On September 28, members of Blooming Prairie Cooperative Warehouse voted approval, by 62 percent of the members and 73 percent of the votes, of a proposal from the board of directors to sell the cooperative to United Natural Foods Inc. A second proposal, to create a Blooming Prairie Foundation, also was approved. Comments appear below, in the editorial (p. 4), and in columns by Robynn Shrader and the editor of (CG #102, September-October).

Ownership Matters!

By Margaret Lund

Owners of Blooming Prairie have voted to disband the largest collective asset in the history of the food cooperative movement, choosing to sell the cooperative to an investor-owned competitor. Within the next few months, more than $26 million will be disbursed to the members of Blooming Prairie (BP), now mostly buying clubs and privately-held natural foods stores, as well as the cooperatives who started the warehouse. Unless we act wisely now to caretake some of these assets for the future of our movement, we will all be losers.

At a public meeting about the sale, I heard much rhetoric about "returning the money to the membership where it belongs." Excuse me, but this sounded like politicians returning a government surplus to taxpayers, avoiding thoughts of less opulent times and appealing to personal gain over any concept of long-term investment, assistance to the vulnerable, or even the efficiency of group purchasing. We all got federal tax rebates under this theory, and I got a generous one from my state too. Now my kids' school has to lay off two teachers due to state "budget cuts."

By the same logic, member co-ops could really save on capital gains taxes by passing through the gain to the real membership, the consumers. As a loyal co-op member, I figure my share of this $26 million is about $50. But you know what? I don't want 50 bucks. I want a movement.

Some don't think it matters who owns the warehouse, as long as we get the products. Many co-op shoppers don't really care. If they could get organic butter at a grocery chain or K-Mart, they would. But ownership does matter. It matters a lot. This movement is not only about the "what" (the product) but about the "who" (your neighbors), the "how" (cooperatively) and the "why." Our region has dozens of small town food cooperatives, outlets not only for organic butter, but for cooperative philosophy and working examples of economic democracy. Every day a kid somewhere asks her mom or dad, "Why do we shop at the co-op?" and the parent tells her. If our only outlet for soy milk is K-mart, both that question and its answer are lost.

I'm not arguing against the sale. It is pretty clear from the discussion that, despite BP's financial success, the failure of the cooperative warehouse sector didn't just happen last week. It happened a long time ago.

One choice, to sell the co-op, has already been irrevocably made. But another important choice, what to do with the assets, has not. We can simply accept this market allocation of winners and losers, and move on. Or we can do what cooperatives were meant to do — change the rules and create opportunities for small players in the marketplace (face it, we are all small players) to prosper, to become "winners." We can do this by designating a significant portion of those big BP checks for the purchase of stock in a new Equity Fund that will invest in the stock of growing and developing cooperatives of all sizes across the region.

Our BP stock is now an asset on our balance sheets. As a financier of cooperatives, I regularly stress balance sheets and the need to match sources and uses of funds. Most folks focus on income statements — the everyday, short-term, ins and outs of daily business. Less flashy is the balance sheet, home of the long-term, patient, future-oriented uses of funds. Many people I have spoken with talked excitedly about using big checks from the BP sale for things that are essentially operating expenses or, at best, assets that will depreciate and lose their value over 10 years. However, attractive, this is essentially converting a long-term asset into a short-term gain. Like using your members' equity to fund operating losses, it's not a beneficial long-term strategy.

A different idea would be for us to exchange one collective asset (the stock in our shared cooperative) which is evidently not serving us well, for another one that will. Change the form, but keep the investment in the movement.

The discussion over this sale question has been a divisive one. One thing that unites almost every cooperative, however, is the need for more equity capital. Maybe we don't need or can't have a warehouse anymore, but we all need and can have a source of long-term, patient capital for the growth of our businesses and our movement. The structure of an equity fund could take many forms, but essentially would be one in which co-ops could invest capital that would be used to buy stock of other growing cooperatives, both start-up and mature co-ops, helping them to leverage other funds for growth. The equity fund might not help everyone, but at least the allocation of its benefits wouldn't (as in the current situation) be decided just by size and location, but rather by opportunity and ingenuity.

The proceeds from the sale of Blooming Prairie represent the largest block of collective capital this movement has ever seen, or is likely to see again. Let's not blow it. In 20 years, let's be remembered for our foresight and courage in creating an asset of such enduring, collective value, that no one would ever think of liquidating it. To do this, we need significant capital. An equity fund can't work with less than $5 million, and is better off with $10 million. To pool that much, each co-op needs to designate more than a nominal portion of its big BP check to the fund. Spend some on yourself, but also invest some for everyone later. We can do it.

Northcountry Cooperative Development Fund has formed an equity fund working group of local and national cooperative leaders, including some from the BP board. We will soon present an equity fund proposal to each co-op member of Blooming Prairie. These members will have another decision to make. Vote for the future, vote for the movement, invest in the equity fund.