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“Please Just Co-operate: An Analysis of the Cooperative Model in Colorado”

Madeline Lasewicz, Colorado State University, May 1, 2019

In a nation obsessed with consumerism and instant gratification, large corporations and businesses have flourished excessively, destroying small family businesses. This trend has become most prevalent in the food industry and as a result, family farms are struggling to stay afloat in this increasingly competitive economy. This is nothing new though, and neither is the solution to combating the problem.

Cooperative Model Basics

The cooperative model can be traced back to Benjamin Franklin in 1752. This early co-op consisted of members pooling their money together to ensure each others property if there was a fire.  Cooperatives allow people to come together with their individual resources to tackle larger goals. This business model may be a solution for suffering family farms.

Co-ops focus on seven main principles: welcoming, democracy, economics, independence, education, cooperation, and community. These principles allow members to control their cooperatives policies, decisions, and financials, while also educating their members about how to be most effective.

There are four types of cooperatives; however they all maintain the seven main principles. The four types include: producer co-ops, consumer co-ops, worker co-ops, and sharing co-ops. If focused on agricultural products, any of these co-op types can be considered an agricultural cooperative. According to Colorado legislation, an “‘Agricultural cooperative’ means a cooperative in which the members, including landlords and tenants, are all producers of agricultural products.” Because of legislative definitions and policies, Colorado is one of the best states in the United States for the development of cooperatives.

Colorado Cooperative Policy

Colorado has “one of the most flexible and robust sets of cooperative laws in the country, as well as a connected network of capital providers, coupled with a thriving economy and an influx of people interested in cooperatives and non-traditional business models. This setting is perfect for the development of cooperatives as long as producers are willing to” take a leap of faith and join.

One of the Colorado policies in play that sets this state apart from others is Title 7, Article 58. This article contains the Colorado Limited Cooperative Association Act. This matches the flexibility of an unincorporated entity with the features and controls of corporate governance.  Colorado has also combined its Public Benefit Corporation statute to its three cooperative statutes. Meaning that “not only can a cooperative choose from among three general purpose cooperative statutes, it can also elect to layer on the added protections and benefits afforded by the Colorado Public Benefit Corporation Act.” Few states have passed policy similar to this yet, making Colorado a better location for co-ops.

Not only does Colorado have strong cooperative policies, but the state also has a governor who stands in support of the business model. Governor Jared Polis has “seen firsthand that employees who work for a business with some form of employee ownership are often more committed to their company and stay with their company longer.” Governor Polis and Senator Bernie Sanders (Vermont) partnered together to create the Worker Ownership, Readiness, and Knowledge (WORK) Act which promotes employee owned business structures by helping with funding.

Disadvantages and Advantages of Cooperatives

Even with all the support that Colorado gives for cooperatives, there are still many people who are reluctant to join one. Some of the reasons people are resistant to joining or creating co-ops include a lack of trust between producers, a lack of time, biases because of failed co-ops and perceptions of low margins, and the giving up of certain freedoms. These are all legitimate reasons for not wanting to join, but they also exist because of misconceptions and biases.

Despite some of the fears of joining a co-op, there are many strong reasons to join. Co-ops have the ability to reinvigorate rural communities, allow producers to focus more on their product and less on marketing, and they are very financially stable. All of these things are possible because of the business models ability to leverage the power of scale to grow local businesses.

How to Start

If the cooperative model sounds like a business model that would fit your needs, you can look into joining or creating one. There are four steps in starting a successful cooperative. The first step is exploration. This means looking for people with similar interests and identifying the co-op’s market, core values, and mission. This step also includes creating a project development plan and budget. Step two is business planning. Similar to any starting business, beginning co-ops must create business and marketing plans for their products, find funding, adopt bylaws, and incorporate the business. Unlike other businesses though, co-ops must also start to recruit members.

The third step is the official launch of the co-op. This includes setting up an office space and staff, orienting new members to their responsibilities, and developing marketing services. Once the business has been established, the final step may come into play. This last step is carrying out the role of the business by responding to members needs with products, services, and education. These four steps are simplified, but they outline what is needed to develop a successful cooperative.

Resources

In Fort Collins, Clinton Wilson, the executive director of the Poudre Valley Community Farms (PVCF) cooperative, admits that startup funding for co-ops can be hard to come by. However, there are some organizations out there with funding to help these startup projects. PVCF is a multi-stakeholder land cooperative that was developed in 2015 with the goal of preserving farmland for farmers and ranchers. They were able to purchase their first piece of property in 2018, and they are continuing to grow.

If you are interested in creating or joining a co-op, there are many resources in Colorado to help you do just that. The Rocky Mountain Farmers Union Cooperative Development Center has helped support and develop many cooperatives in Colorado, Wyoming, and New Mexico. Information about their work can be found at “www.rmfu.org”. Another important cooperative development resource is “colorado.coop”. This tool can help you find co-ops in your area and help starting co-ops find funding. When it comes to legal work, Jason Wiener is a well-known advocate for the cooperative model. Information about his services can be found at jrwiener.com.

Similar to any new business, the first couple steps can be difficult, but there are people and groups here in Colorado that are dedicated to helping those steps be as easy as possible. Cooperatives have the potential to save small farms and give people the opportunity to enter into agriculture, we just need to give them a chance.

Sources:

  1. “Cooperatives.” National Farmers Union, National Farmers Union, 24 May 2016.
  2. Stevenson, Bill. Rocky Mountain Farmers Union Cooperative & Economic Development Center. Rocky Mountain Farmers Union, 2016.
  3. “Colo. Rev. Stat. § 7-56-103.” Casetext, Casetext Inc. , 22 Mar. 2018.
  4. Phillips, Linda D., and Jason R. Wiener. “Colorado Is Fertile Ground for Co-Op Development and Conversions.” Rural Cooperatives, vol. 83, no. 5, Sept. 2016, pp. 39–47. EBSCOhost.
  5. Wiener, Jason, and Linda Phillips. “Colorado – ‘The Delaware of Cooperative Law.’” Medium, Fifty By Fifty: Employee Ownership News, 29 May 2018.
  6. Polis, Jared. “Jared Polis: Bridging Income Disparity through Employee-Owned Business Structures.” Times-Call, Media News Group, 11 Oct. 2017.
  7. Keeling-Bond, Jennifer, Enns, Kellie, and Brockhouse, Bill. Marketing Fresh and Specialty Produce through Cooperatives and Collectives in Colorado with Implications for Cooperative Education Programming. 2011.
  8. Giszpenc , Noémi. “Co-Op 101: A Guide to Starting a Cooperative .” Cooperative Development Institute, Northeast Center for Cooperative Business.

Written and submitted by:

Maddie Lasewicz
Colorado State University
Rocky Mountain Farmers Union Chapter President

By Brian Allmer - The BARN

Brian Allmer & the BARN are members of the National Association of Farm Broadcasting (NAFB), the Colorado FFA Foundation, the Colorado 4H Foundation, the Colorado Farm Show Marketing Committee, 1867 Club Board Member, Denver Ag & Livestock Club Member, the Weld County Fair Board, the Briggsdale FFA Advisory Council, Briggsdale 4H Club Beef Leader & Founder / Coordinator of the Briggsdale Classic Open Jackpot Show.