About Farm Cooperatives

If you want to grow your farm business, don’t do it alone! Collaborate with other small-scale farmers to get what you need.

by Lisa Seger

Farmers are, in general, a pretty independent lot. For many of us who were not born into the farming life, we made our way to farming in no small part because we are self-starters, harder working than a lot of the people we know and not content to rely on other people for our success. But even those of us embrace the solitariness of farming and who maintain successful, profitable farms often find ourselves asking if things might not be just a little bit easier if we had other farmers we could work with in some way.

Farm cooperatives of various types can be set up to make it easier to run parts of your farm business. Let’s take a look at some of the basic agricultural cooperative models and what they are designed to do.

What Is A Farm Cooperative?

In the broadest terms, any type of cooperative, or co-op, is a group of people pooling their resources for the benefit of all. In a business sense, it is a private organization or business owned by its members.

When talking about a farm co-op, this can mean farmers sharing/co-owning production resources—i.e., labor and/or land in the case of a kibbutz or other communal farm—or, more commonly here in the United States, it can mean sharing physical or business resources, like equipment, buying power or marketing dollars. I’m going to go out on a limb and guess you are not looking to start a commune, but rather looking for a way to extend the power of your own small farm and its resources, so we will focus on the latter.

Why Join A Farm Co-op?

Marketing co-ops help producers sell their products.
Rick Gordon/Flickr

The main reason to join a farming cooperative is to pool your power and/or influence with other farmers to get better results in purchasing power, sales or marketing expenditures. It is also a way mitigate or share risk when large investments are necessary. Farming is expensive business—anything you can do to reduce your expenses should definitely be considered.

Cooperative Principles

As mentioned above, cooperatives must be member-owned and democratically run to meet the goals of its member farms. While the dividends paid to member might be based on the size of the farms and their related spending, voting should not be tied to size or spending; each farm member should have equal voting representation.

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Larger co-ops, like my supply cooperative, are generally run by a board that is elected by members. Smaller ones, like the tool library I belong to, can be run by the participating farmers. The bottom line for every variety of farm co-op is that it should exist and operate solely for the benefit of its members.

Types Of Farm Co-ops

Supply cooperatives offer purchasing power to get the farm supplies you need at a better rate.

Here’s a general breakdown of the different ways you may choose to structure your agricultural co-op.

Supply Cooperatives

The most widespread form of agricultural cooperatives—and one that often requires only that you join an existing organization—is an agricultural supply co-op. Basically, this is a member-owned store, where the collective buying power of the members gets lower prices on ag-related items commonly purchased by its members. These can include seeds, fertilizers, feed, gas—you name it. If you use it on your farm, you can probably get it at a co-op. Additionally, members get voting interest in future decisions of the co-op. Generally members pay a fee to join and receive dividend payments of the profits made each year, based on their spending.

I am a member of Producers Cooperative Association in Bryan, Texas. Not only do we buy our dairy goat feed from them, but they worked with us to custom formualte a GMO-free lactation feed that would have been unavailable to us in any other way. Our membership in this co-operative has been a huge, huge benefit to our small farm.

Machinery Pool

Another type of agricultural cooperative that can be smaller and less formal is a machinery pool or tool library. We’ve recently formed one with a few other small-scale farmers in our area. In our version, the members provide a list of farm implements or machinery they own that they are willing to allow other members to borrow. Owners of the machinery set the terms of the loan (the amount time it can be used before being returned) and if it is a gas powered item, members agree to return it with a full tank. (That’s just good manners, but it’s in our rules anyway.) Items in our library include a post-hole digger and a seed spreader, which not all of our members can justify buying outright for their small farms.

An alternative to this library method is a group purchase of machinery that is owned by the collective membership. This can make sense for highly specialized machinery not used often enough to justify ownership, such as harvesting equipment. It can also make sense for things that are used more often but too expensive for a small farm to afford, such as a tractor.

Marketing Cooperative

Marketing co-ops can vary in size and scope, but by definition, they’re responsible for selling what their member farms produce. These can be all-encompassing in scale, as is the case in common milk co-ops: Trucks are sent to member farms to pick up milk, which then gets co-mingled, processed, branded and sold by the co-op. They can also be more specialized, like many commodity co-ops, which members pay into for marketing their product class as a whole.

Marketing co-ops exist for virtually every commodity grown, but most aren’t helpful to small-scale producers. An informal alternative is to form a small group of farmers willing to pool dollars to do small-scale advertising with a common goal. This could be as simple as an ad for a farmers market you all vend at or for a product you commonly produce (pastured meats, eggs or dairy), the main goal being to get your small farming businesses in front of more people at a cost you all can afford.

Another more formal alternative is to form a group CSA (community-supported agriculture) where several farmers work together to supply and market one CSA. Here’s a great profile on City Commons, a cooperative CSA in Detroit.

There are other forms of farm-oriented co-ops, including credit unions and bargaining co-ops, but the ones detailed would be most relevant to small-scale operations. You are hardly going to get together with your neighbors and open a credit union, though you may be able to find one that was formed to serve farmer members. Bargaining co-ops are geared toward commodity producers trying to get better prices—again, not really small farm territory.

New Generation Cooperatives

Traditional commodity marketing co-ops do not, as a rule, work for small-scale producers, so there’s been a trend toward finding a more flexible, dynamic alternative to suit a wider range of producers. These are referred to as “New Generation Cooperatives.” These organizations seek to add value to otherwise indistinguishable commodity items. Largely this means processed foods—think sauces, pickles, trail mixes. The ingredients for these value-added products come from member farms, and the facilities and labor to produce them are also funded by participating farms. These are happening on a large scale, but could absolutely be adapted to small-scale farming.

Organizing a Cooperative

If you organize your own agricultural cooperative, prepare yourself for a lot of meetings.
David Owen/Flickr

Depending on the kind of farm cooperative you are looking for and your goals in working cooperatively, you might decide to form one—though, I won’t lie, it’s not for the faint of heart.

Your first step is to decide whether a formal co-op with all its legal paperwork, financing and contracts will be necessary for your purposes, or if a less formal agreement or arrangement would work. Either way, know what you want out of a co-op, and make sure the other farmers you plan to work with have the same goals.

Once you decide to work cooperatively, you are entering the world of meetings and committees. Choose your co-workers well. When starting a new organization, you should ideally begin with farmers you know and trust and whose operations are similar to yours.

If you go the full legal route, take advantage of the many co-ops that have come before yours. Don’t reinvent the wheel! Your local cooperative extension agent should have a considerable amount of documentation and information on how to start a farm co-op. Those resources may include sample contracts and a host of other materials that you didn’t even know you needed. Start there.

Depending on your personality and farming style, an agricultural cooperative can be an empowering way to grow your farm or make it run more efficiently, while sharing some of the challenges with like-minded farmers. It can be as small or big and as general or specialized as you and the people you opt to work with need it to be. As a rule, it’s easier to start small and specialized and broaden as is feasible—just like farming itself.

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