Cooperative marketing in the new millennium
USDA Rural Development
tructural, change in the food and agricultural industries in the last quarter of the 20th century was phenomenal and appeared to be
accelerating as we approached 2000. It even piqued the interest of Congress, where a bill was introduced to place a moratorium on mergers, acquisitions and consolidations - but the bill excluded cooperatives! Despite the bill's defeat in November 1999, it clear
ly defined public concern over concen tration and other structural changes in the food and agricultural industries.
Farmer interest in structural change revolves around: (1) the growing disparity in market power between farmers and their suppliers and buyers; (2) the inevitable loss of market access as concentration accelerates; (3) the market challenge of competing with lowcost imports produced under conditions of fewer environmental, food safety and labor controls than are faced by domestic producers; (4) the increasing use of production contract terms that alter the entrepreneurial role of producers; and (5) the growing use of genetically modified organisms and related production and marketing controls placed on them by property-right owners. These issues suggest that producers must assume more control of their industry by working together through the development of effective cooperatives and a coordinated cooperative system.
An important opportunity, if farm operators are to have more control over their industries, is to make better use of provisions of the Capper-Volstead Act of 1922. It allows them to organize and coordinate their marketing activity without fear of prosecution under the antitrust laws. This limited antitrust immunity not only enables producers to develop market power on their behalf to better deal with other competitors, but also helps them address supply chain issues from a wellcoordinated position of strength.
A major element of marketing in the new millennium will focus on organization for pricing of products and services offered by producers and on linking local value-added strategies with coordination among these otherwise fragmented cooperatives.
More cooperative bargaining
Contracting is on the increase in many crop and livestock sectors. Much of this increase is associated with the trend toward identity-preserved marketing based on special characteristics that are genetically incorporated into crops or livestock. Both marketing and production contract producers can organize to represent their interests through cooperative bargaining associations. The primary role of these associations is to negotiate acceptable price and service contract terms on behalf of producers. They also: serve important roles as clearinghouses for contract information; provide a member education role; promote product use in domestic and foreign markets; develop partnerships with similar groups in other countries; promote, foster and discuss marketing cooperative operations; and serve as a voice for producers in industry affairs. They are a core group in representing the occupational interests of producers as farm business persons in the policy arena and in the marketplace.
To more effectively perform this role, cooperative bargaining associations whether single or cross-commodity - will work legislatively toward establishing institutional rules that augment the bargaining process. This will include provisions for good faith negotiations, dispute resolution mechanisms and enforcement procedures. These will be crafted to effectively represent both associations negotiating marketing contracts and those negotiating production contracts on behalf of piece-wage growers.
The negotiation process will become more accepted as a method for producer/processor communications and problem resolution. As a result, it will establish the important fartrigate values of product and service that are so desperately needed as a benchmark.
Coordination of value-added cooperatives
Value-added marketing will continue to be emphasized in the 21 st century as a means of market development and bringing home to producers a greater portion of the marketing margin between the farmgate and the consumer's purchase price. The emphasis of many "new generation" cooperatives is on pooled marketing, using delivery rights as a basis for membership investment in processing and marketing activity. Vertical integration of this type assures producers of a market and the preservation of their role - through collective action - as farm entrepreneurs. The economic rationale for this strategic approach is that deliveries are limited to the delivery rights owned by cooperative members. Therefore, supplies can be better tailored to meet demand. More delivery rights can be purchased by existing members, or new members can be added, as the market for the product grows.
A limitation to this approach is the potential for creation of many relatively small processing cooperatives at the very time major processors and retail buyers are procuring from fewer but larger suppliers on a managed delivery basis. This fragmented selling situation as characterized by many ethanol, egg and pasta producing cooperatives can be overcome by following the model established by beet sugar manufacturing cooperatives, which organized a marketing agency-in-common called United Sugars to market their output nationally.
While markets for bulk commodities will still exist, the development of nutriceuticals and other bio-engineered crop varieties suggests that a more segmented marketing pattern could develop. It will involve marketing identity-preserved crops that incorporate some value-added characteristics and moving away from non-differentiated bulk commodities.
It can be noted that publicly traded companies generally have not done well in commodity marketing, while privately held businesses have dominated. Cooperatives can build on their strength in local origination of grains and other commodities by engaging in orderly commodity marketing on a pooled basis. This implies engaging in storage, regular release of grain to the market and pricing it according to different uses or characteristics. A clear trend at present toward use of directmembership commodity marketing organizations will continue to grow in the new millennium.
Small producers will find local marketing opportunities in fresh markets by using cooperative packing and primary processing (shredding, dicing, bagging) operations for produce. In a number of instances, farmers' markets can be organized on a cooperative basis to provide regular and attractive outlets for locally grown fruits, herbs and vegetables. Links with school districts, federal and state institutional facilities and other outlets can also be developed as market outlets.
Cooperative policy role
One important question about the future of cooperatives is whether favorable 'governmental policies will assist in their development - which, for the most part, has not been the case since the 1930s. Federal price-support programs, with the exception of cotton, have generally discouraged pooling through cooperatives and thereby diminished the price- stabilization role cooperatives play. The price floor was established by offering subsidies directly from the government to each individual farmer as either non-recourse loans or deficiency payments. A better alternative - clearly demonstrated and used by the cotton sector - gives farmers the option of receiving the government subsidy through a cooperative marketing pool. Forthcoming Congressional hearings addressing the adequacy of the Federal Agriculture Improvement and Reform Act, or lack thereof, will offer an opportunity to explore these and other pro-farmer features of farm policy.
The rapid structural change in agriculture that threatens the existence of individual farm operations will be turned to advantage by recognizing the strength derived from building cooperative systems. Farm operators will be able to preserve their entrepreneurial role through cooperative action and, thereby, maintain dispersed ownership in agriculture, a distinctive quality of American agriculture that will persevere in the new millennium.
Farm supply cooperatives: a look on and over the horizon
E. Eldon Eversull,
USDA Rural Development
ooking for-ward into the new millennium, the mantra for cooperatives selling farm supplies will be as it has always been: faster, better and cheaper. But there are many other issues on the horizon that farm supply cooperatives will have to face.
There will continue to be more mergers and consolidations. Twentyfive years ago, there were numerous regional farm supply cooperatives that had their operations based in one or two states. Mergers, acquisitions, and bankruptcies have decreased the number of regional farm supply cooperatives that operate in such limited geographic trade territories and increased the number with national and international operations.
This trend will continue in the new millennium, probably leaving two or three national/international farm supply cooperatives and one or two regional cooperatives with smaller, multiple-state operations.
As farmers have decreased in number and increased the size of their operations, local farm supply cooperatives have also followed suit. There were more than 2,700 local farm supply cooperatives in 1975. By 1999, there were fewer than 1,400. In another 25 years, there could be much less than half this amount. Many local cooperatives will have statewide or multiple-state operations. With two to three of these large farm supply locals per state, there will only be 100 to 200
farm supply locals with many branch outlets to serve their members.
There will be one area of new growth in the farm supply cooperative sector. They will be started and patronized by "hobby" farmers whose primary source of income will be from off-farm employment. These customers have grown accustomed to making Internet purchases and will start virtual cooperatives as buying clubs for their farm supply needs.
Meanwhile, the vertical integration and globalization of agricultural markets are fast becoming the defining pressures on agriculture today. One need only look at the recent breakdown of the Seattle World Trade Organization meeting to see global pressure on the agricultural sector. While weather is still a determining factor for yearly prosperity, producers can no longer monitor weather and agricultural commodities only in surrounding production areas. They must also monitor weather and agricultural commodity output in other countries. Information, or the lack of it, has become a valuable asset in and of itself. Industries are adapting to integration and globalization by designing products that have a common appeal and can be sold in just about any country. Business philosophies are also being adjusted. Reliance on bulk commodities for the masses usually means high volumes but low margins. Adaptation of new technology, market segmentation, customized production and market power as means to higher margins and a stronger market position seem to be the engines of future growth.
Technology has spurred consolidation in the seed industry, much of it occurring in the last decade as several crop protection manufacturers have purchased the leading row crop seed firms. There was much synergy in this consolidation. In addition, they were driven by the ability to genetically modify plant material to include desirable traits or resist damage caused by popular crop protectants.
Market segmentation has allowed firms to focus on the needs of larger, more prosperous farmers and offer goods and services that cater to their specific needs. In rum, organizations that adopt this segmentation can acquire farm accounts that produce higher sales volume. Market power is transforming the food industry as supermarket chains merge into fewer yet larger companies. By focusing on what their customers expect in the supermarket, these large chains then exercise considerable power over the whole food system. Ultimately, they can impact what and how farmers grow their fruits, vegetables, livestock or grains.
Can cooperatives adapt?
Many farm supply cooperatives will continue to operate with the same philosophy as today: faster, better, and cheaper, and will do well. Some will look to technology and improved market position to prosper. Others will fail, even though using one or both of these philosophies.
Cooperatives are owned by their users, so they reflect the desires of their farmer-owners. They also reflect what's happening within the cooperative's membership. Understanding membership's business and their expectations for the cooperative is essential to its survival.
Currently producers are concerned about overproduction, low margins and income, government regulations and policy, changing markets and consumer opinions of genetically modified organisms (GMOs). A growing number of farmers are also asking about the future: can their cooperative develop more niche markets for specialty crops with desired traits?
More farmers are also concerned about finding markets for their livestock and dealing with environmental issues, such as animal waste. Some farmers are marketing their livestock directly to consumers and don't have the knowledge or resources needed to deal with new environmental standards. Cooperatives will undoubtedly be asked to provide a bigger role than just providing feed. Their members will want more for-ward integration into livestock processing, marketing and waste handling.
Technology is in the driver's seat for information dissemination and sales in the near friture. A recent National Agricultural Statistics Service farmer survey found that 40 percent owned computers and 29 percent had Internet access. just two years ago, businesses saw the Internet mainly as an information and sales tool. Many people thought it would be a long, long time before consumers would pay for information or buy products from it.
The Internet will continue to expand and will become an increasingly important input to agriculture and cooperatives. Most of the products that farm supply cooperatives sell are bulky items (feed, seed, fertilizer, crop protectants and petroleum products) that are hard to transport to distant customers at a reasonable cost. Service, or advice, lends itself well to the Internet. Information about products that farm supply cooperatives sell would be an excellent service on the Internet. For example, in feed sales, a cooperative could provide: product information and prices for rations available based on livestock type; measured performance of the feed in trials; disease prevention, identification and treatment; and record keeping on feed purchases made by the farmer.
The Internet could also become a tool for dealing with the issue of waste management. There could be links from the cooperative's feed site to university-sponsored research on new digester technology, or technology that increases the oxygen levels in lagoons to promote faster decomposition of the waste. Perhaps feed cooperatives could link members with excess animal waste to members who need fertilizer. There is, of course, other information on the Internet that could help farmers make smart purchases of feed, seed, fertilizer, crop protectants, and petroleum products.
Farm supply cooperatives - on the horizon
The year 2025 is a long way off, but no longer than the time since 1975. Who would have guessed how ubiquitous the use of personal computers, genetically modified organisms, satellite technology, and the globalization of agriculture would have become in just 25 years? But what do these changes mean for farm supply sales?
There will be more sales coordination. For feed sales, computers will design rations, maintain records on weight gain and performance and coordinate delivery. There will be more stringent regulations on feed ingredients, and feed cooperatives will test and maintain records for each customer.
Grain and livestock buyers, in turn, will want to know exactly what went into each animal or crop. They will want farmers and their cooperatives to track every last input and output, just as the manufacturing or the computer industries already have to do.
With fewer farmers, global information systems and positioning satellites will be used to optimize delivery routes. Technology will have turned an animal waste product into a valueadded product. Seed and crop protection sales will align closely as crop protection manufacturers integrate even more into the seed industry. Gradually, a majority of consumers will overcome their reluctance to accept GMOs and more seed modifications will be made.
All farmers will demand more information and services. Cooperatives will provide extensive scouting services and problem solutions. Crop protectants will focus on specific types of seed and they will be applied with sophisticated equipment using new technology.
Soil tests will be conducted for organic matter and crop protectants will be applied where needed, not broadcasted. The use of expensive equipment to apply crop protectants will further consolidate sales into farm supply cooperatives that can pool financial resources to buy the equipment and provide the information, service, and record keeping on use that will be necessary.
Fertilizer sales will be further regulated as the damage of their over-use and even terrorist and illegal drug manufacturer misuse grow. GPS-type technology will allow farm supply cooperatives to apply only the necessary nutrients to specific field areas. Again, as with crop protectant application equipment, this equipment will also be expensive and will require large volumes to be cost effective.
Record keeping of fertilizer use will be necessary. Pooling the resources required to provide this equipment and information is a farm supply cooperative's specialty. Fertilizer cooperatives will also need to align with feed cooperatives to handle animal waste products. Pollution from animal waste misuse will mandate it while the loss of a valuable fertilizer resource will necessitate it.
Petroleum sales will also benefit from route coordination using a GPS (global positioning system) -type system. Computer-designed routes will aid bulk delivery of fuels. With fewer farmers and thus potential customers, more farm supply cooperatives will operate other businesses, such as convenience stores in predominately rural areas. The additional margins generated from non-farm customers will be needed to support agricultural operations in these cooperatives.
Farm supply cooperatives that sell propane for home heating will become more closely aligned with rural electric utilities (RECs). The consumer will soon receive one bill for electricity, home heating fuel, cell phone, and satellite television provided through an alliance of RECs and farm supply cooperatives that sell petroleum products.
What's over the horizon?
In the first decade of the 1900s, a man was born in the Midwest and he started farming with a horse. He was happy to plow a couple of acres in a day. He had a son a half-century later who started farming with a 50 horsepower tractor that could plow about 10 times what his father could in a day. Another 50 years has passed and that son now writes articles on farm supply cooperatives. The land is rented. A
plow has not touched any of the land in the past 15 years. What a difference a century has made.
Transportation of farm supplies from cooperatives to their members will undergo vast changes. Carriers may use air-transport to ship bulky items to farms. If the science fiction technology of Star Trek someday becomes reality, perhaps supplies will be "beamed" from co-op to farm. Livestock within breeds will be genetically similar and rations will be developed for each farm based on specific traits desired in the livestock grown. Each animal will be remotely monitored and the cooperative will adjust rations based on the animal's health and production.
Seed, fertilizer and crop protectants will be sold as a unit and applied in one pass. Cooperatives will operate application equipment remotely and the equipment will hover over the ground to minimize soil compaction. Field sensors will monitor the crop's growth and notify the cooperative when crop protectants are needed.
Petroleum will no longer be the energy source of choice. Fuel cells powered by hydrogen or some other environmentally friendly fuel will power farm equipment. Most equipment will be operated remotely, with farmers in their control center consulting cooperatives for advice when problems occur or service is needed.
These over-the-horizon ideas about farm supplies in the new millennium will likely be far short of changes that will actually occur. But, as long as there are mouths to feed, there will be farmers who will purchase inputs and services from farm supply cooperatives that they own. These farm supply cooperatives will heed their members' needs, adapt to technology, deal with market pressures and opportunities, and continue to serve members in the new millennium.
Providing power beyond 2000
By Glenn English,
National Rural Electric Cooperative
onventional wisdom holds that deregulationof anyindustry creates winners and losers. Of course, the big winner is supposed to be con
sumers, who are always told they will get greater choice and lower prices because the invisible hand of the marketplace will replace the heavy hand of government regulation. In reality, the big losers will be those who cannot compete because of high costs or unacceptable service. It came as no surprise to anyone that the electric utility industry was next in line to be "deregulated." Twenty years of deregulating financial services, transportation, telecommunications and natural gas industries made it inevitable that we'd be the next up on the block.
But that's old news. The pertinent question is: Will we be able to help consumers be winners in the new millennium?
First, we need to recognize that the playing field may change, but the game will still be played according to rules. Deregulation implies a wide-open marketplace without rules. That simply isn't going to happen. Electricity is key to our way of life and no responsible legislature, state or federal, is going to let fast-buck artists play loose and fast with such a critical service. What we're talking about is really re-regulation. Whatever happens, the electric utility industry will continue to be regulated. It will just be regulated differently. Our challenge is to make certain that any new legislation treats electric cooperatives fairly and preserves for them their unique ability to serve their owners.
Fortunately, we are holding our own for the present. The recent bill reported out of the House of Representatives' Commerce Subcommittee does no harm to the electric cooperative industry.
We will be on guard against amendments and new language that will certainly be introduced and which, if enacted, would dogreat damage to our owners. The highest priority we have is to protect their rights to control their own fate and our right to serve them.
But with the rights come responsibilities. If the experience of the last 20 years tells us anything, it tells us that a successful transition from a regulated to a deregulated industry requires that businesses be more financially flexible in order to survive in a much more competitive marketplace. Success is measured by how fast a business moves with die market, responds to the market and, most importantly, makes the market.
Specifically, those who prosper in a deregulated market learn to use marketing and pricing strategies based on market research that clearly segments customers into groups with similar needs. It really boils down to knowing who your customers are and what they want from you, and then producing it for the lowest possible price. The electric cooperative industry has a special relationship with its customers. As cooperatives, we are mandated to think first of our customers, not our bottom line. We can expect more and more Americans to wake up to the benefits of being served by cooperatives as it becomes clearer to them that the large investor-owned electric utilities must satisfy their investors first, not their customers, and that some classes of customers just aren't attractive to them.
For the past three years, the electric cooperative industry has steadily differentiated itself from other segments of the electric utility market. The creation of a new brand, Touchstone Energy, is the most obvious part of that process. But the brand does more than renew our commitment to a long-standing practice of putting consumers first. It also pr vides a center around which our industry can unify because the Touchstone Energy brand takes our already established commitment to the community and extends it to the nation. It makes it clear that the focus of the electric cooperative industry is the customer, not the bottom line. Research verifies that our status as cooperatives has enormous appeal to all consumers because they understand they have a say in how the cooperative is managed and the services it performs. This assumes even greater importance in a time of great uncertainty that always accompanies deregulation.
Electric co-ops were created 60 years ago to bring electricity to rural America. Today, many parts of the country that were once rural are now suburban and even urban. Under deregulation, the benefits of being served by an electric cooperative will not be restrained by artificial boundaries, but will be open to all who have a common interest in protecting their access to reliable and affordable electricity. First Rochdale Electric Cooperative in New York City is only the forerunner of new electric cooperatives all over the nation.
We also understand that the cooperative's value to the community is not based on the generation, transmission and distribution of electricity alone. Time after time, the owners of electric cooperatives have endorsed the common practice by cooperatives of providing them with propane and natural gas, telecommunications services, clean drinking water and wastewater management. It's all part of fulfilling our obligation to our customers to make certain they have access to services that either would not be available to our customers or would be prohibitively expensive.
The creation of regional service cooperatives (Servcos) within our industry allows local co-ops to more effectively increase the number and variety of products and services that can be offered by combining service territories. This is a case where bigger is better for the right reasons. We can expect to see more Scrvcos because they provide a way for electric cooperatives to do even more to meet the needs of their members.
But, as with any effort to "re-regulate," there are those who perceive they will be losers if anyone else gains. Among them will be those who do not welcome competition from the cooperatives and will go to any length to deny electric cooperative customers greater choice in selecting a provider for a specific service. This we have to expect. A competitive marketplace is not a tea party. Our industry will have to be prepared to fight for the rights of its owners to enhance their lives by having access to new services and products through the cooperative. If the marketplace truly works, then the costs of competing will determine whether the members of a single cooperative or a Servco composed of many distribution cooperatives wishes to add new products or services to its menu.
All this assumes, however, that we act like cooperatives, and that our entry into new markets with new products and services is motivated by a desire to serve our customers because they genuinely need whatever it is we're selling. If we have done our homework, we will know whether our consumers are likely to respond favorably. We will have told the owners about the opportunities and the challenges. We will have a full appreciation of the likely reaction from the community as a whole and we will have met it head-on.
As we enter a new millennium and a new marketplace for electric power, we must ask ourselves if we're ready.
Being ready means we are:
If, as an industry and as individual cooperatives, we can answer, "Yes," then tremendous opportunities lie ahead. Answer "No" to any one of them, and we have our work cut out for us.
- Price competitive
- Service oriented
- Knowledgeable about our members
- Proud to be cooperatives
- Involved in our community.
Editor's note: Any opinions expressed in this article are those of the author, and do not necessarily reflect those of USDA Rural Development or its employees.
Consolidations, technology, politics to impact co-op financial institutions
Charles E. Snyder
President & CEO
National Cooperative Bank
s we turn the corner and enter a new century, the U.S. economy is at an all time high. As cooperative financial institutions, we too have been riding the wave of prosperity. Where do we go from here? Are we prepared to meet the challenges of the new century?
If the past decade is any indication of what we have to look forward to, it is going to be a bumpy ride. The recent trends - industry consolidation, technological advancements and a shifting legislative agenda - offered a dizzying pace of change.
Cooperative financial institutions will need to be able to turn these trends into opportunities in order to compete in the new millennium. We will need to continually adapt with customers to meet their needs.
Industry consolidation will continue, especially within the financial services arena. Recent legislation providing for banking modernization will allow banking, insurance and stock brokerage to be sold under one roof Competition with large and well-capitalized companies will increase as firms merge to provide one-stop shopping. With banks increasingly becoming more like fast-food outlets, there will be tremendous opportunity. Super banks will offer a cookie-cutter approach to business. They will tell customers to fit in their box. Cooperative financial institutions must react swiftly, listen to customer needs and offer creative solutions.
The use of computers and the delivery of products and services via the World Wide Web will be paramount to our success. E-commerce allows like minded people to cooperate with efficiency never before seen. Cooperatives, by their very nature, should be able to capture this value if they are able to manage change at "Internet speed." Evaluating how members can use the Web, how we can partner to deliver "added value" through a virtual world is critical. While still relatively unknown, cooperative financial institutions are well aware that the Web will change the face of how we do business. While still in its infancy, we know that over the next five years there will be strong customer demand for Web based products. By devoting significant resources to Web solutions today, cooperative financial institutions can position themselves appropriately for the future. At the same time, customers continue to demand that we provide
services via traditional but more efficient means. It will be a challenge for us to balance these demands.
Shifting legislative agenda
We have already seen how to harness the power of cooperation in order to impact legislation. The grassroots effort of the credit union campaign in the late 1990s is a prime example of how to focus and use our fundamental strengths as cooperatives. The onus will be on all of us to promote the dynamic world of cooperation to ensure that cooperatives benefit from future legislation.
We have our marching orders. To meet the new century's challenges head on, cooperative financial institutions must stay focused. We must look to our strength - that of cooperation - and exploit it. Our cooperative foundation offers us a few things the competition does not have - a unique ability to collaborate effectively, and an uncommon affinity with our customers. While the shape of cooperatives may change, it is our core values that will facilitate our growth in the new millennium.
Cooperatives build community values
s we enter a new century, people across America are hopeful that the challenges and opportunities on the horizon will lead to better lives for themselves, their families and their communities. In their search for better times, they are also searching for values - values that some fear may have been lost during the 20th century. Yet, that is not the case, for the values they seek - selfhelp, self-responsibility, equality, democracy, honesty, openness and caring for others - are alive and well within cooperatives around the world. That is why I predict a cooperative renewal in this new century.
This renewal, or renaissance, is already happening in communities throughout rural America. The heart of most rural communities is the businesses that occupy Main Street. Main Street businesses have long been icons of American life and are often the focus of economic, social and civic activity of rural communities. It is a well-known economic fact that $1 spent in a community will generate seven dollars in additional economic activity.
Unfortunately, Main Street businesses faced severe challenges during the latter half of the 20th century. The corner grocery stores, fast food franchises and local hardware stores found themselves competing with national chains and box stores. These huge corporations had tremendous capital resources and purchasing power. Seeking to increase returns for their stockholders, for-profit companies sought the least expensive production costs and closed local offices and factories. Today, there are many vacant storefronts on Main Streets across America because these locally owned small businesses were unable to compete.
When a multinational corporation takes profits out of a community, the only people who benefit are the investors outside of the community.
Instead, people can participate in the cooperative sector of the economy to help build a community that benefits them and their neighbors. In many rural communities, cooperatives play an important role as the economic engine creating jobs and increasing rural incomes. As a result, rural communities prosper because the economic benefits that cooperatives generate stay in the local community. A locally owned, member-controlled cooperative doesn't move its operations overseas.
Independent business owners are discovering the power of cooperation across the United States. There is an explosion of purchasing and marketing cooperatives owned by small businesses. Main Street businesses are competing successfully in a global economy against huge competitors because they belong to a cooperative.
Currently, there are over 250 purchasing and marketing cooperatives serving 130,000 small businesses. Dry wall contractors, pharmacies, fast food franchises, electrical distributors, hotels and carpet stores are only a small sample of the types of businesses served by cooperatives. Volume buying, joint advertising, central billing, reservation services, employee training and benefits, financing and insurance are some of the services that purchasing cooperatives provide to their members. For example, a fast food franchise restaurant with $1 million in sales could cut 2 percent on food costs through a cooperative for an annual savings of $6,000. At the end of each year, it would receive a healthy patronage dividend from the cooperative.
Many people never saw independent small business owners as natural allies and participants in the cooperative sector of our economy. But, increasingly, these small business owners are facing the same economic and social issues that consumers and farmers have competed against for decades. Keeping small businesses prosperous and on Main Street through cooperatives builds community. In this new century, these organizations will be the fastest growing segment of the cooperative sector of the economy.
It is our cooperative values of self help, self-responsibility, democracy, equality, equity and solidarity that appeal to the owners of small businesses. Survey after survey, these are the same values that Americans everywhere yearn for and these are the values that foster trust in cooperatives trust that will also increase consumer use of cooperatives everywhere.