How to Establish a Cooperative 3rd Annual USDA Outreach Conference Virginia State University Petersburg, Virginia March 18, 2010 Tony Banks Virginia Farm Bureau Federation Commodity/Marketing Department Richmond, VA
Purpose • What Are Cooperatives? • Advantages and Disadvantage • Development Steps
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What Is A Cooperative? A business • Owned and democratically controlled by the people who use its services • With benefits distributed equitably to them based on use
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What Is A Cooperative? Purpose • Obtain market access or broaden market opportunities • Improve product or service quality • Reduce costs (purchasing)
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What Is A Cooperative? Extension of grower’s farm • Cooperative enhances farming operation • Growers own their cooperative. • Lack of support for the cooperative means failure.
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Advantages of Cooperatives
User-members drive business Patronage-based benefits Market access Capital pooling Structure - Easy for large numbers of members to use
Disadvantages of Cooperatives
Members have to give up some independence
Time to develop
Group decision-making
Everyone needs to commit to the cooperative
Voting board members have to be producers
Board v. manager responsibilities
Cooperative Development Steps • Meeting to define economic need/opportunity • Exploratory meeting – Potential members – Steering committee/leadership – Education about cooperatives
• Survey potential members
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Cooperative Development Steps • • • • •
Feasibility study Business plan Legal documents Business startup Board education
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Bill Brockhouse U.S. Department of Agriculture Rural Development Rural Business-Cooperative Service Cooperative Programs Washington, DC
[email protected] Phone: (202) 720-2021
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Laurette Tucker U.S. Department of Agriculture Rural Development Virginia State Office Richmond, VA
[email protected] Phone: (804) 287-1594
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Virginia Farm Bureau Federation Cooperative & Enterprise Assistance • State’s largest farm membership organization • Represent our members’ political, economic and social interests • Provide educational, informational and economic services to our members
Virginia Farm Bureau • Assist individual and groups of producers developing – higher value markets – value-added products – renewable energy enterprises
• Commodity/Marketing Dept. • Virginia Foundation for Agricultural Innovation & Rural Sustainability (VAFAIRS)
Virginia Farm Bureau & VAFAIRS • VAFAIRS is a USDA-funded Rural Cooperative Development Center • Partner with outside experts – – – – – –
USDA VDACS, VDMME, VEP VA Cooperative Extension VA Tech, VSU, Longwood, VCU Private Consultants Many Others
Virginia Farm Bureau & VAFAIRS • Provide assistance new ventures for the following – – – – – –
Project advice Feasibility study Surveys and analysis Business/marketing planning Grant writing education/assistance Organizational structure
Virginia Farm Bureau & VAFAIRS • Provide assistance existing ventures for the following – – – –
Organization-wide strategic planning Board/officer strategic planning Board/office education Grant/finance education/assistance
Virginia Farm Bureau & VAFAIRS • Virtual Business Center www.vafairs.com – FREE on-line business assistance tool • Planning • Financial modeling • Financial statements
– Helpful Resource Links • Technical services • Financial services
• Educational Conferences & Workshops • Price Risk Management
VFBF Commodity/Marketing & VAFAIRS** Contacts Al Glass - 804-290-1156,
[email protected] Tony Banks - 804-290-1114,
[email protected] Jonah Bowles 804-290-1117,
[email protected]
Chris Cook 804-290-1111,
[email protected] ** Spencer Neale 804-290-1153,
[email protected] WWW.VAFB.COM
WWW.VAFAIRS.COM
Tony Banks Assistant Director Commodity/Marketing Dept. Virginia Farm Bureau Federation PO Box 27552 Richmond, VA 23261 804-290-1114
[email protected]
