Cooperative Development Institute

Cooperative Development Institute
Introduction The Cooperative Development Institute created this group-based business resource site to help farmers, agricultural service providers, and economic development professionals work together to develop the products, services, markets and business structures that are needed to sustain agriculture in the Northeast. Despite the impressive successes enjoyed by many group-owned agricultural businesses, information about this approach as a strategy for sustaining agriculture is widely scattered and hard to come by. This site begins to fill that void by providing access to group-based business production, distribution and marketing concepts, models and best practices. In so doing we hope to not only strengthen farmer efforts at collaboration, but equally important to contribute to the development of a strong network of agriculture service providers and business specialists supportive of their efforts. Cooperative Development Institute

Introduction (cont.) And because this site is a work in progress, we encourage you to send your suggestions for improving the site, resources to add, links to make, etc. to the Cooperative Development Institute: Please also note that the site is designed as a PowerPoint Presentation. Please download to share with others and know that more information and support is available from the Cooperative Development Institute. Cooperative Development Institute

Introduction (cont.) Acknowledgements This resource would not be possible without the generous support of the Northeast Sustainable Agriculture Research and Education Program (NE SARE - and the many hours of fruitful dialogue and debate amongst the Sustainable Agriculture Advisory Committee for this project. Advisory Committee members include: Roger Allbee, State Executive Director, USDA Farm Service Agency, Colchester, VT Marty Broccoli, Agriculture Economic Development Specialist, Department of Agricultural, Resource & Managerial Economics, Cornell Cooperative Extension-Oneida County, Ithaca, NY Richard Burke, Director, Program Support, USDA Rural Development, Amherst, MA Herb Cole, Jr. Professional Development Coordinator, Northeast SARE, Penn State Univ., University Park, PA Mike Dolce, Community & Regional Outreach Specialist, USDA Rural Development, Rutland, VT (continued) Cooperative Development Institute

Introduction (cont.) Vernon Grubinger, Director, Center for Sustainable Agriculture, UVM Extension, Brattleboro, VT Rick LeVitre, Regional Specialist, UVM Extension, Howe Center Business Park, Rutland, VT Jan van der Heide, Extension Educator, Cornell Cooperative Extension, Mexico, NY Special thanks go to the staff of the Cooperative Development Institute, who directed and coordinated the development of this online resource: Cooperative Development Institute staff includes: Lynn Benander, Co-Director Lynda Brushett, Senior Partner, Sustainable Agriculture and Marketing Jen Gutshall, Junior Partner and Grants and Projects Coordinator Stacey Cordeiro, Junior Partner, Cooperative Development Specialist Laurie Broussard, Office Manager (continued) Cooperative Development Institute

Introduction (cont.) Special thanks also goes to the many people who provided valuable feedback and substantive contributions to the website. David Holm, Program Manager, Northeast SARE, Burlington, VT Herb Cole, Jr. Professional Development Coordinator, Northeast SARE, Penn State Univ., University Park, PA Gerald Ely, Cooperative Development Specialist, USDA Rural Development, Tunkhannock, PA Chris Fullerton, Manager, Tuscarora Organic Growers Cooperative, Inc., Hustontown, PA Tanya Turner, Cooperative Development Specialist, Keystone Development Center, PA Paul Paulsen, General Manager, Vermont Quality Meats Cooperative, North Clarendon, VT Amy Trubek, Executive Director, Vermont Fresh Network, Montpelier, VT Michael Rozyne, Managing Director, Red Tomato, Canton, MA (continued) Cooperative Development Institute

Introduction (cont.) Mike Look, Foggy Bottom Wild Blueberry Co-op, East Machias, ME Faith Lally-Williams, Our Family Farms of Western Massachusetts, Greenfield, MA Ken Marshall, President, Penn's Corner Farm Alliance, Shelocta, PA Arthur Eve, Massachusetts Woodlands Cooperative, LLC, North Amherst, MA Cooperative Development Institute

What is Sustainable Agriculture?
Sustainable agriculture is a profitable way of producing high quality food and fiber that: Protects and renews the natural environment, Builds local economies, and Enhances the quality of life of farmers and farm workers. Development and support of group-based businesses is a strategy for increasing the sustainability of agriculture in the northeast. Cooperative Development Institute

What is Sustainable Agriculture? (cont.)
As defined by Congress, sustainable agriculture is an integrated system of plant and animal production practices having a site-specific application that will, over the longer term: Satisfy human food and fiber needs. Enhance environmental quality and the natural resource base upon which the agricultural economy depends. Make the most efficient use of nonrenewable resources and on-farm resources and integrate, where appropriate, natural biological cycles and controls, Sustain the economic viability of farm operations, and Enhance the quality of life for farmers and society as a whole. Cooperative Development Institute

What is Sustainable Agriculture? (cont.)
SARE, the Sustainable Agriculture Research and Education Program ( defines sustainable agriculture as an agricultural production and distribution system that: Achieves the integration of natural biological cycles and controls, Protects and renews soil fertility and the natural resource base, Optimizes the management and use of on-farm resources, Reduces the use of nonrenewable resources and purchased production inputs, Provides an adequate and dependable farm income, Promotes opportunity in family farming and farm communities, and Minimizes adverse impacts on health, safety, wildlife, water quality and the environment. Cooperative Development Institute

Trends in United States Agriculture
Sustainable agriculture is a response to the challenges and opportunities influencing farm production and marketing systems. As summarized by The Agricultural Issues Forum, theagforum.com/, these trends include: Consolidation Consolidation is occurring at all levels of agriculture starting at the farm and progressing through the supply and demand chains. Numbers of farms, animal units, and agribusiness entities are declining rapidly, production per unit is increasing and new markets are emerging. Government & Regulatory Influence These powerful forces are exacting various pressures on all of agriculture which result in losses to profitability and declining global competitiveness. As these changes occur, there will be on-going influence by all levels of government and additional regulations and compliance requirements are certain. This influence will have an impact on the industry's ability to remain competitive on a global scale. Cooperative Development Institute

Trends in United States Agriculture (cont.)
Globalization Advanced communications, technology, transportation and trade incentives as well as disincentives have created an environment whereby "globalization" is occurring. Locally, our agriculture has an impact on the world; similarly, the world has an impact on our agriculture. Niche Markets Market and Consumer demand for specialty products, such as organic and ethnic foods, is continuing to grow. This demand will be supplied by producers who see an opportunity to fulfill a philosophical goal and/or profit from a growing segment in the marketplace. Technology Advances Science and industry will continue to develop tools for all aspects of agricultural production that will contribute to a more efficient and competitive agriculture. These advances will also provide tools to trace agricultural products from the field to the table. Cooperative Development Institute

Capital/Finance Agriculture will not be exempt from the pressures faced by other businesses/industries. As financing opportunities become more challenging for the production farmer and industry, agriculture will utilize precision-like management and intensify capitol. Financial sources will continue to increase the minimum business operating standards of agriculture to qualify for capital and encourage competitive rates of return when compared to non-agricultural businesses. Animal Welfare Agriculture continues to make animal welfare advances to enhance confidence, provide continued access to global and local markets, and to remain competitive. Animal agriculture will continue to ensure that animals are cared for in a safe, humane and healthy manner. Cooperative Development Institute

Environmental Stewardship Agriculture, government and public influence will continue to drive environmental stewardship as a top priority for American agriculture. Agricultural producers are establishing management practices that conserve natural resources, not only on their farms but also in their watershed. Government support and regulations significantly influence these practices. Workforce Development Vocational and/or professional training and job incentives are increasingly more critical in order to attract workers to the Agricultural industry. Farmers must become highly trained managers or be willing to enlist the services of a management team. Outsourcing of work will become necessary in many operations. Cooperative Development Institute

Food Safety Emphasis on food safety for the public will create new requirements (imposed by the industry and the government) for the production phase through the processing, shipping and sales phase. It is likely that American agriculture will soon be expected to abide by a zero-tolerance food safety program. This type of program will be implemented both for public health and safety and national security. Agriculture’s Contributions to Energy Production Agriculture will have an increasing impact on consuming and generating energy. New technologies will create opportunities for agriculture to produce energy at the farm level to help sustain and support community growth. Cooperative Development Institute

Increased Public Influence There is an on-going public interest in agriculture that ranges from land stewardship, to animal welfare, to food production, to packaging. As the number of “farmers” shrink and the number of “non-farmers” continue to grow, those who do not farm will have more time to become educated and react to issues. Not only does the public have time on their side, but they also have numbers; therefore, it is inevitable that they will be able to yield substantial influence. Therefore, the agricultural industry will continue to become pro-active, educating and working with the public rather than re-active, a response that can create distrust and isolation. Copyright © 2004 by Mike Brubaker Used with permission Cooperative Development Institute

Group-Based Business and Sustainable Agriculture
Why are farmers forming group-based businesses? Organizing a group-based business is a strategy for dealing with trends in today’s agricultural marketplace. Group-based businesses provide a structure for shared governance , a legal means to shield individuals and a framework for managing the investments, cash flows and profits of new income generating production or market related enterprises. Farm to consumer direct marketing and the extension of farm enterprises into value-added processing are emerging strategies for farm diversification and economic enhancement. Working together in a group-based business, farmers can achieve the scale of expertise, product and financial resources needed to access direct and value-added markets. It’s challenging for an individual farm to develop the expertise required, not only in food or fiber production, but also in value-added processing and marketing. Being a part of a group-based business allows farmers to access appropriate expertise in diverse areas of need. Cooperative Development Institute

Group-Based Business and Sustainable Agriculture (cont.)
Why are farmers forming group-based businesses? (cont.) It’s also challenging for farmers to come up with the money required to build and manage processing facilities and to implement direct marketing strategies. Being a part of a group-based business allows farmers to pool their resources and bring in outside investors and other resources when needed. How can group-based agricultural businesses be structured? There are many approaches to structuring group-based business that can help farms be more profitable in the Northeast. Group-based businesses can be organized as for-profit corporations, cooperatives, limited liability corporations or non-profits. For-Profit group-based businesses give farmers a way to pool their capital and bring in outside capital to process and market farm products. Outside investors and farmers together own and control the business. Cooperative Development Institute

Group-Based Business and Sustainable Agriculture (cont.)
How can group-based agricultural businesses be structured? (cont.) Cooperatives give farmers a way to pool their capital, and bring in limited outside investment to process and market their products. Taxes are paid either at the corporate level or individually when dividends are paid. For-profit business pay taxes at both levels. Small groups of farmers can also process and market their products and enjoy most of the tax benefits of a cooperative without all of the red tape by forming a Limited Liability Corporation (LLC). Group-owned Non-profit Corporations can be organized to provide products, services, and other resources at a savings. See Legal Structure section for more information. Cooperative Development Institute

Challenges Group-based businesses are an economic approach to dealing with the significant challenges to profitability from: Depressed commodity prices, Escalating operating costs, Lack of access to local and regional markets, Lack of management expertise. However, joining together with other farmers to create businesses that will address these blocks requires a tremendous investment of time, money and energy, none of which are easily available. Cooperative Development Institute

Opportunities What are some of the ways challenges to farm profitability can be addressed? To address low commodity prices: Get market focused Develop a profitable value-added product Engage in joint efforts to access value-added processing To address escalating operating costs: Engage in cooperative purchasing of farm inputs To address lack of access to markets: Create a market for a unique product you can produce profitably on-farm or with other farmers Join with other farmers to achieve market clout. To address a lack of management expertise: Get training or coaching Join with other farmers to hire management expertise where it’s needed. Cooperative Development Institute

Opportunities (cont.) Can group-based businesses help farms be more profitable? There are many forms and approaches for group-based businesses that can help farms be more profitable in the Northeast by processing and marketing farm products. For-Profit Businesses give farmers a way to pool their capital and bring in outside capital to process and market farm products. Outside investors and farmers together own and control the business. Cooperatives give farmers a way to pool their capital, and bring in limited outside investment to process and market their products. Taxes are paid either at the corporate level or individually when dividends are paid. For-profit business pay taxes at both levels. Small groups of farmers can also process and market their products and enjoy most of the tax benefits of a cooperative without all of the red tape by forming a Limited Liability Corporation (LLC). Cooperative Development Institute

Opportunities (cont.) Other people are establishing group-owned Non-profit Corporations that provide them with products, services, and other resources they need at a savings. See Legal Structure section for more information. What other opportunities exist? Innovative Education and Marketing Strategies are building consumers who understand the value of local farms and vote with their dollars to support local farms. (See resources for CSA’s and Buy Local Campaigns.) Cooperative Development Institute

Opportunities (cont.) New online community technologies give farmers a way to stay more closely connected to the businesses they launch, ensuring they stay focused on meeting their needs. They also give businesses a way to stay more closely connected to their customers, conduct market research and build customer loyalty. Established group-owned businesses have learned more about keeping these businesses farmer-owned and controlled. They are bringing in strong managers who understand the importance of building trusting relationships with members and the board. Board, member, and management development costs are being included as line items in their budgets to ensure these businesses stay truly member-owned and controlled. Contact the Cooperative Development Institute FMI: Cooperative Development Institute

Opportunities (cont.) How can consumers help sustain agriculture in the Northeast? There is an opportunity for consumer-owned businesses (such as food coops, spinning guilds, credit unions, etc.) and farmer-owned businesses to work together to create vibrant local markets. Create programs that teach young people to buy and use fresh fruits and vegetables (such as Farm to School, Ag in the Classroom, 4-H, etc.). Support buy local campaigns that educate people about the importance of voting with their dollars for local products and services. Cooperative Development Institute

Legal Structures for Group-Based Businesses
If you have a business activity that you cannot do alone and that can be done with others, there are many reasons to form a legal entity to support your group’s work. Group-based businesses with limited liability shield individuals from personal liability for the business’ debts and liabilities. If the business isn’t successful, you won’t be personally liable for its debts. If a truck overturns or something you produce makes someone ill, you are not likely to be personally liable for the losses. Group-based businesses provide a structure for shared governance. The Articles of Incorporation and By-laws lay out the structure of how agreements are made, how conflicts are resolved, how profits are shared, and how the business is overseen. While it is costly to put these agreements together, they provide a clear framework of how group members can successfully work together. Cooperative Development Institute

Legal Structures for Group-Based Business (cont.)
Group-based businesses also can provide a corporate structure for legally managing finances and corporate records. Complying with these corporate laws gives members greater access to information about how money is flowing through the business and how decisions are made. The Cooperative Development Institute is a resource for farmers in the Northeast who are interested in forming group-based businesses. Contact them at for assistance . Cooperative Development Institute

Group-based businesses can operate as unincorporated groups, cooperatives, LLCs, associations, partnerships, for-profit corporations or non-profits. There are advantages and disadvantages to each legal structure and the best structure depends on a detailed assessment of your needs and goals. The following questions will help with this assessment. After you have answered these questions you will be ready to seek professional assistance. Who is the group that would own this new business? A specific kind of farmer from a specific geographic region? Which kind? From where? How many? What benefits does this group want from the business? Bulk purchasing of a product or service? Processing? Marketing? Distribution? Waste management? Access to trained farm workers? Etc. Cooperative Development Institute

Sources of Equity (Choose all that apply): Equity will come from . . . Investors (corporation) Members (co-op) Supporters and Grants (non-profit) Owners (corporation, LLC, partnership) Profits (Choose all that apply): Profits will . . . Stay in the business and not be distributed (non-profit) Be distributed to investors based on their investment (corporation) Be distributed to members based on their patronage of the business (co-op) Be distributed to owners of the business (partnership, co-op or LLC) Cooperative Development Institute

Tax Status (choose one): The business will . . . Be tax exempt and keep all profits within the business (non-profit) Be taxed on corporate profit and investors/members will also be taxed on their share of the profits (corporation) Distribute all income to members to pay taxes on their own income (partnership or LLC) Be taxed EITHER on corporate profit OR investors/members will be taxed on their share of the profits (cooperative) Ownership/Control (Check all that apply): The Board of Directors will be appointed/elected by… Board members (non-profits) Investors (corporations) Members (co-op) Other organizations/businesses (LLC, co-op) Owners (partnership, LLC, co-op, corporation) Other Cooperative Development Institute

Types of Revenue (Check all that apply): Revenue will come from . . . Sale of Products and Services - $/year:______ Program Fees - $/year:______ Rental Fees - $/year: ______ Individual Contributions - $/year:______ Foundation Grants - $/year: ______ Dues/Membership Fees - $/year:______ Interest Income - $/year: ______ Other - $/year:______ TOTAL: $/year:_____ Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Partnership or otherwise unincorporated groups Definition: Any two or more people who agree to carry on a business as co-owners for profit Advantages: Simple to organize and maintain. Can operate more informally and flexibly than a corporation, Profits are taxed once. Disadvantages: Partners are personally liable for the business debts and acts of all partners Joint Venture Definition: Short term partnership Advantages: See Partnership Disadvantages: See Partnership Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Limited Partnership Definition: A Partnership where one or more Partners are the General Partners and the other partners have limited involvement as investors in the business. Advantages: Limited partners are not liable for more than their investment if they’re not involved in managing the business. Costly and complex to organize and maintain. Profits are taxed once at the partner level. Disadvantages: General partner is personally liable for the business’s debts and liabilities, but this can be another legal entity such as a corporation. Limited Liability Partnership Definition: A Partnership where Partners enjoy corporate-style limited liability and are only liable for their investment with the tax structure of a partnership. Advantages: Partners are only liable for their investment. Can operate more informally and flexibly than a corporation. Profits are taxed once at partner level. Disadvantages: Limited to specific types of businesses. Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Limited Liability Corporation Definition: A business structure that provides the limited liability of a corporation and the tax structure of a partnership. Advantages: Fairly simple and inexpensive to organize and maintain. Taxed once. Can be run by members or managers. Is best suited for fewer than 15 members. Disadvantages: Can’t market as a cooperative. Cooperative Definition: Corporation formed under state or federal laws operating on a “cooperative basis.” Its members own and control the business. Profits are returned to members in proportion to their use. Members elect a board. The board hires management to run the company. Advantages: Good public image. Size and strength in the marketplace. Taxed once. Access to co-op funding programs. Member-owned and controlled with member effort. Disadvantages: Access to capital. Legal and administrative costs. Complex and expensive to operate. Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. For-Profit C Corporation Definition: Corporation formed under state laws. Its shareholders elect the board. The board hires management to run the company. Advantages: Access to capital. Business flexibility. Stock can be publicly traded in certain cases. Disadvantages: Run by managers who may or may not be stockholders. Taxed twice. Complex and expensive to operate. For-Profit S Corporation Definition: Structured like a C Corporation and taxed as a partnership – only once. Advantages: Access to capital. Only taxed once at shareholder level. Shareholders are only liable for their investment Disadvantages: More complex and more costly than an LLC to organize and maintain. Restricted to 75 members who are all US citizens or permanent resident aliens. Restricted to one class of stock. Taxes are paid by individual whether profits are distributed or not. Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Non-Profit Association Definition: A corporation formed for purposes other than generating a profit but are not tax-exempt. Advantages: Good public image. Access to some government and non-profit grants. Eligible for non-profit rates. Disadvantages: Cannot accept tax-deductible charitable contributions. Cannot distribute profits to members. Limited to specific non-profit purposes – not in competition with for-profit businesses. Tax-exempt, Non-Profit Corporation Definition: A corporation formed for purposes other than generating a profit. Restricted to businesses with charitable, educational, religious, literary, or scientific purposes as defined by the IRS. Advantages: Good public image. Access to government and foundation grants. Eligible for non-profit rates. Disadvantages: Difficult and costly to obtain tax-exempt status. Cannot distribute profit to members. Narrow scope of business activities. Restricted purposes. Limited participation in lobbying activities. Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Types of Agricultural Non-profits 501(c)5 – Agriculture Associations - Educational or instructive, the purpose being to improve work conditions, products and efficiency. 501(c)6 – Business Leagues - Improvement of business conditions of one or more lines of business. 501(c)16 - Cooperative Organization to Finance Crop Operations - Financing crop operations in conjunction with activities of a marketing or purchasing association. 521(a) – Farmers Cooperative Associations - Cooperative marketing and purchasing for agricultural producers. Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. The Cooperative Development Institute is a resource for farmers in the Northeast who are interested in forming group-based businesses. To contact CDI, Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-Based Agricultural Businesses Who are the Owners? Partnership: Partners Joint Venture: Partners Limited Partnership: Partners Limited Liability Partnership: Partners Limited Liability Corporation: Members Cooperative: Members For Profit C-Corporation: Shareholders For Profit S-Corporation: Shareholders Non-Profit Associations: Board or Members Tax-Exempt Non-Profit: Board or Members Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-based Agricultural Businesses (cont.) Easy for Members to own and control? Partnership: Yes Joint Venture: Yes Limited Partnership: Yes Limited Liability Partnership: Yes Limited Liability Corporation: Yes Cooperative: Yes For Profit C-Corporation: No For Profit S-Corporation: No Non-Profit Associations: No Tax-Exempt Non Profit: No Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-based Agricultural Businesses (cont.) Number of Members Partnership: Best for 15 or fewer Joint Venture: Best for 15 or fewer Limited Partnership: Best for 15 or fewer Limited Liability Partnership: Best for 15 or fewer Limited Liability Corporation: Best for 15 or fewer Cooperative: Unlimited For Profit C-Corporation: Unlimited For Profit S-Corporation: Unlimited Non-Profit Associations: Unlimited Tax-Exempt Non-Profit: Unlimited Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-based Agricultural Businesses (cont.) Limited Liability? Partnership: No Joint Venture: No Limited Partnership: Yes, for Limited Partners not engaged in management Limited Liability Partnership: Yes Limited Liability Corporation: Yes Cooperative: Yes For Profit C-Corporation: Yes For Profit S-Corporation: Yes Non-Profit Associations: Yes Tax-Exempt Non-Profit: Yes Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-based Agricultural Businesses (cont.) Taxation of Profits at Corporate and Individual Level? Partnership: No Joint Venture: No Limited Partnership: No Limited Liability Partnership: No Limited Liability Corporation: No Cooperative: No For Profit C-Corporation: Yes For Profit S-Corporation: Generally, No Non-Profit Associations: No Tax-Exempt Non-Profit: No Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-based Agricultural Businesses (cont.) Expensive to Establish and Maintain? Partnership: No Joint Venture: No Limited Partnership: No Limited Liability Partnership: No Limited Liability Corporation: Somewhat Cooperative: Yes For Profit C-Corporation: Yes For Profit S-Corporation: Yes Non-Profit Associations: Yes Tax-Exempt Non-Profit: Yes Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-based Agricultural Businesses (cont.) Sources of Capital Partnership: From Partners Joint Venture: From Partners Limited Partnership: From Partners Limited Liability Partnership: From Partners Limited Liability Corporation: From Partners Cooperative: From Members For Profit C-Corporation: From Stock For Profit S-Corporation: From Stock Non-Profit Associations: From Members Tax-Exempt Non-Profit: From Members and Grants Cooperative Development Institute

Legal Structures for Group-Based Businesses Talk with a lawyer about which option is best suited for your business. Comparison of Different Legal Structures for Group-based Agricultural Businesses (cont.) Profits able to be distributed to members? Partnership: Yes Joint Venture: Yes Limited Partnership: Yes Limited Liability Partnership: Yes Limited Liability Corporation: Yes Cooperative: Yes For Profit C-Corporation: Yes For Profit S-Corporation: Yes Non-Profit Associations: No Tax-Exempt Non-Profit: No Cooperative Development Institute

The Business Development Process
Here are the steps a group-based business can go through to ensure they have a good chance of getting off to the right start: Engage in strategic planning: Who are the members? What are our needs? What is our vision? What values are important to us? What will we sell, to whom and how? Create founding board to oversee development. Invest dollars for pre-development. Conduct feasibility study to ensure there is enough product to sell to a large enough market for us to make money. Incorporate and adopt by-laws. Create a business operations plan that shows how we will successfully launch the business. Sign membership agreements. Make equity investment. Raise additional equity and get financing. Hire a manager and staff. Open for business. Cooperative Development Institute

The Business Development Process (cont.)
Activities Stage One: Exploration (3 - 6 months) Explore your new business idea. 1. Organizational Development: Form an Organizing Committee with people who represent the business’s potential members and key stakeholders. Identify your mission and core values. 2. Business Development: Define your key business concept – What products and services might the business supply that could make a significant economic difference in the lives of its members? Create a project development plan and budget. Secure funds for stage one and begin fundraising for stage two. 3. Business Planning: Conduct market research to determine the need for your business’ products and services and complete your feasibility analysis to see if you have a viable business idea. 4. Member Development: Share information with potential members and key stakeholders about your business idea. Cooperative Development Institute

Outcomes of Stage One At the end of Stage One, you’ll have… A committed group of people who agree on what they want this business to sell to whom, Market research that shows there is a large enough market and sufficient product to sell that the business will be financially viable and make a significant economic contribution to its members, A clear plan and budget for each stage of development, Funds raised to cover the cost of development for Stage One and some of Stage Two, and Growing interest from potential members and key stakeholders Cooperative Development Institute

Activities Stage Two: Business Planning (3 –6 months) 1. Business Planning: Create a business plan and marketing plan that describes how you will launch your business, what it will cost, and where you’ll get the money. 2. Organizational Development: Set up your founding board, incorporate your business, and adopt by-laws that describe how you will work together. 3. Member Development: Recruit members and other key stakeholders for your business. 4. Business Development: Secure development funds for stage two and three. Raise money (equity) from members and get a loan to launch your business. Cooperative Development Institute

Outcomes of Stage Two At the end of Stage Two, you’ll have … A business plan and marketing plan showing how the business will be launched, Enough members, stakeholders and money to launch your business, A legally incorporated business with a seated board and Funds raised to cover the costs of development for Stage Two. Cooperative Development Institute

Activities Stage Three: Business Launch (2-6 months) 1. Organizational Development: Set up office and hire staff. 2. Business Development: Contract for and market products and services. Pre-sell members and/or customers products and services. 3. Member Development: Orient new members and key stakeholders to their roles and responsibilities. Cooperative Development Institute

Outcomes of Stage Three At the end of Stage Three, you’ll have… Initial products and services ready to offer, An office set up and staffed, Customers signed up for products and services, and Members and key stakeholders educated about their rights and responsibilities. Cooperative Development Institute

Activities Stage Four: In Business Business Development: Provide products and services in response to member needs, engage in sales and marketing and ongoing business development. Organizational Development: Provide staff and management education and engage in strategic planning. Member Development: Engage in member and board education. 4. Celebration: Take time to acknowledge your accomplishments! Cooperative Development Institute

Outcomes of Stage Four At the end of Stage Four, you’ll have… A viable business, up and running, bringing economic benefit to its members. Cooperative Development Institute

Support available from Cooperative Development Institute (CDI): To support Stage One, CDI can . . . 1. Help you put together your Organizing Committee and facilitate a meeting where you define your mission and values, 2. Help you define your key business concept, facilitate project planning sessions, and help you raise funds to support your development project, 3. Help you do your market research and feasibility analysis or help you hire a consultant to assist you, 4. Help you create print resources for potential members informing them about your project and 5. Share lessons learned by other projects and provide sample project plans, market research, feasibility analysis, and member education materials. Cooperative Development Institute

To support Stage Two, CDI can . . . 1. Help you create your Business Plan and Marketing Plan or hire a consultant to assist you, 2. Help you train your founding board and create your legal documents and hire a lawyer to review them. 3. Help you reach out to potential members and key stakeholders, share lessons learned by other projects, and also provide sample business plans, board policies, and legal documents. Cooperative Development Institute

To support Stage Three, CDI can . . . 1. Provide start-up accounting, communications, and support staffing, 2. Provide management, staff, member and board training programs, 3. Share lessons learned by other projects in Stage Three, and 4. Provide sample marketing materials, member orientation materials, job descriptions and personnel handbooks. Cooperative Development Institute

To support Stage Four, CDI can . . . 1. Provide ongoing support until the business starts earning a profit 2. Celebrate with you, and help you connect with other group-based businesses. Cooperative Development Institute

Success Stories Here is a modest, yet diverse collection of success stories showcasing the variety of ways groups of farmers, consumers, and others have organized to sustain agriculture in the northeast. The Cooperative Development Institute is interested in showcasing your story. If you have a success story to share, us at Be sure to include your contact information and a brief description of your successful group-based business. Farmers Markets The number of farmers markets in the United States has grown dramatically, increasing 79 percent from 1994 to According to the 2002 National Farmers Market Directory, there are over 3,100 farmers markets operating in the United States. This growth clearly indicates that these markets are meeting the needs of a growing number of farmers with small- to medium-size operations. Who benefits from farmers markets? Small farm operators. Those with less than $250,000 in annual receipts who work and manage their own operations meet this definition (94 percent of all farms). Farmers and consumers. Farmers have direct access to markets to supplement farm income. Consumers have access to locally grown, farm-fresh produce and the opportunity to personally interact with the farmer who grows the produce. Cooperative Development Institute

Success Stories (cont.)
Farmers Markets (cont.) The community. Many urban communities where fresh, nutritious foods are scarce gain easy access to food. Farmers markets also help to promote nutrition education, wholesome eating habits, and better food preparation, as well as boosting the community’s economy. 2000 USDA Farmers Market Study Statistics: Farmers markets are an important source of revenue. 19,000 farmers reported selling their produce only at farmers markets. 82 percent of markets are self-sustaining; market income is sufficient to pay for all costs associated with the operation of the market (not including grant or in-kind support). Information from: Cooperative Development Institute

CSA (Community Supported Agriculture) A CSA consists of a community of individuals who pledge support to a farm operation so that the farmland becomes, either legally or spiritually, the community’s farm, with the growers and consumers providing mutual support and sharing the risks and benefits of food production. Members or shareholders of the farm or garden pledge in advance to cover the anticipated costs of the farm operation and farmer’s salary. In return, they receive shares in the farm’s bounty throughout the growing season, as well as satisfaction gained from reconnecting to the land. Members also share in risks, including poor harvest due to unfavorable weather or pests. — USDA definition The first U.S. CSA was founded in Massachusetts in There are now more than 1,000. This growth clearly indicates that CSA’s are meeting the needs of a growing number of farmers with small- to medium-size operations. Cooperative Development Institute

CSA (cont.) CSA’s can be organized in different ways, but they all share several fundamental principles: 1. They are formed by one or more farmers and a group of consumers. 2. Consumers purchase a share in the CSA. The cost of a share is a portion of the farmer’s cost of production plus a living wage. 3. CSA farmers agree to provide a portion of their farm products to the consumers who have purchased a share. These agreements give farmers a stable market for their products and a stable income through lean or abundant seasons. They help consumers understand the joys and challenges of farming and build a relationship between farmers and consumers. Consumers can get to know who is producing their food and how it is produced, increasing consumer confidence and loyalty. Consumers can also work on the farm, reducing the cost of outside farm labor. Cooperative Development Institute

Vermont Quality Meats Cooperative P.O. Box North Clarendon, VT Phone: Fax: Paul Paulsen, General Manager, Recognizing that open markets for quality meats existed in high-end restaurants in NY and Boston, a group of meat producers organized a 46 member co-op to market and sell a diverse range of products, including lamb and veal, game birds such as pheasant and quail, eggs, and suckling pigs directly to the restaurants. For three years, Vermont Quality Meats (VQM) has been producing, transporting and selling whole carcasses right to a chef’s back door, which eliminates the middlemen. Cooperative Development Institute

Vermont Quality Meats (cont.) VQM products have received excellent reviews from top chefs in New York and New England. Their products are grown on small family farms, processed at a USDA-inspected slaughterhouse and delivered fresh to customers. Their animals are fed primarily on milk and grains. They do not use growth hormones. They serve 80 customers in NY and Boston on a weekly basis. As a cooperative, VQM can guarantee their customers a consistent supply of diverse, fresh quality meats that was impossible for individual producers to manage. For small, part-time producers, joining the cooperative is a way to market their products at a higher price than they’d get from wholesalers or on the auction floor. It also gives them access to markets that they wouldn’t have the resources to get into on their own. Cooperative Development Institute

Vermont Quality Meats (cont.) “A part time farmer can’t take the truck to New York to sell one lamb,” says General Manager Paul Paulsen. Chefs are willing to pay higher prices because the co-op offers a higher quality product, with better service, and sizes that may not be available elsewhere. One of the challenges of the cooperative has been to convince members to think in terms of the market. The biggest problem, according to Paulsen, is getting a consistent supply from member/producers - not just to have the product available, but to have it available exactly when the consumer wants it. The cooperative has to keep working to make sure its members understand how important this is to the success of the cooperative. Aside from that, the most critical factor for success is the commitment of members to the idea of the cooperative to make it work. Cooperative Development Institute

Vermont Fresh Network 116 State Street Montpelier, VT Phone: or Amy Trubek, Executive Director The Vermont Fresh Network (VFN) builds innovative partnerships among farmers, chefs and consumers to strengthen Vermont's agriculture. A strong farm economy creates local jobs, provides nutritious food and preserves the close-knit communities of Vermont. The VFN helps farms and restaurants team up to provide the freshest local food at restaurants. They have produced a Dining Guide and website to link consumers and chefs with Vermont farms. Cooperative Development Institute

Vermont Fresh Network (cont.) Annee Hayden Rhoades is the owner of Cooking from the Heart, a restaurant in Waitesfield VT that is a member of the Network. She describes her experience with Vermont Fresh this way: “We commit ourselves to support each other’s livelihoods in our own community and not ten states away. It is a commitment from the chef to buy local regardless of the cost because that is the right action. Likewise, a farmer commits back to the chef to supply their products regardless of the demand elsewhere. It is a relationship where both partners take risks! When most of the strawberry crop is wiped out by rain – the chef can count on the farmer to serve them for Father’s Day and the farmer knows the chef will pay the asking price and not buy from California.” The VFN benefits farmers and food producers because chefs are consistent, knowledgeable and enthusiastic bulk buyers. For farmers, becoming a member of VFN formalizes their partnership with participating chefs and provides them with a predictable outlet for their product. Partner chefs are encouraged to acknowledge their farm partners on their menus, so farmers receive exposure directly to interested consumers. Cooperative Development Institute

Vermont Fresh Network (cont.) Annee Hayden Rhoades also describes the community-building aspect of her partnership with a local farmer, Dave Hartshorn. “Dave works harder than any other person I know. Seven days a week, rain or shine, he and his helpers are out in the fields. Dave delivers vegetables right to the kitchen doorstep. Knowing he is only three miles down the road is a blessing. Over the years, our relationship grew from farmer and chef to friendship – we run into each other socially and most important support the other in difficult times, like the flood of And we celebrate together at the end of the season.” Cooperative Development Institute

Tuscarora Organic Growers Cooperative, Inc. HCR 71 Box 168-B Hustontown, PA 17229 Phone: fax: Chris Fullerton, Manager – Tuscarora Organic Growers (TOG) is a cooperatively run wholesale distributor of in season organic produce located in south central Pennsylvania, serving customers in the Washington, DC area and other parts of the mid-Atlantic region. TOG took root in 1988 when a group of neighboring organic fruit and vegetable farmers discussed the possibility of joining forces in the marketing of their products. By working together, they could coordinate crop production to complement one another rather than compete. And they could enjoy economies of scale in shipping and selling. The cooperative form of business fit the farmers' needs, allowing ownership and market access to be divided fairly and decisions to be made jointly. Cooperative Development Institute

Tuscarora Organic Growers Cooperative (cont.) And through cooperation, the growers were able to serve their customers better, by providing a diversity of crops and a level of service that no one grower could provide on his own. In TOG's first season, seven growers moved about 1,500 cases of produce to Washington, DC retailers over a five-month period. Since then, each season has brought steady growth in sales as well as crop diversity, season length and professionalism. In 2003, TOG worked with more than 25 producers to bring over 50,000 cases of produce from farm to city, offering its customers locally grown, certified organic produce all 12 months of the year. They are legally incorporated as a producer's cooperative, which means that the business is owned by the farmers it serves. They’re democratically controlled 100 percent by farmers; they have officers and a Board of Directors who are farmers. Co-op operating expenses are paid out of regular commissions on sales, and any profits at the end of the year are distributed according to the growers' wishes. Cooperative Development Institute

Red Tomato 1033 Turnpike St. Canton, MA 02021 Phone: Fax: Michael Rozyne, Managing Director, Red Tomato is a not-for-profit marketing organization started in 1998 to ‘reinvent’ local food systems by reconnecting small-scale ecological family farmers to nearby supermarkets. Red Tomato distributes produce from 30 family farmers to supermarkets in greater metropolitan Boston. The organization is expanding into more supermarkets, and exploring new ideas to establish brand recognition. In addition to working with local farmers, Red Tomato has also developed a very important brokering relationship with the Federation of Southern Co-operatives (FSC), which includes 35 agricultural cooperatives from the “Black Belt” of Georgia, Alabama, Mississippi and South Carolina. Cooperative Development Institute

Red Tomato (cont.) The FSC grew out of the civil rights movement. Black farmers saw cooperatives as a way to get more control of their lives and land; at the same time, they were denied access to the existing “white” agricultural cooperatives. In 2002, Red Tomato marketed 13 truckloads of seedless watermelons from the FSC to Stop & Shop in the northeast - an endeavor that realized $67,540 in much-needed income for southern minority farmers and enabled Red Tomato to market watermelons before local watermelons were ready. What's more, the Federation was able to market an additional 130 truckloads of seeded watermelons in the southeast for a total gain of $450,000. Red Tomato has demonstrated that consumers are willing to pay a premium for better tasting, fresher products grown by a local farm that’s using innovative and safe growing methods. Cooperative Development Institute

Red Tomato (cont.) Says Managing Director Michael Rozyne, “Local strawberries are such a short-lived treat, and are so notably distinguished from California and Florida berries on the basis of sweetness, color, and texture, that they jump off the shelf when identified as locally-grown strawberries. In years past, Red Tomato strawberries (from three farms in Massachusetts and Connecticut) have sold steadily in supermarkets for $4.99 or $3.99/quart, side-by-side California berries that were on sale for $1.99/quart, and even California organic berries on sale for $2.99/quart.” As a result, produce sold through Red Tomato is more profitable to the grower: “In 2003, Richard Bonanno of Pleasant Valley Gardens (PVG) carefully tracked his earnings through Red Tomato against sales of lettuce through other channels. On gross sales to Red Tomato of $60,000, PVG earned $10,000 more in net income than had the same product been sold through other channels.” However, while the price to the grower has improved, Red Tomato itself has not yet learned how to recover the costs of their promotions through sales alone, and still relies on grants for a part of its income. Cooperative Development Institute

Red Tomato (cont.) Rather than a farmer-owned cooperative, Red Tomato chose to organize as an employee-driven non-profit, with an entrepreneurial culture and a small, tightly knit, highly experienced group of employees. This model, they believe, has allowed the business to change and adapt quickly, to take more risks, and to minimize the bureaucracy for the farmers. In order to satisfy participating farmers, Red Tomato has found they need to pay above-average prices at the same time as providing outlets where farmers can sell significant additional volume of product. Above-average prices for small volume are not worth the farmers’ time and energy after a few years. In addition, Red Tomato’s transparent business practices and their principle of ‘under-promise, over-deliver’ have become the basis of trust with participating farmers. Cooperative Development Institute

Foggy Bottom Wild Blueberry Co-op P.O. Box 569 East Machias, ME 04630 Phone: Mike Look, Foggy Bottom Wild Blueberry Co-op started up a dozen years ago when nine Maine growers split away from an existing cooperative struggling with a Catch-22 that's trapped many a good co-op. An unequal equity situation had developed. Older members were paying taxes on assets they didn't own-with no guarantee of ever getting back their equity. Meanwhile newer members essentially got a free ride on the co-op's earlier investment in a new receiving station. It was a tough situation and many members drifted away. Cooperative Development Institute

Foggy Bottom Wild Blueberry Co-op (cont.) But some of them chose to re-group as the Foggy Bottom Co-op, which now has about 20 farmer members with ten or twelve of them bringing in berries in any given year. They're located in the heart of 'Down East' Maine-Washington County, where fishing towns close up at 6:00 p.m. and come to life before dawn. It's one of the lowest income-per-capita areas of Maine, and one of its loveliest. People here have deep roots: the same names repeat on mailboxes and shop signs. One of the most common names is Look. Michael Look is an original member and president of the co-op. He explains that even though it was time for them to leave the older group (and clearly it was a difficult time for everyone), the new group wasn't disillusioned with the cooperative model. Cooperative Development Institute

Foggy Bottom Wild Blueberry Co-op (cont.) "It gives you moral support, for one thing," he says. Members share experiences and information to strengthen their individual operations, which also benefits the co-op. But useful and rewarding as the networking is, the initial producers incorporated as a cooperative in order to negotiate a better price for their fruit and to lower the cost of their inputs. These were motivation enough for them to take on running a business together. "You can band together and still do your own thing on your own land," states Look. Here as elsewhere around the Northeast, co-ops are helping producers hang on to the family farm. "If a single grower approaches a processor and tries to negotiate, he will be paid what is called 'field price'," explains Mike Look, noting that was 32 cents a pound from one processor in "The co-op will go to the processor and say 'we have a half million to one million pounds of fruit, what will you pay us?' The standard premium for such volume is seven cents over field price. To a farmer with a hundred thousand pounds of berries that's an extra seven thousand dollars in his pocket." Cooperative Development Institute

Foggy Bottom Wild Blueberry Co-op (cont.) Foggy Bottom expects strong demand for blueberries due to new information on the high anti-oxidant quantities in the fruit that make it a cancer preventive as well as its vision-enhancing powers (see "All the health magazines are saying 'eat blue'," says Look. They're even considering putting them in hamburgers in schools to make them healthier for kids. Blueberries are the hottest commodity on the planet right now." Cooperative Development Institute

New York Bold LLC New York Bold LLC, the owners of the locally grown “onions with attitude,” has the wheels turning for expansion. After an encouraging introduction into the market within New York State, they are increasing the distribution of the New York Bold brand into more eastern U.S. markets. In order to facilitate that growth they are contacting other grocery store chains and have been looking into purchasing additional packing and weighing machines. Their initial plan is to install the new equipment in one of the member's existing packinghouses, with a goal of securing their own facility within the next few years. New York Bold is now investigating new ways to raise capital in that behalf. And while rolling it out prematurely could be detrimental to the business, their hope if all continues as planned, is to expand the New York Bold to include growers from other counties and to make this a truly statewide brand in the future. Cooperative Development Institute

New York Bold LLC (cont.) New York Bold is considering franchising the brand to other parts of the state and country and are in the process of researching the intricacies involved in franchising. Other plans for expansion of the New York Bold brand include product segmentation. They are looking into various forms of onion processing, as well as the marketing of jumbo size onions and boilers. They believe that the catchy logo and slogan created for New York Bold has great potential for multi-level marketing of other Bold onion products. New York Bold is also striving to expand their presence within the institutional and restaurant trades. They will be packaging the Bold into 50-pound bags of onions to market to these customers. The excellent cooking qualities of these onions lend themselves perfectly to this channel of distribution. These plans are the result of a cooperative effort by local farmers with some support from local Cornell Cooperative Extension agents. Cooperative Development Institute

New York Bold LLC (cont.) The New York Bold "Onions with Attitude" slogan came about in April Onion growers from the 14 farms in Oswego County decided to meet. The farms, collectively, represent 2,400 acres, producing 90 million pounds of onions annually. The farmers recognized the need to create an identity for the onions after losing business to overseas producers and to the “so-called sweet” onions. They hired an advertising agency to help brand and create a marketing campaign. The goal was to educate the consumer to use New York Bold onions for cooking. The growers formed an LLC, and launched a “pilot program” designed to test whether their onions, when packaged, sold and marketed uniquely, could be a success in the market. And while the end of the “test” program doesn’t complete until May of this year, all signs indicate that consumers will be seeing a lot more of New York Bold’s “onions with attitude.” With the help of some funding from Operation Oswego County and some state and federal funding, the growers purchased a Europak pre-packer. It is one of the first to be used to package onions in the U.S. Cooperative Development Institute

New York Bold LLC (cont.) The packaging on the New York Bold bag is bright red and yellow, with a logo that is distinctive and eye-catching. They also produced and sent displays to showcase the brand, and tout the qualities of the New York Bold onion. In mid-October, onions packaged in 2 pound bags began appearing on the shelves of 94 Tops Friendly Markets across New York State, and in the five Peter's Markets in Syracuse. Following the successful launch of the 2 pound bag, New York Bold has been asked to pack onions into 3 pound bags which soon will be delivered into the Tops Markets in Ohio. To increase brand recognition, New York Bold began radio advertising in the Buffalo market, have had appearances on WTVH Channel 5, and have made great strides in public relations. Cooperative Development Institute

Our Family Farms of Western Massachusetts Phone: Fax: Faith Lally-Williams Our Family Farms started in the spring of 1997 as the Pioneer Valley Milk Marketing Cooperative. Members were local dairy farms in Western Massachusetts, most of which had been in the same family for generations. There are seven members of the cooperative, with 767 years of dairy farming experience among them. Our Family Farms is located in the historic Snow’s Dairy on School Street in Greenfield, which several of the member farms shipped milk to for processing in the 1950’s and 1960’s. Today, the plant produces premium Snow's Ice Cream and super premium Bart’s Ice Cream. Cooperative Development Institute

Our Family Farms of Western Massachusetts (cont.) Our Family Farms has formed a partnership of local farmers, processors, distributors, retailers and consumers to bring a high quality product to market - and in the process they are returning dollars back into the community and reaching out to their neighbors in a new and exciting way. Their focus is on traditional way of selling milk – from a local farm to a local home. Special care is taken in the production of their product: None of the cows milked by Our Family Farms are treated with rbST, a synthetic bovine growth hormone. In fact, since the formation of Pioneer Valley Milk Marketing Cooperative, none of the members have used rbST. Now all of the farms have gone even further and signed a pledge to guarantee that they do not and will not use rbST in the future. In addition, Our Family Farms milk is processed and kept separate from all other milk, all the way from the farm to the store, to guarantee that the milk will meet the high taste, quality, and freshness standards of its customers. Cooperative Development Institute

Penn’s Corner Farm Alliance P.O. Box 160 Shelocta, PA 15774 Phone: Fax: Ken Marshall, President The Penn's Corner Farm Alliance is a group of 21 farmers in nine counties surrounding Pittsburgh, which was organized in 1999 to supply fresh produce to restaurants and grocery stores. They also run several CSAs and participate in a Friday Farmers Market. The idea for the Alliance came out of a 1997 survey by the Pennsylvania Association for Sustainable Agriculture (PASA), which surveyed local farmers to see if they were interested in promoting their products through a publication, and Pittsburgh-area chefs to learn what local products they wanted to purchase. Cooperative Development Institute

Penn’s Corner Farm Alliance (cont.) From the beginning, Penn’s Corner listened to the needs of area chefs. Bill Fuller advised the group during their formation and told them, “Focus on the weird stuff. Microsprouts, unusual varieties, edible flowers, odd greens like purslane.” By joining the farms together, the co-op is able to provide an abundant supply as well as a wide variety of products. “I tried to teach them what a chef will pay money for,” said Fuller. With greenhouses and other methods the co-op is able to supply many items all year long. Margie Dagnal is one of the founders of Penn’s Corner, and adheres to this view: “You have to know your market and ask your customers every week ‘What do you want?’ I'd like to grow so many different herbs, but I only have so much space, so I have to concentrate on what the chefs really want,” she says. Cooperative Development Institute

Penn’s Corner Farm Alliance (cont.) The partnership with area chefs had some crucial elements. In order for chefs to want to do business with the Alliance, they had to become a year-round supplier. They did this by adding greenhouses, year-round meat suppliers, and two farmers who grew products during the off-season – mushrooms and hydroponic tomatoes. Doyle Freeman, another founding member says, “It is very difficult for marketing managers to go to a chef in the spring and say ‘Hi! Here I am again’.” Dependability is the most important trait when dealing with chefs, they learned. Deliveries must be made on time and exactly where the chefs wanted them. At first, the members rotated delivery duties. Now there is one driver (with a back up) to make sure it gets done right every time. Cooperative Development Institute

Proud Cow of Rhode Island When a friend asked longtime Coca-Cola International distributor David Clapp to sit in on a grange meeting with some Rhode Island farmers, no one could have guessed where it would lead. Clapp was moved by the plight of the state’s remaining 17 independent dairy farms, many of them 4th generation family businesses. They knew most of what they needed to know to run a successful milk operation, and they knew they needed to band together. But after attending several meetings, Clapp also recognized that these independent-minded farmers needed some help when it came to co-operating a business. “I said, ‘You have to come to meetings not to debate and dispute but to find unanimity,” replied Clapp. They asked him to help. Cooperative Development Institute

Proud Cow of Rhode Island (cont.) “Some of them thought it was a lot of, you know, MBNA sales stuff at first, but near the end we just kept getting closer and closer to pay dirt, and they could see that,” commented Clapp. He encouraged them to stop doing things like deciding on packaging material or analyzing the dairy industry, admittedly complex and crisis-ridden, and instead to work together and create a brand. “It was a piece of luck, hitting on that idea,” he says. “The farmers needed something tangible like that to hang onto. And the brand, the name, the caricature, ‘Proud Cow of Rhode Island’ pretty much says it all. It stands for what these families are up against, the fighting spirit (and the sense of humor) that brought them through.” The co-op plans to market milk only in Rhode Island, impressed with the growing “buy local” trend in the dairy, egg, and meat markets as well as fruits and vegetables. They have applied for a value-added USDA Rural Development grant to build their marketability. Cooperative Development Institute

Proud Cow of Rhode Island (cont.) They’ve already registered a trademark, an act Clapp credits with coalescing the group. “They saw what their collective equity could do and realized that they owned something together. Attendance at meetings went up. It was one of those moments, when you know it’s going to be a tough haul but with enough luck and enough strategy, you can do it.” This success story originally appeared in the Cooperative Life Leader, CDI’s monthly newsletter. To read more stories from CLL, visit Cooperative Development Institute

Massachusetts Woodlands Cooperative, LLC P.O. Box 9660 North Amherst, MA Arthur W. Eve, The forest of northern hardwoods, white pine and hemlock that blankets much of the western Massachusetts landscape is in reality a patchwork quilt of non-industrial family plots--about 220,000 of them in all, ranging in size from several dozen to several hundred acres. In 1999, a group of forest landowners became convinced that the “problem” of many small, privately-owned parcels was in fact an opportunity. They recognized that a cooperative structure could enable them to strengthen their bargaining power, pool their resources, add value to their forest products, enrich the local economy, and maintain the region’s rural quality of life. Cooperative Development Institute

Massachusetts Woodlands Cooperative, LLC (cont.) So they took the initiative to learn more about best forestry practices and the business of selling forest products, cooperatively. Support came from the University of Massachusetts, the Massachusetts Department of Conservation and Recreation, the Massachusetts Forest Stewardship Program, and the Cooperative Development Institute. The group surveyed nearly 1,000 of the region’s small landowners in order to develop a list of potential services the co-op might offer. Priority was given to forest and wildlife management, preservation and protection. They also emphasized gaining access to federal and state programs, and working with local loggers, sawmills, and manufacturers. In 2001 they incorporated, and since then they have continued to research and learn, develop their land, and plan their business. Their dedication has paid off. Cooperative Development Institute

Massachusetts Woodlands Cooperative, LLC (cont.) On January 16th, the Massachusetts Woodlands Cooperative was awarded $499,523 from the US Department of Agriculture Rural Development’s value-added program to expand niche markets that focus on Forest Stewardship Council (FSC) green certified materials and other forest products. “Our support of value-added agricultural ventures is only truly successful when coupled with innovative ideas and initiatives like those being developed by the Massachusetts Woodlands Cooperative,” said the state’s USDA Rural Development Director David Tuttle. “This grant benefits not just the cooperative, but the environment, the community, and the local economy.” USDA Rural Development's mission is to deliver programs that support increasing economic opportunity and improve the quality of life of rural residents. As a venture capital entity, it provides equity and technical assistance to finance and foster growth in homeownership, business development, and critical community and technology infrastructure. Cooperative Development Institute

Massachusetts Woodlands Cooperative, LLC (cont.) The co-op will use its grant to develop and implement niche markets for flooring, timber frame materials, and residual wood products such as bark mulch, firewood, and pallet wood. To this end, they have already obtained FSC Group ‘Chain-of-Custody’ certification to monitor the value-added process from the forest on, and they’ll establish a network of producers interested in buying these products. In addition, the co-op will assess the market potential for using forest-based biomass fuels in southern New England. An expanded database will provide detailed information on forest material available for harvesting from co-op members, track the transformation into value added products, organize their business information (inventory, sales, marketing, etc.), and link to the co-op’s website so that members and those who work on members’ land can access proprietary information more easily. Cooperative Development Institute

Massachusetts Woodlands Cooperative, LLC (cont.) During the three-year grant period, the co-op also proposes to expand membership from the current 27, who together manage around 3,500 acres of forest land, to 125 members owning 20,000 forested acres. And it will recruit 25 regional artisans, craftspeople and other woodworkers as associate members (who will receive Group FSC Chain-of-Custody certification as a part of their membership) to create valuable products from green-certified material harvested from the co-op’s forest. This success story originally appeared in the January 2004 edition of the Cooperative Life Leader. To read more stories from CDI’s newsletter, visit Cooperative Development Institute

Resources Primary contacts SARE and the Sustainable Agriculture Network- SARE and SAN have great information available for people interested in starting a business in sustainable agriculture. Also check their project database for information on what other groups are doing. Northeast SARE - Cooperative Development Institute – CDI is the Northeast’s Cooperative Development Center providing business planning, education and training, and many other services to existing and start-up group-based businesses. National Agricultural Library’s Alternative Farming Systems Information Center, US Department of Agriculture - Cooperative Development Institute

Resources (cont.) Additional Contacts U.S. Department of Agriculture - Cornell University Cooperative Extension – University of Vermont Cooperative Extension – University of Massachusetts Cooperative Extension - University of Wisconsin Center for Cooperatives – University of California Davis Center for Cooperatives – National Cooperative Business Association – National Council of Farmer Cooperatives – Cooperative Development Institute

Resources (cont.) Agriculture Related Sites Regional Farm & Food Project - New England Small Farm Institute – - The “Growing New Farmers” section lists grants, loans, and other sources of capital available to starting farmers The New Farm – - A farmer-to-farmer exchange maintained by the Rodale Institute Northeast Integrated Pest Management - Pennsylvania Association for Sustainable Agriculture - Cooperative Development Institute

Resources (cont.) National Agroforestry Center - Robyn van En Center for CSA Resources – Includes CSA farms by state Appropriate Technology Transfer for Rural Areas Small Farms - Farm Transfer (new farmer, retiring, intra-family,etc.) - Organic farming resources - Cooperative Development Institute

Resources (cont.) Center for Integrated Agricultural Systems Leopold Center for Sustainable Agriculture Organic Farmers Research Foundation Northeast Organic Farmers Association (NOFA) Soil and Water Conservation Society Yahoo’s list of Sustainable Agriculture sites Cooperative Development Institute

Resources (cont.) Northeast Center for Food Entrepreneurship Agriculture Network Information Center ATTRA-Appropriate Technology Transfer for Rural Area American Farmland Trust Farmland Information Library Alternative Farming Systems Information Center Cooperative Development Institute

Resources (cont.) Small Livestock - Women's Agricultural Network – Cooperative State Research Education and Extension Service - Cooperative Development Institute

Resources (cont.) Northeast Organic Dairy Producers Alliance (NODPA) NODPA has three resources which may be of interest to you and dairy farmers in the Northeast: or - Resources, calendar of events, newletters, survey results The NODPA newsletter - available at the www site or by mail. Contact Lisa McCory, NOFA-VT N. Randolph Rd., Randolph, VT or Odairy electronic discussion group. Odairy - or contact Bill Casey at Cooperative Development Institute

Resources (cont.) Internet Resources “How To Direct Market Farm Products on the Internet” is available in print and on the Internet at For more information or to obtain a copy of the publication, contact : Errol Bragg USDA AMS TMP MSB Room 2646 S, Stop 0269 1400 Independence Ave., SW, Washington, DC 20250 Phone Fax Value-added: At this site you can access information about projects and organizations within New York State, regionally, and nationally: Cooperative Development Institute

Resources (cont.) Prospects for the Market for Locally Grown Organic Food in the Northeast US David S. Conner, Ph. D. Department of Applied Economics and Management College of December 2002 RB For a wide range of useful resources on farm management, environmental issues, (and cooperatives) go to: Cooperative Development Institute

Resources (cont.) State Departments of Agriculture in the Northeast Connecticut: Delaware: Maine: Massachusetts: Maryland: New Hampshire: New Jersey: New York: Pennsylvania: Rhode Island: Vermont: West Virginia: Cooperative Development Institute

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