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The new co-operatives

Is the co-op movement on its way out, or just getting rolling?

Co-ops have costs, like increased management time, and they’re less nimble, but for Bodnar and others in the industry, they make new ventures possible.
Chris Bodnar. photo: Chris Bodnar

Because Chris Bodnar loves soil, growing crops, the cycles of weather and seasons, it wasn’t a big surprise when, a dozen years ago, he decided his future was farming. Unfortunately, big barriers stood in the way of this 20-something. Since Bodnar wasn’t raised on a farm, he had no one’s bootsteps to follow in, and no opportunity to inherit land.

Even more challenging, his location of choice was B.C.’s Lower Mainland where prices on two- and three-acre parcels of ALR farmland routinely top $2 million.

In fact, Bodnar would still be dreaming rather than doing if not for one huge ace in his pocket: the farm co-operative movement.

Thanks to the investment of about 50 co-op members, Bodnar and his wife Paige Dampier have spent the past 11 years growing premium organic vegetables and berries for direct-to-consumer sale on 50 prime (i.e. “expensive”) Fraser Valley acres.

Members have access to the farm for a one-time membership investment of just $5,000.

To anyone who has scrimped and saved to purchase or lease farmland, Bodnar’s arrangement sounds almost too good to be true. Yet he now believes agriculture needs to take a hard look at the co-operative model, both in the form he currently benefits from and in its many other iterations.

“I’m constantly surprised by how rarely the co-op model is viewed as a business model in agriculture,” Bodnar says. “It’s so costly for new entrants to get into agriculture. I think it’s really crucial right now to explore the co-operative model for landholding, for value-added processing, for marketing, even for knowledge and equipment sharing. The co-operative model is a way for a community to come together around a piece of property or a vision for supporting farmers. It’s a creative and sustainable way to share resources and promote agriculture’s sustainability.”

Throughout the 1990s, the land that Bodnar farms today was a privately held organic farm owned and operated by current Vancouver mayor Gregor Robertson and his then-wife. When the Robertsons listed the property for sale in 1998, a group of mostly urban non-farmers united as a co-operative to save the prime agricultural land from development. Together, the group purchased the property and, since then, have owned and managed it as Glen Valley Organic Farm Co-operative.

The vast majority of Glen Valley Co-op’s members are “supportive shareholders”, i.e. relatively uninvolved financial backers who expect little to no access to the land and no financial benefit from their investment. Rather, they invest for ideological reasons. They believe in sustainable farming and are willing to put dollars behind ensuring it is able to continue.

Tenant farmers have come and gone over the years. Currently, Bodnar’s “Close to Home Organics” business shares the land with the three tenant farmers behind Earth Apple Organic Farm.

Glen Valley meanwhile sees its job exclusively as maintaining the physical assets of the land. It leaves the farming operations up to farmers, only stipulating that leaseholders maintain organic certification.

In Bodnar’s case, a co-op’s benefits to the individual farmer are obvious. Not only does he have access to land he’d likely never be able to purchase, he says he also has more control and security than he would in a typical lease arrangement.

“Because we are members in the co-op, we have more say about the future use of the land than we would as leaseholders where someone else has ultimate control over the land,” he says. “It’s very easy for someone who owns land to cash in on land value without notice. Being at the mercy of the whims of the owner is something that causes many young farmers who are renting land a lot of consternation.”

A landholding co-op is just one of countless co-op options. In fact, the flexibility of the co-op concept is one of its most important attributes.

Co-ops can be virtually any size, and they can be structured around any priority. Consumer co-ops increase members’ buying power. Worker co-ops aggregate the supply of labour, allowing workers to better access employment and to advocate for rights and benefits.

In agriculture, the vast majority of co-ops are producer co-ops, designed so members can (among countless other possibilities) share infrastructure, improve production or marketing efficiency, maximize purchasing power, streamline or improve backroom elements like accounting, and/or increase negotiating power.

Most co-ops start as grass-roots efforts with a handful of individuals who legally bind themselves together via a co-operative agreement because of a shared need, resource, concern or priority. While most stay relatively small, others grow to significant size, like BC Tree Fruits and Quebec-based Agropur with hundreds of members each. Non-ag co-ops like Mountain Equipment Co-op and some credit unions boast tens of thousands of members.

“The major challenge for the co-op model is to increase people’s awareness of them,” says Elvy Del Bianco, the program manager for co-operative partnerships at Vancity credit union. “A lot of people think co-ops are something you did on the prairies a generation ago, or a counterculture thing in the ’70s. They don’t realize that co-ops are in their midst right now.”

Need proof? Home Hardware, Pharmasave, Ocean Spray, Sunkist, Blue Diamond, Best Western, even the Green Bay Packers are all co-ops.

“There’s a billion people on this planet who belong to at least one co-operative,” says Del Bianco. “About 250 million people on this planet are employed by co-ops. That’s far more than multi-national corporations employ. The co-op landscape may have changed from our parents’ or grandparents’ time, but we haven’t outlived the model.”

Though most co-ops simply hold the membership dollars from a member’s joining until their departure, there are other ways to offer returns to members.

“A lot of people think corporations best support your needs now and into the future,” says Bodnar. “But the same can be said for co-ops. You can set up co-ops that have the potential to allow for removing some of the equity that develops, or that allow members to get an investment return. When our grandparents on the prairies set up their branch of the Federated Co-op, their member equity accumulated in the co-op and then was paid out in monthly cheques after they turned 65. There are many options.”

Arzeena Hamir. photo: Bill Jorgensen Photography

Three years ago, Comox Valley farmer Arzeena Hamir banded together with four other farms to create Merville Organics, a producer co-operative that shares resources and markets direct-to-consumer. Today, Merville Organics sells produce at three farmers markets, supplies eight restaurant and health food store wholesale clients, and delivers 120 CSAs (Community Supported Agriculture) produce boxes from spring to fall.

“As one of the bigger farms in our group, people are always asking us why we don’t go it alone. There’s no way,” Hamir says. “Well, I guess there’s always a way, but it would be so much more stressful and so much less efficient.”

The group shares the load for marketing and distribution (“I handle Saturday market sales. Another person takes on Sunday. Another takes on the CSA dropoffs on Tuesday and someone else on Friday,” she says). The group also shares infrastructure, including a truck, walk-in coolers, wash station, flame weeders, etc. Plus, the co-op backs up individual members on the production side, providing support when works piles up, for example, and stabilizing output in the event of production shortfalls.

The benefits, Hamir says, can be summarized as “community.”

Farming was never meant to be a lonely occupation, says Hamir. “It’s such a fallacy that farmers need to be able to do it all.” photo: Bill Jorgensen Photography

“I know the democracy things takes time and effort and can be really frustrating, but the emotional support a co-op offers is huge. We had the crappiest spring this year. We commiserated together. When things go well, we celebrate together.

“I think farming was never meant to be a lonely occupation,” she believes. “It’s such a fallacy that farmers need to be able to do it all. Hell no, there’s no way that was ever true. Our co-op structure is helping to recreate what everyone used to have and what can continue to make farming viable for the long term.”

Hamir was very lucky. Though she admits that forming the co-op was an incredible amount of work, she and her co-op partners connected with organizations that provided informational and financial startup support.

Unfortunately, however, Merville Organics’ long but relatively straight road to co-op formalization isn’t what all hopeful co-op initiators should necessarily expect. In fact, Canada lags behind many other countries in terms of offering formal support for co-operatives.

“A few years ago Vancity gathered some co-op members together to talk about some of the challenges and opportunities of co-ops,” says Del Bianco. “They all told us the hardest part of forming a co-op is the actual forming of the co-op. They described it as building the plane while they were flying it.”

Figuring out how to build the co-op took serious time and a lot of personal energy, says Del Bianco. “The challenge is that there are so many different options for co-ops, and people who want to set up a co-op often feel that they have to invent it from scratch.”

Del Bianco, Hamir and Bodnar all agree the process to co-op creation needs to be simpler, and government legislation needs to more actively support co-op development.

“We are working on a recommendation paper to put in front of the noses of provincial government,” says Del Bianco. “We’d like to see the process for co-op incorporation streamlined. At this point, it’s unnecessarily complicated and takes too long.”

As well, he says, governments could actively promote co-ops in agriculture by educating producers on the many ways in which co-ops can be structured.

Governments should also recognize that farmers are already stretched for time. “Ideally, co-ops are ground-up organizations,” Del Bianco agrees, “but it’s tough in agriculture to do that. There’s a real role for government to make available resources that support the community organizing and development process. We need someone greasing the wheel a little and presenting some basic information on successful co-ops. It would be a relatively modest investment of government resources, but a valuable one.”

Changes to securities legislation should also allow more freedom and flexibility for investment in co-ops, Del Bianco argues. The traditional co-op model, under which members bring a set membership fee into the co-op when they join and take that same amount with them when they leave, means co-ops often have limited investment ability, limited options for raising any significant capital, and very low chances of being approved for credit from most financial institutions. So, while a co-op might be successful as a marketing structure, it is more problematic if the priorities of the membership require serious infrastructure or technological investment.

“Right now, co-ops can have a class of investing members but if you go above $5,000 per share, it triggers all kinds of security regulations,” says Del Bianco. “We’d like changes there that would allow greater pooling of capital that would support co-ops better. It’s just too difficult to accumulate too little capital.”

Bodnar adds that professional support is another element that would help.

“There is definitely a gap. We don’t have lawyers, accountants, even executives who understand the co-op structure and the benefit to the agricultural sector,” he says. “As organizations change and bylaws change, we need support from professionals to reinvent existing co-ops to meet the changing needs of members.”

Admittedly, not everyone is quite so keen on co-ops. Some believe the co-op movement is an outdated dinosaur that no longer works in an era of high technology, costly infrastructure, and increasingly competitive marketplaces.

Motivated, entrepreneurial and competitive farmers may argue that the product grown by the best growers gets averaged down in a co-op because it is mixed with other growers’ inferior product. Others say they would have to settle for average prices because a co-op has to move a higher volume of product. Still others say a co-op fosters complacency or decreased competitive spirit.

It doesn’t have to be that way, says Bodnar. A co-op can be — and, in fact, should be — structured to ensure farmers are fairly and individually compensated for quality. A co-op’s ability to foster relationships with more customers can offer higher returns to growers. And, a co-op should actively foster leadership and support ambition, he says.

“Some growers are extremely talented and ambitious, with huge entrepreneurial drive. If a co-op could invite those people into leadership positions, the whole organization could benefit from the strength of those growers,” he says. “There absolutely is a place for entrepreneurial spirit and ambition in co-operatives.”

In fact, in other countries, co-ops actively support competition, product excellence, and maximized returns. In Italy, co-operatives are valued, vibrant, diverse and cutting-edge, and they are seen as a fully integrated and entirely accepted way of doing business. In fact, as much as 95 per cent of high-value, value-added agricultural products including wine, parmesan cheese and balsamic vinegar are produced via co-ops in certain regions.

“Co-ops have completely changed the economic reality for farmers in Italy,” says Del Bianco.

Since 2002, Vancity has sponsored a study tour to the northern Italian region of Emilia-Romagna to see its co-operative system in action. This past June, the Vancity group — which included Bodnar, Hamir and other community partners — travelled to the region to explore the role of co-operatives in its thriving agricultural sector.

“It was so eye-opening to see how co-operatives work in Italy. The region we visited has a very well-developed and diversified economy. So much of the agricultural activity was supported by co-operatives with vertically integrated ownership by farmers,” says Bodnar.

He was particularly impressed to see that co-operation does not mean a lack of competition in Italy. In fact, competition and ambition are hallmark features of successful co-ops internationally.

“In Italy, they have a carbonated red wine called Lambrusco. There are numerous co-ops that each produce that wine. Each has a lot of members: some are 1,400 members in size. The co-ops compete for members. What that really means is that the products have to be quality because membership is not a static thing,” says Bodnar.

In addition to government legislation more actively supporting its co-op sector, Hamir noticed another key element of the co-op movement’s success in Italy.

“I did a lot of pre-trip reading,” says Hamir. “While I was reading, I was thinking: maybe it’s in Italians’ culture to get along? Maybe that’s why co-ops work there better than here? No! They fight there too! But they have support services for co-ops in trouble there. There are places you can call on that will helicopter in and guide you through the major hiccups a co-op can go through.”

In Italy, all co-ops pay a levy of sales. The levy is put into a fund that supports new co-op startups and offers resolution support for co-ops facing issues.

“Because co-ops are so big and such an accepted way of doing business there, the funds come from within the co-op sector. It would take us a while to get to that stage. What we need in Canada is a) some funding and b) some people with skills to support and facilitate,” says Hamir.

Back home in Canada, Del Bianco was gearing up for Cooperate Now, a four-day “Co-op Boot Camp” organized through a partnership between the BC Cooperative Association and Vancity since 2015. Designed both to help build a support network for prospective co-op creators and to teach the basic co-op model, the boot camp enjoys strong and growing demand.

“People are thirsty to sip at this well,” says Del Bianco “We have to turn away as many good applicants as we allow into the Boot Camp because there is so much interest.”

Typically held in May, the workshop was offered an extra time in November this year in order to better suit the many farmers interested in co-op creation.

Hamir has her own boot-camp style, tough-love advice for those considering a co-operative structure.

“If you can’t tolerate meetings, co-ops are definitely not a good choice for you. Working in a democracy is not the same as making decisions right away. You won’t be as nimble. Allow yourself time to plan, since there’s a lot of planning that goes into making a co-op successful. And, have a good business plan. Just because you are a co-op doesn’t entitle you to be successful. If the numbers aren’t there, you aren’t going to succeed.”

At the end of the day, have the meetings, the planning, the voting and the compromising been worth it for Hamir?

“Oh my gosh. Absolutely. I get heart palpitations just thinking of what it would be like if Merville Organics didn’t exist.”

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