Prospects: Year 1, 25, 40…

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Annual milestones and awards of recognition are noted here, with some food co-ops in year one and others now at age 40. For Cooperative Grocer, it is 25 years— and an excuse to offer some reflections.

Looking at the larger picture has always been a theme in these pages. Within today’s food co-ops and their larger environment, one can see both deep continuity and significant change. And the surrounding changes seem to be accelerating.

Certainly the pace of economic disruption is increasing, and few of those trends are for the better. Cooperatives promote egalitarian values, yet recent years of growth in U.S. wealth yielded the most unequal income distribution in its history. There is talk of recovery, but 20 percent of the labor force remains unemployed or under-employed, and 40 million citizens are using food stamps. For the country at large, debt is monumental, assets have been leveraged far beyond reliable valuation, and credit is likely to remain scarce. For many cooperative businesses, even those that continue to do well, self-financing will be a key challenge.

Additionally, and most unfortunately, there is next to no public discussion and planning for a period of energy disruption and constraints. In those upcoming circumstances, co-ops’ efforts to reduce resource consumption while building the local economy will be worth many times their current expense.

New co-ops and new stores
Of course, many of these issues were raised years earlier. Among food co-ops, the current formation of new stores lightly echoes the period of 40 years ago. Startup co-ops and additional stores in any year encounter a familiar set of challenges: securing adequate capital and good facilities, generating member enthusiasm and patronage, retaining competent management and staffing, and more.

Fortunately, today’s development projects can take advantage of improvements in co-op resources and in understanding how to meet those challenges. However, startup groups can be led to water but cannot necessarily be made to drink. And while national and local co-op resources greatly improve the odds for success in expanding co-op businesses, the predominant pattern is independent, single stores. Many startup efforts never reach opening day— although new co-ops that do succeed in opening a store tend to survive.

New food co-ops germinate and thrive in underserved markets. But they are slow to build the capital and other business resources that enable them to further expand their market share.

Historically, largely through specializing in natural and organic foods, today’s co-ops have been able to “find a niche and scratch it.” They have advanced greatly in member-owners, in sales and services, in establishing professionalism and good workplaces. Yet food retailing, whether of conventional or organic groceries, remains a very price-sensitive and competitive field dominated by chain stores. Although their aggregate annual sales are approaching $2 billion, food co-ops are a tiny part of the total market.

Nevertheless, by leveraging capital and relationships with allies, many food co-ops continue to have a strong impact in their local territory. Supportive services that are national in scope have added an important new element to food co-ops’ potential. But each co-op’s success still is largely determined by local leadership and resources. There is an irreducible element of community-based organizing and member recruitment when establishing and growing co-op stores.

While a new food co-op’s chances of success have much improved over earlier years, the general pattern of development is the same. Additional stores are based either in a newly organized community project attempting to launch a cooperative business, or in an existing co-op that has the vision and resources to open another site.

The challenge is to capitalize and extend the cooperative way of doing business. Despite many years of growth and usually profitable operations, most food co-ops have leveraged their owners’ investment lightly, exercising a cautious approach to business development. That is not to diminish the value of national programs, which constitute some of the food co-op sector’s most important accomplishments, and where a purchasing program, shared liabilities, and branding have tied them together strongly. But some co-ops are not members of the national association, and a local board of directors and management must determine strategy within their co-op’s capacity.

When a store fails, the outcome often reflects this stand-alone focus. On the other hand, the additional stores launched from an existing co-op, while fewer in number than new co-ops, are most often successful. Co-ops with demonstrated capacity to expand have been able to quickly generate member investments and loans. Among many examples of such capital campaigns, a million dollars or more was raised in a matter of weeks by Willy Street Co-op in Madison, Wis., for its second store and Linden Hills Co-op in Minneapolis for its relocation. Such local roots and support, and the balance sheet equity that demonstrates the community’s investment, may be the most important elements that will enable food co-ops to thrive in the future.

An end to business as usual
Concerning the economy at large, many people follow the mainstream media and hope for a return to business as usual— and that is unfortunate since business as usual is what created the mess we are in. We face three worsening trends: economic breakdown, resource depletion, and climate disruption.

These crises, as well as possible remedial actions, are closely interrelated. So far, what persists is an attempt to repay ever greater debt through growth that is supported by cheap energy and by a faith in boundless resource substitution and technical fixes. Such beliefs help people avoid recognition of resource limits, ongoing environmental damage, and the need to change behavior. A “wake-up call” has not occurred.

Still, the biggest change in outlook lately, along with a declining economy and shrinking public revenues, is recognition of resource depletion and energy constraints. For farm and food businesses, petroleum and natural gas could hardly be more central nor conservation practices more urgent. Even though U.S. domestic oil production has been declining since the 1970s, this gets muted recognition on the part of public officials. To accommodate our oil dependence, we have embraced deeper denial, deeper debt, deeper off-shore drilling, and deeper military intervention. At the moment, widespread economic decline is lowering demand, giving us one more summer of low-tax/low-cost gasoline while we grieve for the Gulf Coast.

Cheap and easy access oil has ended. Globally, production has been at a plateau for several years, and we are seeing much price volatility. In 2010, and earlier in the 2005 Department of Energy Hirsch Report, top U.S. and international bodies have forecast an era of supply constraints beginning as early as 2012. Somehow (avoiding panic), this doesn’t make the headlines. Substitute forms of energy each have their set of financial and environmental problems. Other essential resources— soil, water, fish— also are being dangerously depleted, generating additional barriers to many growth projections, now obsolete.

Widespread denial and comforting dismissal of these issues extends to co-op members and colleagues, and necessary conversations are difficult. This column itself will not be widely welcomed. Nevertheless, in a spirit that promotes solidarity and cooperative approaches— call it the pursuit of happiness rather than the pursuit of consumption— we should embrace what we all face: reducing resource use on every level from household to national infrastructure, while we attempt to make critical investments in the future.

Once settled on this agenda, we will be able to identify the obstacles. Many of the first stages in radical resource conservation would be readily achieved because there is so much waste in the U.S., which has per capita energy use two to three times that of Europe (to take the next highest example). But this will require changes, and because it threatens business as usual and the comfort level of many, few leaders are willing to advocate such a direction. Consequently, instead of engaging in widespread preparation, we keep stumbling toward widespread disaster.

Community initiatives
In the face of such social erosion, it’s up to co-ops and many other community-based organizations to sustain a democratic culture that builds awareness and offers new directions— no small challenge! Just as shortcomings of capitalist enterprise have led to market opportunities for co-ops, the failure of political institutions calls for community-based initiatives. That is not merely an analogy, for the obligation proposed is an extension of cooperative values— summarized as self-reliance, solidarity, and concern for community.

Earlier, I noted some common elements of successful co-op development and that we’re getting better at it. But national consolidation of resources by itself does not ensure that food co-ops will secure growth in stores while also managing challenges they have not encountered before. Contrary to a mode of central control, in a situation of disruption and uncertainty, we may need to rely increasingly on ad hoc solutions. (Examples in this issue: startup co-ops being launched with unanticipated formats; and the Bozeman co-op countering a sales decline by expanding its storage capacity.)

Leaders often discourage ad hoc approaches. Yet in the best of circumstances— including those that are difficult!— when a solution is not predetermined, people draw upon more of their potential and resources at hand. Ad hoc solutions become enduring solutions.

The future is only partially determined, and much is up to us. This magazine has completed 25 years of reports on the best of food cooperative lessons and leadership. Its production has been gratifying, and I’d like to continue making these pages an important part of co-ops’ conversation about the future. Thanks for all of your many contributions. With your help, Cooperative Grocer can continue to share vital stories in our cooperative community.

To conclude, here is a catechism I have learned:

A cooperative rule: The whole is greater than the sum of its parts.
A cooperative outlook: Our uniqueness is of less weight than our commonality— we are all in this together.
A cooperative ethic: A cooperative is a gift from those who preceded us, and we have an obligation to share it and pass it on.
A cooperative purpose: In order to realize a cooperative outlook and ethic, we must extend democratic control of capital.
A cooperative practice: Keep learning! ■

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