Greater Bargaining Power Savings to the farms has to be greater than the cost of running the co-op.
Just sells to individuals Only sells wholesale Sells to a friend Has a diverse clientele
Co-op needs to cover its operating expenses from sales. Farmers need to make more by selling through the co-op.
Advantages Can focus on farming and increase production Can reach more diverse markets
LLC vs. Cooperative Similarities –Producer can own business –Taxes on profits paid by owners not company –Limits liability –Must cover costs –Must benefit owners
Why Are Co-ops Different? 1. Open membership 2. Democratic Control 3. Member Economic Participation 4. Autonomous 5. Education/training 6. Cooperation 7. Community Co-op Principals
Co-op Features The effect of the co-op principals Membership is open to persons who can use the co-ops services. Member control is usually one member one vote. Investment $ = control/votes Benefits are tied to usage –Operate at cost –Net margin allocated to members based on use. Investment $ = percentage of profits –Limited return on equity
Where are Co-ops Effective? New/unusual industries - butter in early 20 th Century in Midwest - cranberries Areas where private businesses dont think there is enough profit. –Small/remote salmon fishing districts Maintaining prices? –Kachemak Bay
The Cons Cooperating Start up Distraction Marketing Costs/financing Management Member dependent
Examples of seafood cooperatives Seafood Producers Kachemak Bay
Getting Started Planning Preparing Begin operations
Planning Process Collective Process Gather Information Get organized Research feasibility
Preparing the Business Membership Drive Business Planning Founding Documents –Articles –By laws (owners manual) –Membership agreements
Beginning Operations Elect directors Hire management Develop polices and procedures Set up business
Members role Elect directors. Vote on major decisions. Patronize the cooperative.
Resources Technical Assistance National Coop. Business Assoc. Coop. Devlpmnt Institute Coop. Devlpmnt Services Northwest Coop Devlpmnt Center Financing Coop. Devlpmnt Fund Blooming Prairie Foundation
Alaska Cooperative Development Program Purpose Partnership and Resources Clients
Instructors Andrew Crow Consultant and Cooperative Program Manager 907-786-5447 firstname.lastname@example.org Home page – http://ced.uaa.alaska.edu/ac dp/index.html