–Cooperative Defined –Pros and Cons –Getting Started –Managing –New Generation Cooperatives Cooperatives In the Shellfish Industry

What is a Cooperative? 1.A business organization 2.Communism Answer: A cooperative is a BUSINESS

Business Characteristics Alligator Business Model (not coop)

Types of cooperatives Consumer Worker Producer –Marketing –Purchasing

Every Farm for Itself

Greater Bargaining Power Savings to the farms has to be greater than the cost of running the co-op.

Just sells to individuals Only sells wholesale Sells to a friend Has a diverse clientele

Co-op needs to cover its operating expenses from sales. Farmers need to make more by selling through the co-op.

Advantages Can focus on farming and increase production Can reach more diverse markets

LLC vs. Cooperative Similarities –Producer can own business –Taxes on profits paid by owners not company –Limits liability –Must cover costs –Must benefit owners

Why Are Co-ops Different? 1. Open membership 2. Democratic Control 3. Member Economic Participation 4. Autonomous 5. Education/training 6. Cooperation 7. Community Co-op Principals

Co-op Features The effect of the co-op principals Membership is open to persons who can use the co-ops services. Member control is usually one member one vote. Investment $ = control/votes Benefits are tied to usage –Operate at cost –Net margin allocated to members based on use. Investment $ = percentage of profits –Limited return on equity

Where are Co-ops Effective? New/unusual industries - butter in early 20 th Century in Midwest - cranberries Areas where private businesses dont think there is enough profit. –Small/remote salmon fishing districts Maintaining prices? –Kachemak Bay

The Cons Cooperating Start up Distraction Marketing Costs/financing Management Member dependent

Examples of seafood cooperatives Seafood Producers Kachemak Bay

Getting Started Planning Preparing Begin operations

Planning Process Collective Process Gather Information Get organized Research feasibility

Preparing the Business Membership Drive Business Planning Founding Documents –Articles –By laws (owners manual) –Membership agreements

Beginning Operations Elect directors Hire management Develop polices and procedures Set up business

Members role Elect directors. Vote on major decisions. Patronize the cooperative.

Resources Technical Assistance National Coop. Business Assoc. Coop. Devlpmnt Institute Coop. Devlpmnt Services Northwest Coop Devlpmnt Center Financing Coop. Devlpmnt Fund Blooming Prairie Foundation

Alaska Cooperative Development Program Purpose Partnership and Resources Clients

Instructors Andrew Crow Consultant and Cooperative Program Manager Home page – dp/index.html