BIZTIPS - July 9, 2006
Biz Tips: Cooperatives Deliver for Owners and Customers
Sunday, July 9, 2006
By Art Hill
Lots of people have come into contact with a 'cooperative' business in one form or another. Pendleton Grain Growers, Mid Columbia Producers, and the Oregon Trail Electric Cooperative in Baker are a few familiar co-ops in eastern Oregon.
Cooperatives have been around in one form or another worldwide for centuries. During a recent economic development meeting, a colleague from Europe expressed concern that farmers in his region couldn't afford storage facilities to hold their harvest until they could get the best price for large shipments.
In response, Raleigh Curtis, Manager of Mid Columbia Producers 'connected the dots' between cooperatives and an Austrian economic model for the creation of economic value. The lesson was clear -- many businesses can grow the value of their operations more effectively together in a well-managed co-op than they can alone.
What does 'well managed' mean? Well, in a cooperative it may mean drawing out only modest dividends on an annual basis so the rest can be plowed back into growing the assets of the co-op -- equipment, facilities, saleable commodities, etc. It's just like re-investing the revenue of an individual business to increase production resources, and with them, the company's earning capacity.
OK, that sounds fine for small farmers and other agricultural producers, but what about my business? The answer is that purchasing cooperatives, equipment cooperatives, and financial cooperatives are all examples of the same successful model. Basically, the model maximizes value by working together with others in the same industry. It's somewhat like a trade association, but a cooperative adds an important element -- fiscal responsibility for the capital investment and return on investment of the members.
Carol Corin of the Food Innovation Center in Portland, recently presented a series of workshops around the state on co-op formation, financing, and operation. As part of her presentation, she introduced participants to the Northwest Cooperative Development Center of Olympia, Washington. This nonprofit assists new and existing cooperative businesses, from daycare centers to credit unions. It works in a six state region to help groups start or strengthen cooperative enterprises and provides them with technical services and advice. Their website is http://www.nwcdc.coop.
So whether you are involved in agricultural production and marketing, wind power, biofuels, or almost any other type of business that could benefit from the pooled resources of a cooperative, get more information on whether it might be right for you and your fellow business owners.
Content © 2006 East Oregonian