
employees.
Distinctive Features
• Service at cost
• Financial obligation & benefits
proportional to use
• Democratic control
• Limited return on equity capital
UNIQUE
User-Owner Principle:
The people who own and finance the
cooperative are those who use it.
User-Control Principle:
The people who use the
cooperative are those
who control the
cooperative.
User-Benefit Principle:
The cooperative’s
sole purpose
is to provide and
distribute
benefits to
members on the
basis of their use.
USDA Cooperative Services
Participation Roles
Cooperatives operate
through the roles of
principal parties
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•
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Members
Directors
Manager
Employees
What Cooperatives Do
• Marketing
• Purchase supplies
• Provide services
Marketing Cooperatives
• Market products
–acquire and sell commodities
Kona Pacific Farmers Cooperative
Maui Farmers Cooperative Exchange
–bargain for price, terms of sale
Hawaii Banana Cooperative
Hawaii Cattle Producers Cooperative
Association
Purchasing Cooperatives
• Purchase supplies
–operate farm supply store
Farm Supply Cooperative
Hikiola
–joint purchasing programs
Kona Pacific Farmers Cooperative
Maui Farmers Cooperative Exchange
Service Cooperatives
• Provide needed member services:
– Hamakua/North Hilo Agricultural
Cooperative
– Maui Produce Processing Cooperative
– Hawaii Livestock Cooperative
– East Kauai Water Users Cooperative
Steps to Organize
Summary
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Hold exploratory meeting
Form steering committee
Conduct survey of potential members
Analyze market
Evaluate Feasibility
Prepare business plan
Prepare legal papers
Implement the business plan
Marketing Agreements
• A marketing agreement is a LEGAL
DOCUMENT recording the rights and
duties of farmers (members) and a
marketing business (cooperative) with
regards to marketing agricultural
products.
• It is a CONTRACT between farmers and
the marketing business.
Marketing Agreements
• Are DIFFICULT to enforce unless tightly
written--must be ENFORCED quickly and
equitably.
• Have PROVISIONS for what happens
when the contact is broken.
• Outlines LIQUIDATED DAMAGES that
can be assessed for non-delivery.
• OUTLINES quality requirements.
Energy Programs at USDA
• Section 9003: Biorefinery Assistance
• Section 9004: Repowering Assistance
• Section 9005: Bioenergy Program for
Advanced Biofuels
• Section 9007: Rural Energy for America
Program (REAP): Replaces Section 9006
• Section 9008: Biomass Research and
Development
• Section 9009: Rural Energy Self-Sufficiency
• Section 9011: Biomass Crop Assistance
Program
Section 9007
Rural Energy for America
• Enhancements from previous program:
– More technologies available (now includes
small hydro and wave energy)
– Increases loan guarantees from $10M to $25M
– Establishes an energy audit grant program
– Allows grants for feasibility studies
– Increases combined guaranteed loan/grant
combination from 50% to 75% of project costs
(subject to statutory $ limits)
Section 9007
Rural Energy for America
• Program can be used to purchase a
renewable energy system AND/OR
• Make energy efficiency improvements.
• Maximum grant is 25% of project cost:
– Not to exceed $500,000 for an energy
system
– Not to exceed $250,000 for energy efficiency
• Rural small businesses and agricultural
producers
Section 9007
Rural Energy for America
• Any renewable energy or energy
efficiency project as defined in the law:
– Biomass, Anaerobic Digester, Geothermal
(electric generation and direct use),
Hydrogen, Wind, Solar (photovoltaic and
thermal) and [small hydro and ocean
energy—added 2008]
– Energy Efficiency Improvements-improvements to a facility, building, or
process that reduces energy consumption,
or reduces energy consumed per square
foot.
Value-Added Producer Grants
• Program designed to assist producers to
develop businesses that produce and
market value-added agricultural
products.
• Provides grants for planning or working
capital purposes relating to the
marketing of a value-added product.
Value-Added Producer Grants
Applicant Eligibility
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Independent producers;
Farmer or rancher cooperatives;
Agricultural producer groups;
Majority-controlled producer-based
business ventures.
Value-Added Producer Grants
Purpose Eligibility
• Planning activities, such as conducting
feasibility studies and developing
business plans for processing and
marketing value-added agricultural
products.
• Working capital expenses for processing
and marketing value-added agricultural
products, including inventory, salaries,
and office supplies.
Value-Added Producer Grants
What is NOT Eligible?
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Purchasing any processing equipment,
Agricultural production expenses,
Land purchases,
“Research and Development”
Small Minority Producer Grant
What is NOT Eligible?
For cooperatives to assist small, minority
agricultural producers
• Governing board and/or membership is at
least 75% minority
• Provide technical assistance to small, minority
agricultural producers--market research;
product and/or service improvement; legal
advice and assistance; feasibility study,
business plan, and marketing plan
development; and training.
• Maximum grant--$175,000—no matching
required.
Other USDA Programs
• Farm Labor Housing—1% loan for up to 33
years
• Rural Business Opportunity Grants—Technical
assistance, leadership training, establishment
of business support centers, economic
development plans.
• Rural Business Enterprise Grants--for projects
that finance/facilitate development of small
and emerging rural businesses…
Tim O’Connell
Assistant to the State Director/
Cooperative Development Specialist
154 Waianuenue Ave., Room 303
Hilo, HI 96720
(808) 933-8313 (F)—8326
[email protected]