COMMENTARY
Co-op structure aids longevity
The two feature articles about farm supply cooperatives
that lead off this issue of Rural Cooperatives both tell
remarkable stories. One is an account of how Southern States
Cooperative in Richmond, Va., has come back from the brink
of bankruptcy five years ago. The turnaround involved painful
staff reductions, the selling of assets and out-sourcing of some
functions (including retail credit operations and the co-op’s
transportation fleet).
But even with all those moves, the turnaround would have
failed without the support of the co-op’s loyal members,
employees and suppliers. They stuck by the co-op because
they know how much this cooperative has meant to producers
and others throughout its broad service area.
CEO Tom Scribner is candid in saying that the co-op’s
policy of “laying all of its cards on the table” when dealing
with suppliers and others was the only way it was able to
overcome the rumor mill and continue to carry out the
business moves it had to make. The article concludes with
Scribner’s checklist of “lessons learned” — something all coop
directors and managers should review carefully.
The cover story salutes California’s Fruit Growers Supply
Co. on its 100th anniversary. Even though it is the nation’s
oldest regional farm supply co-op, it has always existed
somewhat in the shadow of its internationally famous sister
co-op, Sunkist Growers. But the success of Fruit Growers also
holds valuable lessons for all co-ops.
The fact that it was organized as, and has remained, a
grower- and packer-owned cooperative has been key to
enjoying a century of success, its managers and directors say.
When dealing with a perishable product like citrus, and
different production regions, the co-op business structure is
“the best that you could adopt,” says Fruit Growers President
Nazir Khan.
While some bemoan slow decision making as a drawback
of co-ops in a fast-moving business world, Khan sees
advantages to the collaborative decision-making process that is
a hallmark of cooperatives. “You may not be able to make
decisions as rapidly, but you also avoid rash or impulsive
decisions.”
As a co-op, Fruit Growers looks at the interests of all its
different districts and growing regions. “Chances are, we will
have considered every nook and cranny of the important
decisions we make,” says Khan. “I believe it forces a better
decision in the end,
even though the
process might not
be a simple one.”
Sunkist President
Tim Lindgren (and
former Fruit
Growers Supply
president) agrees
that the co-op business structure is ideal for ensuring that the
6,000 grower-members and 40 packer-shippers supported by
the sister co-ops have their voices heard and their needs met.
“Fruit Growers has prospered because it stayed focused on
supplying member needs. It hasn’t branched out into a lot of
areas that aren’t part of the program. It has provided
tremendous service to Sunkist packinghouses and growers, for
no charge, and pays them (through dividends) to do business
with the co-op. It’s an unbeatable combination.”
That’s not to say “business as usual” will cut it for co-ops
any more than it will for any other type of business that
expects to thrive in a market where competition is always
king. Fruit Growers is completely revamping its information
technology systems — a huge undertaking that offers
increased efficiencies throughout the organization.
The effort is progressing “on time, on budget and as close
to seamlessly as you can get,” says board Chairman Nick
Bozick. He credits that result to a collaborative effort and
“many long hours put in beforehand by our planning teams.”
Improving the co-op’s data systems and other operations is
essential as the American citrus industry has to deal with evergrowing
levels of foreign competition, Bozick stresses.
Maintaining good relationships between management and
directors is “like anything in life,” says Lindgren. “It takes
trust, communications and transparency. It takes a while in a
co-op to develop full, mutual respect between board and
management. So once it is established, you must nurture it,
communicate and allow participation. Trust (between
directors and management) can carry you a long way once
established, but you can never compromise that trust.”
Dan Campbell, Editor
