– 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-op’s Different?

1.Open membership2.Democratic Control3.Member Economic Participation4.Autonomous5.Education/training6.Cooperation7.Community

Co-op Principals

Co-op Features The effect of the co-op principals

• Membership is open to persons who can use the co-op’s 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 20th Century in Midwest

- cranberries

• Areas where private businesses don’t 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 CrowConsultant and

Cooperative Program Manager

907-786-5447 anacc@uaa.alaska.edu

Home page – http://ced.uaa.alaska.edu/ac

dp/index.html