A farmer’s guide to co-ops
No one ever went into agriculture because it was easy. Yet it amazes me that something that’s essential to every person on the planet — the food that powers our bodies — is produced with a system that leaves the producers scrambling to make a living. Yes, many farmers are rich in assets, but that doesn’t change the fact that the products we create are valued so poorly that 81.5 percent of U.S. farms had less than $100,000 in sales in 2021. That’s a lot of farmers scraping by on poverty wages or relying on off-farm income, even if they are rich in land.
This is the first in a series of articles that will discuss how farmers can build themselves a safety net so their farms can weather the inevitable shocks without relying on off-farm income or selling off their land or equipment. This month we’ll consider one of the ways to put more of the food dollar back into the farmer’s pocket: cooperatives.
Co-op Basics
Cooperatives come in a variety of organizational flavors. From small-scale, member-owned setups to large and intricate organizations with thousands of stakeholders, their structures determine how they function, manage, and cater to their members. Let’s delve into the varieties of cooperative structures before we explore the upsides and downsides.
Cooperatives can serve any function to support their members’ needs:
Aggregation, processing, and marketing: These co-ops establish standards for the crop grown and harvested, and then aggregate and market the yields of some or all their members’ farms. Consider Organic Valley, the dairy co-op — the individual farmers get access to larger markets and higher wholesale prices through the co-op than they would be able to access on their own, and the challenge of packaging, distribution, and marketing is taken off their plates. Can you get a better price selling direct to consumer? Yes, but then you take on the entire responsibility of finding that consumer, educating through their objections to your prices, making the sale, and getting the product to them. And you have to do it enough times to make ends meet.
Purchasing: This type of co-op gives farmers better access to lower prices or better-quality supplies of feed, fuel, fertilizer, and seed. By teaming up, farmers can gain more purchasing power and often lower per-unit costs. Local farmers’ coalitions can often serve to facilitate bulk purchases without having a formal co-op designation. In Atlanta, I helped to organize purchases of organic mulch, straw, and fish emulsion for the members of our now-defunct coalition, a service that has since been taken over by one of our local nonprofits. The challenge in building this type of co-op is finding other farmers to participate who have the same needs that you do — and coordinating farmers is worse than herding cats. Use your extension agents as resources here.
Service: Agricultural Service Cooperatives
Agricultural service cooperatives extend specialized services related to the production and marketing of farm products. You see this in a lot of the farm credit organizations — they’re owned by the farmers they hold accounts for and make loans to. Then they pay their profits back to those members. This can also be seen with specialized harvest equipment — multiple growers in an area can have collective ownership and spread the cost and use across the collective.
Knowing how a cooperative is organized and structured empowers members to make informed decisions, harnessing its potential for meeting their needs. And with those needs met, the individual in a co-op is more resilient to challenges, be they from the market or the environment.
Now that we’ve explored the foundation, let’s uncover the pros and cons of cooperatives to help you understand whether co-ops are right for your farm.
Pros
1. Less marketing hassle: Imagine not having to spend hours marketing your produce and chasing down buyers. With a co-op, individual farmers can share these responsibilities or hire someone to sell for all members, allowing everyone to focus on what they do best.
2. Protection from market shocks: Because aggregation co-ops deal in larger volumes than individual farmers, they often have pre-negotiated contracts with their buyers. When prices take a sudden dip or skyrocket, the impact on individual farmers can be lessened because the co-op can collectively navigate these changes.
3. Higher prices via ownership: Co-op ownership often means having a stake in value-add production equipment. This ownership allows farmers to benefit from added value and, in turn, fetch better prices for their products than they would selling a raw product.
4. Access to larger wholesale orders: As a smaller farmer, you may fall into a bit of a donut hole. There’s a limit to how much you can sell direct to consumers, but you don’t grow enough to fulfill larger wholesale orders. A co-op can aggregate your produce with others, making it easier to fulfill larger orders.
5. Collective bargaining power: Being part of a co-op means you can collectively bargain for better prices on your products and secure lower prices on your inputs. Strength in numbers!
An awesome example of a successful co-op focused on small growers is the Middle GA Growers Co-op. They’ve been around since 2016, and they bring members’ products to farmers markets in middle Georgia and Atlanta by aggregating at one member’s farm and using a co-op-owned van to get to the market. Founder Julia Asherman says they have seen sales go up at the co-op’s market booths, which increases income for the various co-op members. And since the labor of setting up and running the market booths is split across the co-op, labor demands on individual members have gone down.
Cons
1. Handling logistics and management: Running a co-op requires someone to handle logistics and management. Finding the right person for the job is crucial because the wrong one can sink the whole ship. Some co-ops pay one of their members to handle these tasks; others hire someone or multiple people for a full-time role.
2. Dealing with different personalities: When you’re in a co-op, you’ll have to work with other farmers and people who are not farmers who are performing services for the co-op. For those who got into farming due to an intolerance of others, you may not want to get involved in a co-op populated by people that drive you nuts. Consider the trade-off of money or time saved with your mental health and decide if it’s worth it.
3. Active involvement required: Co-ops are not a “set it and forget it” kind of deal. They require attention and participation. Think of it as reducing your personal time commitment, not eliminating it entirely. You may not need to spend 20-30 hours a week selling your product, but you may need to spend 5-10 a week working with other members of the co-op to achieve your collective goals. This active involvement ensures everyone’s interests are taken care of, and it keeps the co-op running smoothly.
4. Agreeing on standards: In order for a group of any kind to aggregate products, they’ll need to agree upon standards for the units coming in. Depending on your growing practices or access to facilities, you may have higher or lower standards than the group at large. In a group, someone is going to have to adjust their practices. What are you willing to compromise on?
My experience with a co-op was much more an exercise in the cons than the pros. I was one of the founding members of a local farmer’s coalition and served as the treasurer for three years. We started as a farmer social group and buying collective, then chose to affiliate with a national farming nonprofit and took on their emphases of political lobbying, education, and outreach.
Atlanta farmers are almost entirely small-scale market-style growers with direct-to-customer sales. It’s a labor-intensive business model, and asking farmers to take on additional leadership roles outside of their farms is a tall order. That left us open to individuals and organizations that wanted to use the coalition to further their own agendas.
Once our founding members moved out of leadership roles in the coalition, we entered two years of power struggles that culminated in forcing out the president in 2019 and the vice president in 2020. One treated a staffer for our congressional representative so poorly that she called the affiliated national office to complain. The other started berating the rest of the leadership team after we pointed out that it wasn’t reasonable to turn around a $300,000 grant application in two days, especially when the majority of the money would have gone to hire his “consulting” firm.
In both cases, the process of dealing with inappropriate behavior took attention away from what the group was supposed to be doing. After the second round, the group stopped meeting in-person or virtually, and all that remains is a mostly dormant listserv. Despite that, the national nonprofit still lists us as a chapter on their website and impact reporting. Lesson learned: ulterior motives will sink a co-op.
How to Find (or Start) a Co-Op
It’s easier to find an existing co-op than to start one from scratch. Ask around — the local farmers’ organizations probably have a good read on the local co-ops, as do the extension agents. If you have to start your own, the process is similar to starting any group. You’ll need to find people interested in what you’d like to do, and you’ll have to do most of the wrangling in the early months. The USDA has a good guide on starting agricultural co-ops (https://www.rd.usda.gov/files/cir55.pdf). Keep it simple — focus on one thing first and get good at that before you entertain ideas of expansion. Vet the people who express interest and listen to your gut. It may be better to forge on alone than to deal with some of the people who are happy to claim ownership of the work farmers do.
There’s no silver bullet to building a safety net for your farm, but co-ops can be one of the ropes in your net. They can help you reduce your input costs and provide a steady market for your products while reducing the time you need to spend selling. Like a relationship, the individuals in a co-op are what make it an amazing benefit or a nightmare. You’ll have to assess the situation with your local co-op options and decide for yourself whether this is something you want to pursue.
Kirsten Simmons is the co-founder and Chief Farming Officer for Good Agriculture (goodagriculture.com), a company dedicated to helping farmers find funding, manage finances, reach new customers, and get certified. She also farms at Ecosystem Farm (ecosystemfarm.com), the only u-pick strawberry farm inside Atlanta.
