[permaculture] Food Co-op Advice

Robert Windt meridian_power at yahoo.com.au
Thu Jun 17 17:15:12 EDT 2004

A long but informative post on the setup and management of the Oklahoma food co-op Cheers

Rob Windt

SE Australia


From:  "Robert Waldrop" <rmwj at s...> 
Date:  Fri Jun 4, 2004  1:19 pm 
Subject:  Arkansas Regional Food Network


Wednesday night the Arkansas Regional Food Network, which is the beginning of a
local food co-operative such as we have started here in Oklahoma, had its
inaugural Arkansas Food dinner. They have a website at http://www.farmtable.org
, so send this to anyone you know in Arkansas. Anyway, they invited me to speak
at their dinner but I couldn't go, so I sent them this letter which they said
they read at the dinner last night. After the letter are "miscellaneous notes"
which is 3 pages of info I prepared for their core group to consider in their
planning and startup of their own cooperative. I am sending it here in case
anyone else out there is thinkg about starting their own local food organizing
campaign. The Arkansas network plans to start their system up in August I think
and they are bringing a group of their folks here to one of our summer delivery

As part of our organizational startup, we have been developing an online Local
Food Cooperative Management System, which has these features, which interact
with each other::

databases of members, routes, trucks, products and prices
shopping cart system
automatic invoice system for customer and producer invoices
automatic route information system
labels (for mailings, for products)
summary total pages for producer and customer revenues
automatic creation of printable PDFs of our price lists
automatic creation of printable invoices for customers and producers
administrative pages that show links based on permissions (some people can see
everything, others can only see what applies to them)

The board has voted to make this software available for no charge under the
General Public License system, which means it can be used by anyone we give it
to, everyone who receives it has full rights to give it away, enhancements that
others make will be shared through the system. We are presently guestimating
that it will be ready to replicate in other states in July. We still have 25 or
so pages of gee whiz thingamadoodles that we want it to do. Our software
designer, Emma McCauley of Red Earth Design, is doing a fantastic job on it. So
if you decide to start something, we can give you an assist.

Robert Waldrop, Oklahoma City

Dear Arkansas neighbors,

I am sorry that I cannot be with you for your first Arkansas Food banquet. I
wear several hats and each "hat" comes with responsibilities that I can't always
finesse so that everybody is satisfied. Nevertheless, I wanted to write y'all
and give you my congratulations on your decision to enter this great local food
adventure. We in Oklahoma have set out to build a cooperative business that is
socially just, environmentally sustainable, and economically viable. Each of
these three aspects of our business plan is critical, we call these our Core
Values. I encourage you to think about the core values of your organization,
identify them early and often, and build your cooperative business around your
shared values. This is not just about making money, and it is not just about
being green, and it is not just about doing justice. It is about all three,
three sides of an equilateral triangle, proving that a successful business can
flourish and prosper on a foundation of these community values.

There are several unique aspects of our developing cooperative business. From
the beginning it has been a challenge to identify and then work through the
various issues, opportunities, and problems. Including both customers and
producers in the same cooperative organization has worked very well for us. We
the Oklahoma Food Cooperative act as agents of both the producer members and the
customer members in making a convenient local food marketplace available. For
the producers, we list their products, collect the orders and the payments, pay
the producer and deliver to the customer. For the customers, we find products
for sale that meet our established criteria, provide a way to order and pay for
them, and then organize and deliver their order for pick-up at one of our
regional depots or for home delivery if available in their area. A producer in
Kiowa County in southwest Oklahoma can sell his or her products in Green County
in northeast Oklahoma, and a member in Tulsa can buy from producers in Waynoka.

Starting a local food cooperative is fun. You never know what will happen next.
Our Delivery Days are hard work, but they are also becoming social occasions. It
reminds me of the social time after church on Sunday in a rural community -
farmers standing in the shade, talking about the crops, the weather, the

Creating a local food system from the ground up is a lot of work. It is probably
more work than we thought in the beginning, but it hasn't been impossible work.
We have now had seven monthly Delivery Days, and have moved more than 10,000
items with a total value of $47,993 through our system, November 2003 through
May 2004.. One thing that lightens that load is that the results are so
tangible, both in terms of economic advantage for the producers and good
nutritious food for the customers.

Growing a cooperative local food marketplace adds quality to the lives of all
the participants. The food in fact does taste good! On a recent delivery day, a
member of my church walked through the sorting area (we use a large hall at the
church where I am director of music for our delivery day sorting), she saw a bag
of green onions - and they were perfectly green, with a nice perfectly white
bulb. She picked one up and exclaimed, "My God, where does this come from? I
have never seen a green onion like this" Okemah, as a matter of fact, is where
those onions were grown. My bad cholesterol has gone down 50 points since I
stopped buying supermarket meats and started buying meats, eggs, and poultry
direct from Oklahoma farmers. It takes me 20 minutes to order 90% of my
groceries for the month. The members of the Oklahoma Food Cooperative are
enjoying excellent food, food that is healthy and nutritious (with all the
benefits that derive from that), AND we are saving time. More than one member
has told me that they are also saving money, which has been my experience with
local foods. Producer members benefit from a new source of revenue. Nobody's
paid their mortgage off yet with Oklahoma Food revenues, but several producers
have indicated that their Oklahoma Food sales are significant to the continued
viability of their farming operation. When somebody tells you in February, "You
made my land payment this month," you know you are doing good for people who
deserve a break.

There ain't no such thing as a free local food cooperative (TANSTAAFLFC). We
applied for a big grant and a little one, we got the little one, didn't get the
big one.. Grants can be useful, but I think it is dangerous if your success or
failure is dependent upon a grant. Local agriculture has suffered from being
dependent upon outsiders for capital. Self-funding by the participants via the
sales of capital shares to the membership is the strongest financial base on
which to rest your cooperative efforts. It enforces financial discipline (which
is critical) and prevents us from getting too far ahead of ourselves and from
developing excessive administrative overhead. Grants aren't free money, they
also cost money and volunteer time for their administration.

The start-up and monthly work of a local foods cooperative involves properly
managing a myriad details. Your information and communication systems are
therefore critical to your success. We are continuing to fund development of our
online Local Food Cooperative Management System, as anything that we can get our
software to do is work that cooperative management and volunteers don't have to
do. It is better to make capital investments up front in such "smart work"
projects than to weary key volunteers and management doing things that computers
can do better. Work hard, work smart, as they say. My goal, which I think is
shared by the rest of the board and by Emma McCauley, is to make our Local Food
Cooperative Management System software available under the General Public
License system, where users of the software have the right to give it to others,
and where any enhancements if shared with the public must also be freely given
to others who use the software. As more groups use and develop the software, all
of us will benefit. "Freely you have received, freely give."

The success of a local food cooperative is entirely dependent upon the
willingness of the membership to take responsibility for the work of the
cooperative. People should not think of this as a typical business where the
"customer" is "served" by "employees", but rather as a house in which they are
developing sweat equity. At this stage in our development, we have no paid
staff, only volunteers, including all of our management and administration team,
and we use borrowed space. We are all members of this organization together, and
each of us is responsible for its success.

We are committed to open cooperative membership and democratic governance. Any
customer or producer can join the cooperative, and all members are equal,
producers and customers alike can buy and sell. If a customer member has surplus
produce, they can sell it through the cooperative. We are opposed in principle
to limiting the number of producers who can sell a particular item, and we think
such limits are also a bad idea for the economic vitality of the organization.
Just as in a regular supermarket, producers compete against each other for
customer dollars, and that is healthy for the producers and for the customers.
Product inventory continues to be a challenge, especially with certified organic
vegetables. By having several producers in product categories, we can often
suggest substitutes if one producer runs short of a given product.

Those are some ideas for you to think about. This is a big job you are
undertaking, but it is not an impossible job. And the rewards are tangible and
abundant. On behalf of the Oklahoma Food Cooperative (and also the Oscar Romero
Catholic Worker House community, which is one of my other "hats"), I extend to
all y'all our very best wishes and hopes and prayers for you as this journey
begins for the Arkansas Food Network. We start small or we don't start at all.
Just as two heads are better than one, two states doing local food cooperatives
are better than one. We hope to learn from your experiences, just as you have
the opportunity to consider our experiences (successes and failures) as you
develop your own local Arkansas marketplace. It will probably take us at least 3
years to get our cooperative businesses on a truly sustainable foundation, the
sooner we start, the quicker we'll get there. We look forward to years of
fruitful cooperation between our organizations.

I should also mention that starting a cooperative like this is a scary endeavor,
because if you build this marketplace, the people will come. We didn't know
nothing, not a thing, in November 2003 when we hung out our shingle and even so
that month we sold $3500 worth of good Oklahoma food. And then most of those
folks came back the next month and ordered again, and new people joined us, and
we are still growing. We make things up as we go along as necessary, but we are
developing an increasingly firm foundation for our business that is rooted in
our Core Values as applied to actual real life experiences and successes.

And so I pray that Almighty God, Creator and Lover of the Bounty of the Earth,
will bless all of you in your journeys, your opportunities and your challenges,
your hardships and your blessings. May your families and your fields be filled
with joy and abundance, and may your work together as faithful and prudent
stewards to build this new food cooperative be fruitful and a blessing to all of
the people of Arkansas. May we all together as friends and neighbors have the
courage to change the things we can, the serenity to accept the things we can't
change, and the wisdom to know the difference. Amen..

Yours in solidarity and cooperation,


Bob Waldrop, president, Oklahoma Food Cooperative

and founder, Oscar Romero Catholic Worker House

PS. When you think about marketing, remember this: all you really have to do to
get a new customer is to put a plate of good Arkansas food in front of them,
hand them a fork, and say, "Y'all bon apetit, you hear?" You will be where
people will go when they want the right eats in Arkansas. Get ready for it..
They're coming. Local food is the next big thing in food.


- in no particular order -

Cooperative StructureWe set up our cooperative structure in such a way that it
is basically impossible for someone down the line to throw money at us in order
to take us over and convert our cooperative organization into something else. We
believe strongly in the principles of cooperative enterprise, and have
structured things so that there is a close relationship between the price of a
share of our cooperative and the value of our cooperative. We don't want our
membership's ownership to be nominal, but to be real. Thus, one member household
- one share - one vote. We do not intend to ever issue additional classes of
stock. If we need more capital investment, we will either grow the cooperative,
or borrow the money or ask the members to vote an increase in the share price.
The purpose of the share price is not to raise operating funds, but rather to
fund capital expenditures for equipment, software, and other things necessary
for the startup of the cooperative (licenses, fees, etc). Our operating funds
are effectively "volunteer sweat equity and borrowed space", with some
expenditures for volunteer benefits, postage, some fees, etc. The cash expenses
are covered by the co-op charge.

Cooperative Charge

We add on $3.50 to each customer invoice for the cooperative, and we also can
include a transportation charge, presently a flat $1.50, and a fee for home
delivery. In the future, as we develop more history and get a good handle on
what our monthly expenses are as the software development completes and our
systems fully operational, we will switch to probably a lower flat fee plus a
percentage of the order.

Customer Delivery Code.

We really like the Customer Delivery Code that we developed. Each code has four
parts: Regional sorting hub - member number - route designation and whether
pickup or home delivery - truck number

My personal code is OKC-004-OKCNWP-000

which means: this product is sorted in Oklahoma City, for member Number 4, who
is on the Oklahoma City NW route, picks up his groceries, and those groceries
don't have to go anywhere on a truck because they are picked up at the sorting
site, which is also the OKC NW pickup site. If I was in Norman the first three
digits would be NOR and the last digits would be NO1 or NO2.

Postal Mailings.

Print and mail as little as possible. We charge a monthly subscription of $2 to
anyone who wants or needs to receive a paper mailing via the post office. Nobody
has complained about that. The principle is: "activities finance themselves".
Don't mail to everyone every month. Copying and postage will hundred dollar you
to death.


Do as much on the internet as you can, but you also need personal interaction.
Use the internet to send out product information, price lists, etc., information
that would cost a lot of money to mail in hard copy format. We have two
listservs, one with all the members, one for only the producers. These are
announcement only listservs, not discussion groups. We have one discussion group
that is fairly active.

Definition of an Oklahoma Food Product was Problematic.

The definition of what is eligible to be sold through the cooperative turned out
to be one of our greater challenges. It seemed so simple in the beginning,
"Oklahoma foods". Everyone knows what that is, right? But the question
immediately asked was, "What is an Oklahoma food?" We ended up deciding that an
Oklahoma food "eligible to be sold through our cooperative", is something that
is raised or grown within the state, or if it is a processed product, it is made
within the state. In both cases (primary and processed products), we decided
that they had to be sold by the producer, we accept no "distributorships" as
members. Also, because many of our customer members join the cooperative because
of ethical and moral concerns about Confined Animal Feeding Operations, we say
that while ingredients for processed foods and products can be bought from the
commercial system, any meats or poultry must (a) originate within the state of
Oklahoma and (b) cannot derive from a Confined Animal Feeding Operation.
Whatever you decide about the definition of "Arkansas Food", set up a procedure
from the very beginning to review new products to ensure that they meet your
requirements. (It is easier to keep something you don't want out than to de-list
something once it is already in the public price list.) One of the benefits of
joining the cooperative for customers is that the cooperative does this kind of
basic product review so they are assured of the local origin and they know the
production practices of the particular product. You don't have to be certified
organic or all natural to sell through our cooperative, you do have to declare
what your production practices are. We also decided to sell non-food items as
well as food, and that is a growing category of our product line. We require
that processed products include an ingredient list, and that producers note any
that are of Oklahoma origin. Some processors have changed product ingredients in
order to qualify their product for sale through our cooperative. And there is a
small but growing trade among the producers. Some of our chicken producers buy
certified organic feed through the cooperative, another producer who bakes bread
and grinds flour and cornmeal gets those certified organic grains and corns from
cooperative members. We the Cooperative like that a lot and strongly encourage

Delivery Day Procedures

Each Delivery Day we have changed our work procedures, but we are getting to the
point where they have about stabilized. The one innovation for June will be
using totes for each customer. We went to this a bit reluctantly, as that is an
added expense ($5/each), but I have been persuaded by the actual work that they
are necessary. Each month we have had some items go astray and often it is
because when one order as bagged for delivery, some of the order items sitting
next to it that belonged to a different customer were picked up by mistake.
Delivery Day mistakes are a Big Problem because they require a lot of personal
attention from the cooperative administrative team. Thus I am willing to go many
extra miles, even if it costs money, to minimize those mistakes, because the
volunteer time is itself a limited resource. Even though we are all volunteers,
we have to think about how much time and work we are asking from people, just as
if we were paying salaries. "Volunteer" does not equal "Limitless".. Our
Delivery Day system works because one day a month a delivery system comes
together. But it's not there "the day after" until the next delivery day, so
anything that misses the truck and goes astray on Delivery Day is a problem
often without an easy solution. (The ease of the solution depends on the
geography of the problem.)

Our present Delivery Day work procedure is to set up tables around the perimeter
of the room, and we lay the customer invoices (2 copies of each) on those
tables, sorted first by route, then by member number. Ice chests are also
arranged around the room, typically 2 or 3 members per ice chest, with some
exceptions (some members require a whole ice chest for their monthly orders).
When a member's product goes in the ice chest, the member's name is put on tape
on the lid of the ice chest.

We started out by putting the producers' products on the perimeter, and picked
each member's order individually, but our present method is much more efficient
and has fewer problems. We have also tried arranging the producer invoices in
simple member number order, and then when the orders were checked, they were
moved to a staging area for its delivery route. But that method involves one
extra movement of the orders, and we are trying to minimize movement of the
orders as a matter of efficiency and frugality of effort. Believe me, when you
sort nearly $10,000 in groceries into individual customer orders, you will
become very interested in frugality of effort.

When the producers bring in their orders, we have three tables up front and the
producers' orders are first checked in. If anything is missing, a "Missing Item"
ticket is filled out, one copy for the customer's order, and the producer's
invoice is marked with what is missing. In June we intend to use four producer
check-in stations.

After the product is checked in, the producer assisted by volunteers distributes
the items to the appropriate member places on the tables. Products for Tulsa and
Tahlequah and Norman, which are sorted in those areas, go to their staging
areas, where their volunteers bag things and load them for transport. In June,
there will be totes on the table with the member's customer delivery code on it.

After all the producers have arrived, and all of the product is distributed, we
check each order, and it is bagged. Customers then come and pick them up or they
are transported to other pickup areas. If there are any discrepancies on
delivery day, the customer's invoice is adjusted. We lay out two copies of the
invoice when we set up, and the corrections are made to both copies. One copy
stays with the customer's order, the other copy goes to the treasurer. (The
treasurer has a table at the front, staffed by two volunteers).

Decision Making and Information Flows.

You need a streamlined decision making process and a clear description of who is
responsible for what, and how and where the information flows, is archived, and
is retrieved. We're still working on that.

Charge More Rather Than Less for Membership.

Because we got the small grant, we charged a little less for a membership share
because I figured we would have the grant money available. Oops, as it turned
out, we probably aren't able to use all the grant money. We applied for it when
we thought we would open a store, so the money was programmed that way, but we
ended up with a delivery system, and the budget didn't fit the new needs. If I
had it to do over, we would have calculated our share price as if we had no
other funding source. This was not a fatal mistake, we are doing more than OK,
but we probably should have charged $75 for our share price instead of $50.
Everything always costs more and takes longer, so whatever you decide to charge,
add 20%.

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