SARE’s 20 th anniversary NEW AMERICAN F A R M CONFERENCE

1. SARE’s20th anniversaryNEWAMERICANF A R MCONFERENCE “Why CO-OP” By: Ben F. Burkett, Marketing Specialist Federation of Southern Cooperatives/Land Assistance Fund MARCH 25-27, 2008

2. Mississippi Association of Cooperatives • A state association of the Federation of Southern Cooperatives/Land Assistance Fund (FSC/LAF) • Established in 1972 with a purpose to serve limited resource and minority cooperatives throughout the state

3. MAC Continued… • Parent organization of the Mississippi Center for Cooperative Development • Chartered in 1997 • Allows MAC to expand education, training, and technical assistance to participating cooperatives

5. Regional Crops • Watermelon • Assorted Greens • Squash • Culinary Herbs

7. WHAT ARECOOPERATIVES?

8. A cooperative is a business that is owned and controlled by the people who user it- its member-owners.

9. A Type of Business Dependent On • Who owns the business? • Who controls the business? • Who uses the business? • Who gets the profits?

10. Whosparks the coop Idea? A compelling need and a few leaders can spark the idea of forming a cooperative.

11. What makes a successful coop? • Successful cooperatives bring people together who: ( 1) have a common need or problem (2) want to do something to help themselves; (3)are willing to support the cooperative by supplying capital; and, (4) patronize the cooperative by using it when organized. In addition, a successful co-op must have competent management.

12. What can cooperatives do for people? • They market what people grow or produce • They obtain production supplies.

13. What does the coop do for the members? • Cooperatives help improve the quality and reduce the cost of supplies and services members use. • Cooperatives help improve net returns to members from products they market and goods and services they provide.

14. What members do for the coop: • Members finance their cooperative. If the cooperative needs more money than the members can provide, the co-op may borrow at least part of it from outside sources, such as banks. • Members control their cooperative through a board of directors, that they elect. Directors set policy and hire a manager to supervise the day-to-day cooperative operation.

15. Membership • Members, are the reason the cooperative is organized. (owner-users). They justify the existence of the coop through their patronage, capital investment and decision making participation. They should show an interest in all the cooperative’s affairs, present ideas to improve performance and promote it to others who can benefit by using it.

16. Survival

17. Cooperatives Are a Type of Corporation • Multiple owners who are user members • Variety of goods and services • Physical facilities • State chartered • Members are investors • Owned and controlled by members who use its services

18. Cooperatives • Are primarily controlled by a board of directors elected by and from members • Derive equity from member owners • Operate for the benefit of member owners • Allocate earnings to members based on use • Earnings from member business is taxed once • Have perpetual existence

19. The Cooperative Form of Business Is Prevalent • 47,000 cooperatives in the United States • Serve 100 million people, 40 percent of the population • There are several types of cooperatives serving many sectors

20. Types of Cooperatives • Financial • Consumer Service • Business

21. Cooperatives Have Unique Principles User - Owner User - Control User - Benefit

22. User-Owner Principle The people who own and finance the cooperative are those who use it.

23. User-Control Principle The people who use the cooperative are those who control the cooperative

24. Members Exercise Control By • Voting at annual and membership meetings • Electing Board of Directors • Making decisions on major cooperative issues

25. User-Benefit Principle The cooperative’s sole purpose is to provide and distribute benefits to members on the basis of their use

26. User-Benefits Bargaining Power Reduced Costs Quality products and services Market Access Community Strength Economic Enhancement Political Action Competitive Yardstick

27. Cooperative Practices Implement and Facilitate Basic Principles • Patronage Refunds - distribute earnings to members based on use • Limited Return on Equity Capital - members form cooperatives for service, not for a monetary return on investment • Cooperative Cooperation - joint ventures, MAC’s, networks, alliances, working relationships, etc. • Cooperative Education - promote the cooperative way of doing business and educate members, directors, and employees

28. Cooperative Governance System Structure Based on membership structure and essentially defines who the members are and how the cooperative is organized to serve them. • Centralized Structure - Individuals are direct members • Federated Structure- Cooperatives are direct members • Mixed Structure - Individuals and cooperatives both are direct members

29. Centralized Structure Cooperative Member Member Member

30. Federated Structure Cooperative Local Cooperative Local Cooperative Member Member Member Member

31. Cooperative Functions Three Core Functions • Marketing - extend control of members’ products through processing, distribution, and sale • Purchasing - providing affordable supplies and goods • Service - provide needed services

32. Participation Roles Cooperatives operate through the roles of principal parties • Members • Directors • Manager • Employees

33. Organizational Make-Up Members Board of Directors Manager Employees

35. CONTACT INFORMATION BEN BURKETT Marketing SPecialist Federation of Southern Cooperatives/ Land Assistance Fund Post Box 22786 Jackson, MS 39255 (601) 354-2750 OFFICE (601) 354-2777 FAX benburkett@earthlink.net