Using Co-operatives to achieve shared business objectives. Chris Bodnar

Transcription

1 Using Co-operatives to achieve shared business objectives Chris Bodnar

2 What is a Co-operative? Exist to provide services/benefits to members (rather than profits to owners) Members are owners Members provide financing through purchase of shares One member, One vote: democratic, based on membership, not number of shares

3 What is a Co-operative? Benefits distributed in proportion to use of services, purchase of goods Limited liability against loss (similar to an incorporated entity)

4 Why form an agricultural co-op? Improve bargaining power Reduce costs Achieve economies of scale Increase returns Improve product and service quality Reduce risk Obtain needed services or products

5 Formal vs Informal Co-ops Formal: Incorporated provincially or federally The co-op can be for-profit or not-for-profit Requires three people over the age of 18, solvent Informal: Unincorporated, collective activities Shared seed orders Shared ownership of small tools or equipment

6 Types of Co-operatives Any agri-business could be organized as a co-op. Supply co-operatives Marketing and processing co-operatives New Generation co-operatives Land-Based co-operatives Worker co-operatives Financial co-operatives

7 Supply Co-operatives Members are the consumers who purchase products from the co-operative

8 Marketing and Processing Co-ops Members are producers who deliver their products to the co-op

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11 New Generation Co-operatives Financing is through sale of delivery rights to producer members Predominantly used in agriculture for processing and marketing Provides additional mechanism for raising capital

12 Land-Based Co-operatives Members collectively own land for a shared purpose/objective.

13 Worker Co-operatives Members are the employees of the cooperative. Purpose is to provide livelihood for members.

14 Financial Co-ops (Credit Unions) Member-owned financial institutions Some have agricultural origins, services and/or mandates Often originated when banks wouldn t serve areas or sectors

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17 Common problems encountered by new co-ops Lack of clearly identified goals and objectives Inadequate planning Failure to use experiences advisors Lack of member leadership and commitment Lack of competent management Failure to minimize risks Lack of financing Poor communication

18 Examples from around the world Thailand: Co-ops used as part of food security Supporting self-sufficient family farms through: Sustainability: Best Practices, farm planning Production: shared machinery, knowledge, increase productivity Marketing: access to markets Enterprise: Network businesses, build cooperation, access to financing

19 Characteristics of Successful Italian Ag Co-ops Members obligated to sell 100% to co-op Highest price possible to producers Technical supports to ensure highest quality Ceaseless communications with members: via governance structure and technicians Value added whenever possible

20 AMUL Dairy Co-op (India)

21 La Siembra (Canada)

22 Steps to starting a co-op 1. Identify a common economic goal Identify the goal or reason for a co-op Information meetings for people interested in forming a co-op Select steering committee Obtain funding

23 Steps to starting a co-op 2. Determine business feasibility Producer survey Market analysis Suitable markets, supply sources Potential competitors Alternatives to a co-op Financial Feasibility Assessment

24 Steps to starting a co-op 2. Determine business feasibility Financial Feasibility Assessment Capital requirements Anticipated sales and revenue Develop financial statements Sensitivity analysis (best and worst case scenarios) Financing options General meeting to review feasibility study

25 Steps to starting a co-op 3. Develop a business plan; unique to co-ops: Governance structure Marketing strategy Capital requirements Treatment of co-op surplus and member equity Communication and training program General meeting to review plan

26 Steps to starting a co-op 4. Draft legal papers and incorporate Register name Draft Memorandum of Association Draft Rule of Association Incorporate Draft other legal docs (member agreements) Hold first AGM to approve rule, elect directors

27 Steps to starting a co-op 5. Implement business plan: begin operations Hold membership drive Apply for debt capital Acquire facilities Record keeping and accounting Hire manager Publicize co-op s activities, develop community recognition

28 Steps to success Keep members informed and involved Use advisors and committees effectively Maintain good board-manager relations Conduct effective meetings Follow sound business practices Work with other co-operatives

29 Where to access resources? BC Cooperative Association Vancity and local Credit Unions Ministry of Agriculture s Cooperatives in BC Agriculture publication Investment Agriculture Foundation

30 The power of co-operation Compete to grow incrementally Cooperate to grow exponentially