Scaling Up The Cooperative Economy

May 16th, 2013 -- john
Regional alliances and collaborations help spread cooperative business models
Posted by: 
John Duda
The Cooperative Issues Forum

At the 2013 Cooperative Issues Forum, hosted by the Cooperative Development Foundation (CDF) on May 8th at the National Press Club, representatives of three equally exemplary, but very different projects, outlined how they had used regional collaboration to advance the cooperative economy. The forum is the prelude to the annual induction ceremony for the Cooperative Hall of Fame and each year explores vital issues in the cooperative sector.

Introduced by Mike Beall, the current President of the National Cooperative Business Association (NCBA), this year’s forum tackled the challenges of taking the cooperative model to scale. Cooperatively owned businesses, with an estimated 130 million members, are a huge but largely unrecognized sector of the US economy. As Beall noted in his introductory remarks, this lack of recognition, especially on the part of government, often translates to unfortunate missteps and omissions. In particular, Beall highlighted how a lack of familiarity with the basic principle of cooperatives results in phenomena such as the inability of food cooperatives to access capital via Small Business Administration loans, or FEMA's unwillingness to provide recovery funds to help restore the common areas of housing cooperatives in the wake of Hurricane Sandy. For Beall, the challenge is twofold; cooperatives need to better understand the benefits of working together to build a stronger mutual economy, while at the same time building organizations that can represent their interests in civic and political life at the local and national scales.

Liz Bailey, the Executive Director of the Cooperative Development Foundation, echoed Beall's concerns in her opening comments. She went on to highlight the momentum that had developed around the recently concluded International Year of the Cooperative, and spoke of how this surge of interest in the cooperative model in the US and across the world would likely be felt for years to come.

On the ground, different and increasingly sophisticated approaches for advancing the cooperative economy were highlighted by the panelists. In Philadelphia, for instance, a new regional organization called the Philadelphia Area Cooperative Alliance (PACA) is providing a platform not just for cooperative development, but for political organizing and education. Bob Noble, from the Keystone Development Center, explained the genesis of PACA and the work it is engaged in on a number of exciting fronts. Critical policy work is taking place, including the passage of a city council resolution in support of cooperatives and an important study of local government best practices in support of co-ops—not to mention the integral role Philadelphia cooperative advocates played in working with Representative Chaka (D-PA) Fattah around the introduction of the National Cooperative Development Act. PACA is forging connections with area universities to conduct a cooperative economic impact study with Haverford, and develop a certificate program in cooperative business at Drexel University. They are also working to launch new food co-ops, build a worker owned taxi cooperative, and establish a revolving loan fund. Crediting the influx of young people excited about cooperatives for the Alliance’s growth, Noble sees PACA working to become a membership organization that can support full-time paid staff.

In New England, an even larger regional collaboration is empowering the area's food cooperatives. Erbin Crowell, the Executive Director of the Neighboring Food Co-op Association (NFCA), presented this impressive second-level cooperative, composed of existing food co-ops and startup projects, with a combined membership of over 80,000 people. Crowell pointed out that from Montreal to Mondragon, regional structures that promote collaboration among cooperatives are key to building a cooperative economy. The NFCA seeks to aggregate the power of its members to do just that, not only for the benefit of the local economy, but as a way of using their combined influence to build a healthier, more just, and sustainable food system for the region. He noted the irony that despite the proven effectiveness of the cooperative model in the agricultural and food consumer sectors, it remains largely absent from the current energetic discussions around food security. To help inject the cooperative model into these discussions, NFCA is working with its members to combat the perception that food cooperatives are too expensive to help low-income families achieve food security by sharing best practices regarding affordability across its membership. It is also working to make sure that its members have a seat at the table when it comes to state-level economic policies. Working with the University of Vermont to assess the economic impact of its combined membership, the NFCA discovered that its cooperatives bring in $200 million in annual revenue and $30 million of local purchasing, and that food cooperatives are the 25th largest employer in the state of Vermont. By bringing to light the surprisingly large economic impact of cooperatives in the region, this study helped pave the way for high-level discussions with state officials.

The third presentation highlighted the Fifth Season Cooperative in rural Wisconsin. Jerry McGeorge of the CROPP Cooperative (better known to most Americans as Organic Valley, the largest organic food producer’s cooperative in the country), explained how a coalition of local businesses in the agricultural sector, some cooperative and some not, together with area institutions, has spearheaded the creation of an innovative multi-stakeholder cooperative to promote regional food security and the local economy. Fifth Season has six classes of membership, making it one of the most sophisticated multi-stakeholder models to date: producers and producer groups, processors, distributors, large institutional and retail clients, and workers. Essentially, Fifth Season provides a template for a regional food sector which is managed through an overarching cooperative structure, rather than by competitive market relationships that pit members of the same communities against each other. With the support and involvement of regional anchor institutions like Gundersen Lutheran (whose involvement is highlighted in our report, Hospitals Building Healthier Communities), the cooperative received significant assistance from local government to transform a recently shuttered 100,000 sq. ft. factory into a comprehensive food production and distribution center.

The panel concluded with a presentation by The Democracy Collaborative’s Gar Alperovitz, author of the newly published book What Then Must We Do?, who emphasized the importance of building cooperative capacity at the regional scale within the larger movement for a new economy. Despite the lack of press coverage for such promising developments, he stressed that at a time when the conventional economy is faltering and failing, cooperative models provide a much needed new direction. Alperovitz asserted that the examples presented of educational efforts, training and technical assistance programs, and linkages with non-profit anchor institutions like universities and hospitals, as well as local governments are critical in the transition to a more democratic economy. In a time when wealth is becoming more and more concentrated in American society, Alperovitz contended that serious efforts to build a cooperative economy at scale and generate economic answers that make sense for communities are of vital, and even historic, importance.