Food Co-ops and the Road to Organic Valley: Part 1

[First published 2008 in Organic Valley's Rootstock.]

Click here for Part 2.

Twenty years ago, organic agriculture was a glimmer of light in a declining farm economy.  From the beginning, many of the retailers and distributors of organic products from CROPP Cooperative and other producers were themselves cooperatives.  Today, millions of households recognize both elements of organic and cooperative.  Yet these two movements only partially overlap.

The confluence of cooperative and organic movements continues to be central to building a better food economy.  A cooperative, owned and patronized by its members, models business relationships that are more fair and democratic and also more consistent with stewarding of natural resources and human communities.  A co-op business works on behalf of its member owners.  But the best co-ops also recognize a triple bottom-line responsibility:  to the owners of the business, to the community in which it operates, and to the environment that sustains it.

Food cooperatives made possible the early success in bringing organics to the public. When CROPP was launched twenty years ago, natural food co-ops (as they often are known) were ten to fifteen years old.  Such food co-ops had been launched all across the country, and in most regions these stores and distributors pioneered in finding and supporting organics.

Food co-ops founded in the 1970s had in turn been preceded by a generation of consumer co-ops begun in the 1930s and 1940s.  During those depression and war years and afterward, most farmers left the land, and most shoppers left the local store for the supermarket.  The grocery co-ops of that earlier generation had joined or succumbed to the post-war growth of supermarkets, except for dwindling numbers of small town co-op stores scattered from New England to the Northwest.

The voice of inexperience

The new generation of cooperatives that planted and cultivated organics arose from discontent with the mainstream food supply and a cultural surge of desire and self-determination. The 1960s – which in some ways lasted until about 1975 – spawned a thousand efforts to improve a society that was sick with war-making, industrial and farm chemicals, and heedless consumption.  Co-ops became a way to rebuild a cleaner and more localized food supply.

The new food co-ops, built more on enthusiasm than on expertise, learned through many trials and errors how to operate community-based businesses.  There were several hundred storefront co-ops by the late 1970s, along with several thousand co-op buying clubs – informal and usually small – purchasing from distributors that had the right kind of food and that would accept co-op methods and orders. 

Food co-ops everywhere sought out farmers and local producers and developed new distribution networks.  On delivery day, typically, volunteers helped sort the goods at the store or, for buying clubs, in a garage or parking lot or church basement. Liberal arts majors biked to the co-op and became marketers and store managers.  Car mechanics learned compressor maintenance and small-scale distribution logistics. Young people who didn’t know their assets from a hole in the ground learned how to read balance sheets and how a board of directors functions.

At least half of these new co-ops survived an initial decade of business ups and downs that were largely self-created. Some three hundred surviving co-ops thrived and spread the news about organics and wholesome food like prairie fire.  They built a foundation of farmer/distributor/public networks that would, in the next decade, make organics the fastest growing kid on the block. 

Like Organic Valley of today, the food co-op movement is a social experiment disguised as a business.  Gradually it has garnered essential knowledge about customer service and financial management.  It has persuaded more and more people to subscribe to its values and vision of a better food economy, one that is both organic and cooperatively owned.

Does co-op mean organic?

Many food co-op founders had read critiques of industrial agriculture, by figures such as Robert Rodale and Rachel Carson, as well as guides to finding and preparing more wholesome foods, such as Francis Moore Lappe.  Food co-op leaders tended to take seriously the indicators and reports on the consequences of ever-increasing consumption of resources – warnings that were largely ignored until today, thirty years later.

Concerned with wholistic health, some of the new co-ops were unwilling to carry meat, illustrating their environmental and ethical concerns but also revealing some limits to their understanding of farming. Such cultural choices also reinforced widespread confusion about just what a co-op is. 

What constitutes a cooperative? It is an enterprise in which responsibilities and risks as well as benefits are shared democratically. Its purpose is to meet member needs, with benefits accruing to each member in proportion to use of the co-op.  Modern cooperatives have a history dating to the mid-18th century and have succeeded in sectors as diverse as consumer goods, credit unions and banking, agricultural processing and marketing, housing, manufacturing, childcare, burial societies, and more.  Cooperatives internationally share a common set of seven principles, and organized cooperation is a global movement of huge impact in most parts of the world.

A deeper reading about agriculture would have brought food co-op activists to Sir Albert Howard (Agricultural Testament, 1940) and his first rule of what he called farming in nature’s image:  “Mother Nature always farms with livestock.” But while animals living on pasture and fertilizing the soil are essential to a sustainable farm cycle, food co-op founders were appalled at conventional feedlot operations in which animals were crowded and confined while soil and water were polluted.  They gradually found sources where grazing animals lived primarily on grasses, where the chickens were not caged and the milk was more wholesome.  Food co-ops sought and nurtured productive relations with both local and distant family farms.  Fresh and organic were returning to the American diet, and cleaner meat and dairy found its way into most food co-ops.

Actually, some new generation food co-ops always carried a range of both conventional and organic groceries, depending on what the co-op’s members and community would purchase. Many others mistakenly thought that “food co-op” and “natural/organic” were synonymous, provoking repeated arguments and growth lessons when some members wanted to expand the co-op with more offerings for members of the community.

The food co-op movement’s journey through its first couple decades was not easy, given its experimental side and its scarcity of capital and professional experience for operating businesses. Nevertheless, through sweat and dedication along with improved professional skills, food co-ops maintained a corner on the small but growing market for organic and “natural” foods in many cities across the country.  The products carried commonly reflected the desire of co-op founders and members for cleaner foods sold in bulk.  They wanted flour and eggs, but they also wanted granola and bulk grains and beans, and they tended to avoid mainstream groceries that were overly processed and nutritionally depleted, excessively packaged, and frequently contaminated by industrial additives and methods. 

Where’s the money?

Besides demonstrating and nurturing the demand for organics, food co-ops illustrated self-reliant community improvement.  They showed that ordinary people with ordinary powers can organize to meet their own needs by launching successful enterprise based on shared investment and shared benefits.  This, of course, is the same business model under which CROPP Cooperative is organized. 

The farmer members of CROPP invest significantly in their cooperative and receive substantial returns.  But in many consumer cooperatives, the capital required of each member is very low, and the level of earnings distributed to members also can be small.  The money tends to stay in the co-op – but may be scarce – since the overriding purpose is to serve member needs.

Food co-ops, especially in early years, typically are grassroots efforts with high levels of member participation in the co-ops but minimal owner capital.  In addition, often there is little recognition within the co-op of the need for earnings that make possible improvement of the cooperative’s services and employment opportunities.  Since the co-op is organized primarily for providing services rather than for producing earnings or a return on investment, many members take this to mean that the co-op should not be making a profit!

This common undercapitalized side of food co-ops, along with the generally low margins in the grocery business, has tended to restrain growth in co-op members and services.  It is key to why co-ops in the business of grocery distribution – where economies of scale are much more important than for a specialty retail – gradually merged with other co-ops and then eventually were bought by larger, private distributors. 

As organics began to expand rapidly, grocery store owners with deeper pockets began to capture more of organic sales – a niche that for many years most observers thought was a “fad” and found only at those hippie food co-ops. But by the late 1980s, supported by a few key allies in national and regional cooperatives, food co-ops had laid the foundation for a cleaner and more sustainable food economy.

Needless to say, although retail co-op sales are now over $1 billion a year, this movement to transform our food supply has a long way to go.

Cooperative allies

When the Organic Valley brand began, it had assured support in the network of consumer food co-ops.  Food co-ops through the Midwest, and then throughout the country, have welcomed and promoted the Organic Valley line for its quality and the values inherent in both its organic methods and its cooperative structure.

When private industry and its allies in the USDA have attempted to dilute or distort the original intent of organic standards and legislation, food co-ops have rallied hundreds of thousands of members and shoppers to protest these moves.  Today, there are many allies in the field of organics, and organic opportunities are as large as our imagination and our world.  But with diminished resources, we also face unprecedented challenges to organic production and to sustainable communities.

The cooperative way of doing business, democratic and based in community, is much misunderstood.  But such a structure, providing services to member owners who share both responsibilities and earnings, has demonstrated its value many times over.  In a second part to this article, I’ll review what has changed forever the environment in which food co-ops and Organic Valley grew up.  Prospects for cooperatives are both enhanced and threatened by an environment of resource declines and a crisis in the global food economy.  Those prospects and threats are profound and reach into every co-op business and its member households.

11/10/2010