02391 How to start a local food cooperative

Getting Started.

A local food system starts in local kitchens, as individuals decide to take personal responsibility for the food they eat.

Kitchens formed by permaculture design are helpful if you want to jump start the foundation of a local food system.

If we want a more sustainable and just food production system, there must be a market for the products of sustainable and just food production systems.

Personal and household choices about where and how we spend our kitchen money and time are critical to the permaculture design of the kitchen.

This design process begins with observation of your present situation and an inventory of what you have and do, what you need, and the challenges of getting from here to there.

A local food system is about distributing basic foods; it does not look like a big box store. Don’t expect all the ersatz "convenience" offered by manufactured foods. The good news is that while the process is not always easy, the change that permaculture design brings to your kitchen is uniformly positive. The food will be more nutritious, it will taste better, and you will feel better about your work in the kitchen.

The First Organizers

The best local food cooperative organizers are people who have advanced through the beginnings of this "kitchen permaculture design" process and who are already buy and eat local foods. In the case of the Oklahoma Food Cooperative, during the year prior to the actual organizing campaign, key organizers had begun to look for sources for local foods and to incorporate local foods in their diets.

Getting Online

Get online early and often! As you collect information, tell everybody! The Oklahoma organizers started a website to share the information they found about local food producers. Today, besides a website, you’d want a Facebook page and Twitter, maybe also Pinterest, Tumblr and other online platforms. The more the merrier!

The Oklahoma organization got started with a "call to organize a local food cooperative" that was posted in several email discussion groups serving the Oklahoma area. As a result of that email posting, the group started a Yahoo group. The initial discussions and planning took place at that Yahoo group. The archive of okfoodret@yahoogroups.com contains a complete written record of the development of the cooperative from the first announcement of the idea to the present time.

Public Meetings.

Besides internet discussion, the Oklahoma organizers held a dozen meetings, in different parts of the state. The primary publicity was through free notices published in local newspapers. The meetings were in churches and libraries. The best attendance at any of these meetings was 12. The people attending each meeting elected one person to serve as a member of the "Oklahoma Food Cooperative Organizing Committee."

The Organizing Committee.

The organizing committee initially incorporated as an Oklahoma Non-Profit Organization (we reincorporated as a cooperative when we started selling membership shares), and began holding monthly meetings. At each meeting, we had a potluck lunch. The organizers believe that this regular “table fellowship” was critical to the group’s success.

The benefits of church involvement.

Recruit members of church staffs "early and often.” Churches directly supported the organizing campaign for the Oklahoma Food Cooperative. Epiphany Catholic Church let us use their facilities free of charge for 3+ years until we outgrew their building. Other churches lend their facilities for use as pickup sites.

Where to look for local food producers.

Directories. Some state departments of agriculture maintain directories of local food producers.

Certified organic producers. Certification organizations can provide lists of certified organic producers by geographic areas.

Farmers’ markets. The Oklahoma organizers handed out flyers to all the producers at farmers’ markets.

County extension agents. In the United States, every county in all 50 states has an “extension office” which works with farm, garden, and domestic issues. They will often know who is producing for direct sale to the public.

Custom butchers. They will know what farmers and ranchers are selling steers to their neighbors.

Other. Look at classified ads in newspapers for people advertising food, and run classified ads to find farmers. And word of mouth is one of the best ways to find people.

Where to find the first customers

• Local and state chapters of environmental organizations, in particular, look for Sierra Club chapters.
• Homeschoolers
• Weston A. Price Foundation local chapters
• Churches
• Local and regional internet discussion groups.
• Food editors
• Restaurant owners
• Slow Food conviviums/contacts
• Peak oil discussion groups
• Transition Town organizations
• Doctors and medical professionals
• Support groups for people with allergies
• Gardening organizations,
• Environmental groups.

Everyone has a right to eat local food.

Cast a wide net when you look for people. Everybody has a right to eat and to access local foods — not just the people who agree with you on politics, religion, or culture. The Oklahoma Food Cooperative is diverse — we have conservative evangelical Republicans, gays and lesbians, Catholics, Methodists, Presbyterians, Southern Baptists, Muslims, Buddhists, pagans, Democrats, anarchists, socialists, atheists, and all points in between. There is no political, ideological, religious, or cultural litmus test to join and participate in the Oklahoma Food Cooperative.

Many of our members would not normally even be in the same room as others, much less working with them across barriers of religion, politics, and culture, on a common endeavor. We find this to be a hopeful sign. We don't lack for reasons to divide us. It is nice to find that a diverse group of people can come together and work with each other on a common cause.

We don't make some kind of commitment to faux diversity where we pretend things don’t matter. No one has to deny any deeply held belief. We just realize that some things are relevant to food, and other things in our lives aren't relevant to coming together at a table of local food fellowship. The Oklahoma Food Coop does not get involved with politics, except for issues that directly relate to food. This includes a ban on distributing partisan political literature at our pick-up sites during election campaigns.

In other words, there is no religious, political, or cultural “test” in order to access local foods. People from all aspects of the political spectrum have been shocked to find that this is true and the food cooperative is not a vehicle for them to pursue other interests, political campaigns, or ideologies. The shock wears off quickly however, and we haven't had any problems with people coming to an understanding of the need for this kind of cultural, political, and religious neutrality.

The local food contribution to economic development.

The fastest way to create jobs in rural areas is to help farmers sell food directly to local residents. Rural areas are well stocked with the most important capital good relating to food production — which is land. Given the resources local communities sometimes spend to attract industries to rural areas, it is ironic that these rural development organizations often ignore the one industry already present in rural areas and the opportunities it offers for new markets that will reduce capital outflows from the rural community and create new capital inflows as rural producers market their goods in regional cities.

For example, if people in rural areas simply started buying their beef from the neighbors who are cattle ranchers, the economic impact to a rural county would be about $2.6 million per 10,000 residents, if the residents eat the U.S. average amount of beef. Since rural folks are likely to eat more beef, that figure may be low.

If each of those dollars only circulates once in the community, the economic impact doubles to $5.2 million. Run it around a third time, and the impact multiplies to $7.8 million.

These are real, not imaginary dollars. Making this shift in most rural areas would require zero capital investment, since the necessaries — cattle production, processing facilities, and relationships between cattle producers and customers — already exist. What it requires is a structure to facilitate and organize that potential marketplace.

Features of the Oklahoma Food Cooperative Order Delivery System.

Core Values. The Core Values of the Oklahoma Food Cooperative are social justice, economic viability, and environmental sustainability. Our food has a story, and this is what we are about. If people want miscellaneous anonymous food, they can go to a supermarket. They come to a local food cooperative because they want something more. Telling the coop's story is important, and it is equally important for each producer to tell his or her own story.

Membership. Both producers and customers are members. Everybody pays the same amount to join, and has the same rights. Producers can buy, and customers can sell. One member, one vote, one class of membership stock. Each member receives a unique membership number.

It is important to not limit the number of producers in the coop. Early in the Oklahoma Food Cooperative’s history, there was a proposal to limit the number of producers that could sell in any given product category. This kind of restriction is common in farmers’ markets in some areas. The founders of the Oklahoma Food Cooperative rejected this, however, and time has proven the wisdom of this strategy.

• The cooperative constantly grows. We need new producers to help meet the growing demand.
• Producers drop out, often without any warning or notice to the Coop. They go bankrupt, retire, get divorced and have to sell, they change their production focus, and they die. A multiplicity of producers helps insulate the cooperative from this kind of event. We had one producer who was selling $8,000/month with us — a wide variety of products, beef, pork, eggs, prepared foods. Then, one day his wife said "I want a divorce." They had to sell the farm and one month he was there and the next month he was gone. The coop didn't miss a beat because there were more than a dozen other producers selling beef and pork and eggs and prepared foods.
• The market should choose, not the cooperative’s leadership. The only rational way to pick winners and losers is to let the customers choose who they do business with.
• A limitation on producer access to the cooperative marketplace violates core values of social justice and economic viability.
• Multiple producers (variety) attracts customers.

Product Standards. You need product standards. The question “what is a local food?” is deceptively simple. With some things — such as vegetables, meats, eggs — the answer is fairly clear. What about prepared foods? Can they use ingredients purchased from the wholesale trade? If not, you will have no jams and jellies. Will you require any local product in prepared foods? Or is the labor of the producer preparing the ingredients sufficient to make it a local food product? What about co-packed products? Your group will need to decide its standards for product sales.

To become a producer, members must apply and be approved. The coop's administration screens the applications to make sure they meet our standards. We ask for a copy of any relevant licenses or certifications (kitchen inspections, organic, etc.). We have an orientation process producer applicants must complete before approval. We visit their farm or kitchen to ensure that they produce what they say they produce. The final step is a vote by the Board to approve them. We have different applications for various categories of producers (food, non-food, processed food, etc.), since the questions asked vary based on what will be sold. The Oklahoma Food Cooperative has these categories of producers: Food, Non-Food, Prepared Food, Processed Food, Co-packed Prepared Foods, Co-packed Processed Foods. Producers who want to sell in different categories must apply for and be approved in each category in which they want to sell.

An Agency Relationship. The relationship between the cooperative and its producer and customer members is an agency relationship. We act as agents of the producers in listing their products, collecting the customer orders, arranging for delivery, collecting from the customers and paying the producer. We act as agents of the customers in finding producers with products to sell, providing an order system, collecting their payments, and delivering their groceries. In our sorting operation, we are a cross-docking operation. The cooperative never holds title to any of the products. The products are always owned by either the producer or the customer. This is important for regulatory reasons.

Order system: Local food cooperatives use an online ordering system coupled with a semi-volunteer distribution system.

The Oklahoma Food Cooperative designed its own online order system, the Local Food Cooperative Management System, which is available free of charge to others via the General Public License System. It is not "download, plug, and play.” You need someone who understands PHP and MySQL to set it up and maintain it. Contact roy@designinsight.net for more information on how to download and use the system.

Delivery Schedule. Each local food cooperative adopts a delivery schedule, from once a month to once a week. The Oklahoma Food Cooperative operates on a monthly schedule. The order opens on the first day of the month. Customers order by browsing the product lists and clicking to add items to their shopping cart. When a customer orders, the system creates two invoices: one for the customer, and one for the producer informing him or her what people have ordered. After the order closes, producers can then log in and click a link to access their orders, in two formats, sorted by customer, and sorted by product.

Delivery Day is when customers get their food. Each local food cooperative finds places for pickup sites at churches, businesses, homes, and sometimes parking lots.

Financing. The Oklahoma Food Cooperative has been almost totally self-financed by the sale of membership shares, sweat equity volunteer workers, and in-kind donations. In our organizing campaign we received a few hundred dollars in donations (from the Sierra Club and the Oscar Romero Catholic Worker House), in-kind donations from Epiphany Church in the form of free use of church space for meetings, delivery day, and banquets, and we received one small grant, some of which we were unable to use because we had requested the grant when our goal was to open a store and not all of the money could be re-programmed to fit our order delivery service.

Pricing. Producers set their own prices. The Coop has nothing to do with what producers charge.

No limits on the producers. The cooperative does not limit the number of producers who can sell a particular product. We think this is important to maintain the vitality of the cooperative and make it an interesting place for customers to shop. If the cooperative limited producers in product categories, this would totally change the relationship between the cooperative organization and its producer and customer members. The cooperative would find itself in the business of picking winners and losers and second-guessing customer tastes and choices, as well as requiring us to forecast expected demand in order to make sure we had enough producers.

Producer brands. Each producer effectively is their own brand within the Coop. All the producers have a page at our website to tell their story. Producers decide the categories to display their products. Producers enter and edit their own information and products on the website. Producers must be able to access the internet to participate in the coop. Each product receives a unique number, automatically assigned by the software when the producer sets up the product. Producers can specify inventory amounts in their product descriptions. As customers order products, the inventory declines. If somebody cancels an order, the inventory increases.

When customers order, they order from specific producers. If I want five pounds of ground beef, I order that from a specific producer. The coop does not buy wholesale and then sell retail.

Only Sales of Production. We have strict standards about what can be sold through the cooperative. We allow no distributorships. Anything sold must be produced by the producer. Producers can buy raw materials, but the producer must add value. "Repackaging" is not added value. No confined animal feeding operation products may be sold through the cooperative nor may they be used as ingredients in processed/prepared foods. Ingredients for prepared and processed foods may be bought from the regular food system, except that any meats or eggs must come from Oklahoma farmers. Meats, dairy, and eggs must come from free-ranging flocks and herds. We don’t allow animal products or antibiotics in feeds nor do we permit the use of bovine growth hormones. Products do not have to be organic or all natural. Producers must declare their production practices at the cooperative’s website.

User Ids. The system assigns new customers and producers a user ID. This tells our system what level of access to allow the member.

Producer prepping of delivered products. Producers must get their goods to the delivery location. We have several producers who pick up items from other producers; those producers help pay for the gas for the driver.

Each product coming in to our operations center must be labeled with the name of the producer, the name of the customer, the customer’s delivery code, and what the product is. The cooperative’s website produces labels in two formats which the producer can automatically download at any time after the order closes. All he or she has to do is cut them apart and staple, tape, or otherwise stick the label onto the package.

Product packaging has been an issue. The flimsy plastic grocery bags are not that suitable for our system, since items have to be sorted and moved, and packages inside them can easily fall out. Attaching labels to such bags is next to impossible (well, you can attach them, they don’t always stay). For frozen items, the best packaging is zip lock bag, with the label inside the zip lock bag.

Delivery codes. Each customer has a unique delivery code based on how they choose to get their food (pickup at one of several locations or home delivery):

Ice chests. We use ice chests of varying sizes, for moving frozen and refrigerated items. For frozen items, we use food grade dry ice which we buy directly from a distributor, not from a retail store. We use frozen bottles of water for refrigerated items. We number the ice chests. Keeping track of those ice chests and ensuring that they come back to each delivery day is always a challenge. (These are former soda and juice bottles repurposed as frozen water bottles to keep refrigerated foods cold.) We tried using those frozen “blue blocks” but we had problems getting those back too. We switched to the frozen bottles of water.

Pick-up site management. Each route and pick-up site has a volunteer in charge of it. This volunteer has an administrative access that allows them to see the customers on their route. They email or phone them before delivery day to verify that the customer selected the right delivery method and remind them of the pickup times. Each pickup site has a volunteer in charge of that. Sometimes one person is the volunteer in charge of the route, the pickup site, and the driver for the route (smaller routes, like Midwest City).

Coop operating revenues. The cooperative presently charges the producers 11.25% to sell and the customers pay 11.25% to buy, this provides the operating revenues of the cooperative.

Payments: The cooperative takes payments in checks and via the PayPal system, thus allowing us to take credit cards. We originally offered a cash discount, for customers paying with cash or check. The accounting of that was always a problem, so we no longer offer a cash discount. We originally took cash, but with our widely distributed pick-up site system, cash turned out to be a problem. Few checks written to us bounce.

All orders must be paid for by the customer before leaving with the groceries.

Our primary method of communication with customers is the internet. We do not do regular postal mailings to members, although we did in the early stages. We do not have a printed customer handbook. We tried to do this early on and quickly discovered that even with donated copying, we could go broke just mailing out updates. At one point we had a subscription to a monthly mailing. Since only one or two people took advantage of that, we discontinued it. Now a printed price list for all of our 4500+ products would be more than 100 pages long!

We sell about $850,000 in local food and non-food products each year.

Sorting:

On Delivery day, producers deliver their products to our operations center. We have five areas in our operations center where we sort products to customer orders: Dry/non-refrigerated, produce, eggs, refrigerated, frozen. Ice chests for each pickup site are co-located in the sorting area, so the ice chests for frozen, refrigerated, refrigerated produce, and eggs for each pickup site are together. Larger pickup sites (with 50+ members picking up) may have 20-30 ice chests on delivery day.

We presently work with a staff of 3-3/4 full time employees and about 60 delivery day and pickup site volunteers.

The Oklahoma Food Cooperative welcomes visits groups interested in starting a coop in their area. You will learn the most by planning to participate in one of our delivery days, which are always the third Thursday of the month.

This document may be downloaded as a PDF from the site http://www.impermie.net/. It may be freely copied and distributed in accordance with its Creative Commons license.

How to start a local food cooperative. by Bob Waldrop is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. Permissions beyond the scope of this license may be available at http://www.bobwaldrop.net/.