Cooperative Rural Workforces
By Daniel Hobbs, Director, Rocky Mountain Farmers Union Cooperative Development Center
Several cooperative initiatives designed to create rural jobs and serve farmers and ranchers and food makers are underway in Colorado and showing promise for solving tough persistent problems.
While working with the Montezuma Orchard Restoration Project (MORP) in 2016, the RMFU Co-op Center learned of the emerging heritage apple economy of Southwest Colorado and the looming challenge of harvesting the fruit. In February of 2017 the Center held a “labor listening session” with 20 farmers and ranchers in Mancos and learned a lot about labor dynamics and solutions on family-scale farms. Numerous producers described their operations having been constrained due to qualified and timely labor. Others reported scaling their farms to exactly what they could handle within the family unit because hired help was unpredictable and difficult to find.
At that listening session we also explored the idea of a mobile workforce that could offer timely and targeted contractual services for farmers and ranchers. Various models were discussed, including cooperative H2A programs, established labor contractors, and conservation-type corps crews. The consensus among the meeting participants was that there was a clear need and desire for fresh solutions to the labor bind that many agricultural communities face year in and year out.
With this information the Co-op Center dedicated itself to identifying partner organizations and proposing a pilot project to develop and test the viability of a mobile workforce. We formed partnerships with two non-profit organizations—the Good Food Collective of Durango and Uproot of Boulder. Under the leadership of Rachel Landis and Dave Laskarzewski, we entered into what became four years of proof-of-concept for a mobile farm domestic workforce. Our first outreach efforts to recruit worker participants were to the Somali Bantu immigrant community in Denver and the Veterans to Farmers organization. Ultimately people from many walks of life worked during harvest time each year on a variety of fruit, vegetable, livestock and hemp farms.
Demand from the farmer and rancher clients proved to be strong and the commitment from the workers and project leaders was also strong. One of our assumptions was that some people actually do like physical work and appreciate working outside and with plants and animals. This proved to be true and, additionally, the wide diversity of work at different operations was highly valued by the workers.
Questions of the economic sustainability of these pilot projects have been in the forefront of our minds all along. How do we pay fair and living wages to workers, acceptable charges to farmers and ranchers and cover overhead? Furthermore, how can these types of businesses operate on a year-round basis? The challenge of the business model(s) is one we are still working on with the expert support of retired New Mexico State University agricultural economist, Connie Falk. Some of the most promising approaches we have developed thus far involve expanding clientele to include food makers and offer them processing labor services; other professional services, such as marketing, bookkeeping, agronomic consultation; and establishing a “tool library” that would enable a future workers cooperative to provide more technical, custom, and valuable services to farmer and rancher clients.
At the time of writing this article two steering committees—one in Boulder County and one in Pueblo County--are working on refining business models that may well lead to the creation of one or more rural worker-owned cooperatives. If successful, these cooperative businesses will be unique in the United States and may contribute significantly to supporting family farms, establishing meaningful work, and fostering improved diversity and inclusion in local food systems.
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Financial Feasibility Analysis and Business Planning
Dr. Connie Falk joined the RMFU Cooperative Development Center as a consultant in May, bringing with her a background in agricultural economics and business. She retired from New Mexico State University in 2013, after 25 years teaching and conducting research in sustainable and organic agriculture, crop diversification, small farm economics, season extension technologies, and food system issues.
Business plans are an essential tool for new and expanding businesses to analyze their options and make a rational decision about how best to invest or whether a business idea is worthwhile at all. When business expansion or startup is funded by venture capital or debt, a business plan is an absolute requirement. Deciding on the form of the business organization, whether it is a limited liability corporation, a Sub-Chapter S corporation, a cooperative, or a partnership will not alter whether a proposed business venture is a good investment, and can be dealt with after the details of the business plan are examined. Only slight changes to the business plan would need to be made in handling how profits are distributed or taxes paid if the choice of business organization changes from the original assumption in the business plan.
The major components of a business plan are the marketing study, the financial feasibility analysis, the organizational plan, and the financial plan. Many business plans also contain an industry analysis and an executive summary. Some banks also ask for a risk analysis and a plan addressing how major risks will be handled.
The marketing study examines what products will be sold or services provided, at what price, through which channels and to which customers or consumers. The marketing study will analyze the promotion and advertising methods and costs. Product packaging and labeling costs need to be estimated, and product sizes need to be specified. The organizational plan contains the background and expertise of all the business principals. Enough detail is needed to convince any investor that the business leaders are competent and trustworthy. The financial plan details how much financing is needed to successfully launch the venture and the source of those funds, whether debt or equity.
The backbone of the business plan is the financial feasibility study. The financial feasibility study will draw upon results from the other three major components. Product lines and prices, product marketing costs, packaging costs, and costs of capital are examples of information that flows from the other components into the financial feasibility study. At a minimum, the financial feasibility study needs to contain the pro forma, or projected, income statement, cash flow, and balance sheet. Projected financial ratios and a breakeven analysis are also desirable.
The three major financial statements need to be connected in the model by formulas so that the fundamental accounting relationship is always maintained: Assets=Equity+Debt. For example, if a piece of equipment is expected to be purchased and is partially debt-financed, the balance sheet would be affected by the depreciated asset, the debt incurred, and the equity provided by the business. In addition, simultaneously, the income statement would be affected by the interest expense, and the cash flow would be affected by the outgoing cash for the down payment and loan repayments. A well-constructed financial feasibility model incorporates formulas to insure none of these impacts are missed.
Ideally, the income statement and cash flow can project monthly as well annual outcomes. A good financial feasibility study will project at least a few years into the future, and be able to carry forward balances from each year to the next. The study should be able to handle any short-term or long-term financing of assets, including a line of credit. The model should be set up so that changes to assumptions can easily be included, and new financial projections provided. In other words, the model should be easy to use to create what-if scenarios or sensitivity analyses. |
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The Cooperative Difference
George Cheney is professor emeritus in communication at the University of Colorado and an independent contractor working with RMFU.
People in the co-op world often speak of “the cooperative difference”. This phrase has several meanings: one of them refers to the values and principles upon which co-ops are based and how they put those commitments into action.
Cooperatives in the US can be traced back to the first mutual insurance company founded by Ben Franklin at the end of the 18 th century. Cooperatives have been formed in just that way, by inspired entrepreneurs; they have also been created and promoted by labor unions; by communities; and many different groups of like-minded individuals (read about TYPES OF COOPERATIVES HERE). During the COVID-19 pandemic, for example, the world has seen a rise in interest in forming co-ops, along with mutual aid organizations (which may be incorporated as co-ops), time banks, and other less formal grassroots efforts. In all cases, cooperatives and cooperatively inclined organizations have tried to embody ideals that maintain and strengthen social aspects of commerce. That is, from the perspective of the cooperative economy, social bonds like trust and collaboration, are necessarily part of doing good business.
The commonly discussed “Seven cooperative principles” trace their roots to the Rochdale Pioneers, a cooperative in England founded in 1844. The principles have been modified, augmented, and applied in various ways since that time. The International Cooperative Alliance (ICA) and many other organizations, including the National Cooperative Business Association, in the US, promote these principles:
- Voluntary and Open Membership: This means openness to all people who use their services, contribute to the whole, and are willing to accept other responsibilities. In practice, this means co-ops have a responsibility to reach out beyond their familiar networks in terms of recruiting members.
- Democratic Member Control: This is usually operationalized as one-member, one-vote, for example in the committee of the whole as the chief governing body of the co-op. This is often misunderstood as suggesting that everyone votes on everything. In practice, decisions are delegated to committees and individuals. The important point about this principle is that the committee of the whole decides what must be supported by the entire membership—whether through consensus, some modified version of consensus, or majority rule.
- Member Economic Participation: Members contribute equally upon entry to the value of the cooperative. This initial contribution can be a modest sum of money, a certain number of hours of work, or equipment and other resources. Members receive benefits in accord with their work or other offerings to the business.
- Autonomy and Independence: Cooperatives are independent, self-help organizations. A good example of this principle in action is when a co-op enters into a partnership agreement of some type. Member control of decision making is a key part of this process and for any other major policies or actions by the co-op.
- Education, Training and Information: This principle has two domains of application: internal and external. Co-ops have a stated responsibility to provide necessary training and education to members; at the same time, coo-ops pursue a commitment to inform the public about co-ops and their advantages. Popular education is important given that even with the diversity and number of co-ops around the world, this segment of the economy is not well understood by many people and is still not well represented in most business curricula or in financial publications.
- Cooperation among Cooperatives: This is yet another principle that distinguishes true co-ops from conventional businesses: co-ops understand that their success is intertwined with that of other cooperatives and that together they can work most effectively through not just ad hoc collaborations but also through participation in local, regional, national and international associations.
- Concern for Community: Although the term “concern” doesn’t necessarily simply action, co-ops show their commitment to community through a range of types of contributions, both monetary and in-kind. Many co-ops pride themselves on being intricately involved in supporting the activities and well-being of their communities; some co-ops will take up specific causes as decided by their membership.
These principles are presented in the reports of most co-ops. Some cooperatives, for instance, the largest single worker-owned-and-governed business in the world, the Mondragon Cooperative Corporation, in the Basque Country, Spain, have their own list of principles. Mondragon’s statement of principles includes three others that are important:
- Wage solidarity, which is an explicit commitment to maintain a narrow ratio of lowest to highest paid worker-owners;
- The subordination of capital to labor, stressing the secondary role of capital in the control of the firm; and
- Social transformation, which goes well beyond education to seek a more just and inclusive economy.
Cooperative principles have important parallels to other value-based approaches to our economy. For example, the principles of Kwanzaa, the African-American year-end holiday, includes an express commitment to cooperative economics, defined as an economic system that is both governed by and in the service of all. Many indigenous cultures regularly practice cooperative economic principles without even using the label, according to Ana Maria Peredo, a business professor at the University of Victoria, Canada, in her studies of indigenous forms of cooperative economics in Latin America. Reciprocity and solidarity are woven into relationships in the world of commerce such that an economy without such features could scarcely be imagined.
In recent years, there has been serious discussion in many circles about adding two principles to the famous seven. At the “Imagine 2012” international cooperative conference in that year in Quebec, a proposal was advanced by the assembly to add a clear statement of commitment to ecological values to the list. The intent is that the environment would be a guiding concern in both internal affairs of a co-ops—such as energy use—and to external relationships—such as overall environmental impact. That principle has been much discussed, and many co-ops, such as Namaste Solar, a worker co-op in Boulder, see the ecological principle as infusing all of their work.
Another principle receiving a great deal of attention now is one that would put a spotlight on efforts towards greater diversity, equity, and inclusion. The pandemic has brought this to the forefront of discussions because of the racial and class-based inequities that are even more sharply defined by the global public health crisis. A new principle along these lines would go beyond the first one on open membership to stress proactive outreach work to take co-ops out of their comfort zones.
There are currently discussions underway in networks all over the world, in which the seven principles are being reexamined—not as an academic exercise but rather in terms of how best to advance the cooperative economy in the future.
It is often overlooked that the “father of capitalism,” Adam Smith himself, would not have advocated an economic system that was absent big roles for social bonds. He wrote extensively about the emotions of empathy and compassion and the importance of trust in the marketplace. Yet the sound-bite summaries of Smith’s perspective usually repeat the metaphor of “the invisible hand” of the economy, which he mentioned just once in his 1776 treatise The Wealth of Nations.
Cooperators everywhere want to hold the economy accountable to social values and commitments. To speak of the economy as if it were divorced from society—from real people—and from the planet on which we all depend is an illusion that cooperatives are working to dispel through their great examples of what collaboration can fully mean—for personal livelihoods, community well-being, and environmental sustainability.
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Rocky Mountain Farmers Union members will join up for the general farm organization’s annual convention set for Friday and Saturday, November 19-20, at the DoubleTree Hotel in Greeley, CO. The theme of this year’s event, “Cultivating Strategies: Looking Forward with Respect and Dignity,” speaks to the challenging times facing the families who make a living farming and ranching.
Two pre-convention opportunities will be held at the DoubleTree on Thursday, November 18.
- 1 p.m. the workshop “Ag Labor Organizing and Ag Workforce Development” will take place. Farmers and ranchers across Colorado, New Mexico, and Wyoming are facing a wellspring of changes in how to secure and compensate ag workers. This workshop will explore recent trends, current regulations, and look at future opportunities to assure the food supply chain is fluid from field to fork.
- 4 p.m. the topic of water for agriculture - including demand management - will be held. Colorado and surrounding states are in the grips of an extended severe drought that is taxing existing sharing agreements across the Southwestern and Great Plains states.
The main convention will open Friday, November 19
- 9:15 a.m. with Colorado Commissioner of Agriculture Kate Greenberg will review the state of agriculture during her address.
- 9:45 a.m. convention keynote speaker, co-founder and president of the Farm Labor Organizing Committee, AFL-CIO, Baldemar Velasquez will delve into the timely topic of labor reform. Velasquez will consider how farmers and their hired labor effectively are on the same side when it comes to crafting agreements.
Velasquez notes adversarial policies tend to create an “us versus them” attitude. Instead, employers and employees need to look at what they are hoping to accomplish for overall farm and farm worker profitability goals and move forward from there.
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Making Cooperation Work – Thu, Oct 28 at 2pm EDT
Rocky Mountain Farmers Union Cooperative Development Center
Registration LINK HERE
to attend live and receive a recording link and transcript.
Tagline: Cooperatives work everywhere.
National Farmers Union and the Rocky Mountain Farmers Union Cooperative Development Center are grateful for the opportunity to share insight on the cooperative development process, its motivating principles, and how the solidarity economy empowers disadvantaged populations.
For more than 20 years, the Rocky Mountain Farmers Union Cooperative Development Center has worked to build a more just, healthy, thriving, and inclusive economy through cooperative enterprises. We’re grateful for the opportunity to bring you this presentation on the cooperative development process, its motivating principles, and how the solidarity economy empowers disadvantaged populations. Plus – how to find a co-op developer near you.
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Six organizations in Colorado were awarded Farm to School support. We are proud to announce the Rocky Mountain Farms Union Education and Charitable Foundation was one of the six recipients and we will use the grant funds to partner with Nourish Colorado to provide Local Procurement workshops, specific to Farm to School programs. One workshop will be held on the Southeastern Plains and one will be in Northeastern Colorado. |
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