Marketing Agreements/Cooperatives United States Department of Agriculture, Rural Development.
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Transcript of Marketing Agreements/Cooperatives United States Department of Agriculture, Rural Development.
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Marketing Agreements/Cooperatives
United States Department of Agriculture, Rural Development
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USDA Rural DevelopmentDelivers over 40 programs that provide a variety of:
• loans and loan guarantees,
• grant programs,
• technical assistance
In the areas of:
• business;
• economic development
• cooperative development;
• rural housing;
• community facilities;
• water and waste disposal;
• electric power;
• telecommunications (distance learning and telemedicine)
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Hawaii State Office
Program Delivery• State of Hawaii• American Samoa• Western Pacific–Guam, CNMI, Republic of Palau,
Federated States of the Micronesia, Republic of the Marshall Islands
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Specialize in technical assistance to rural groups interested in organizing a cooperative, and to existing cooperatives.
Cooperative Program
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Cooperative
A COOPERATIVE IS A FOR-PROFIT CORPORATION
It has:
• a corporate board of directors,
• a profit motivation,
• a service orientation,
• single tax treatment.
$$$$$$$$$$
SERVICESERVICE
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What is a COOPERATIVE Business ?
A cooperative is a user-owned and user-controlled corporate business in which benefits are received in proportion to use.
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Who owns the business.
• Who controls the business.
• Who uses the business.
• Who gets the profits.
A Type of Business Dependent On
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What is a COOPERATIVE Business ?
• It is a fair way for producers to go into business together
• It is a locally owned and controlled corporation
• Its business purpose depends on its members
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Types of Cooperatives
• Producer-owned cooperativesare owned by farmers, producers or small
businesses.
• Consumer-owned cooperativesenable consumers to secure a wide array of goods
and services.
• Worker-owned cooperativesare businesses owned and controlled by their
employees.
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Distinctive Features
• Service at cost
• Financial obligation & benefits proportional to use
• Democratic control
• Limited return on equity capital
UNIQUEUNIQUE
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User-Owner Principle:
The people who own and finance the cooperative are those who use it.
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User-Control Principle:
The people who use the
cooperative are those
who control the cooperative.
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USDA Cooperative Services
User-Benefit Principle:
The cooperative’s sole purpose
is to provide and distribute
benefits to members on the
basis of their use.
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Participation Roles
Cooperatives operate through the roles of principal parties
• Members
• Directors
• Manager
• Employees
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What Cooperatives Do
• Marketing
• Purchase supplies
• Provide services
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Marketing Cooperatives
• Market products–acquire and sell commodities
Kona Pacific Farmers CooperativeMaui Farmers Cooperative Exchange
–bargain for price, terms of saleHawaii Banana CooperativeHawaii Cattle Producers Cooperative
Association
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Purchasing Cooperatives
• Purchase supplies–operate farm supply store
Farm Supply CooperativeHikiola
–joint purchasing programsKona Pacific Farmers CooperativeMaui Farmers Cooperative Exchange
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Service Cooperatives
• Provide needed member services:–Hamakua/North Hilo Agricultural
Cooperative
–Maui Produce Processing Cooperative
–Hawaii Livestock Cooperative
–East Kauai Water Users Cooperative
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Steps to OrganizeSummary
• Hold exploratory meeting• Form steering committee• Conduct survey of potential members• Analyze market• Evaluate Feasibility• Prepare business plan• Prepare legal papers• Implement the business plan
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Marketing Agreements
• A marketing agreement is a LEGAL DOCUMENT recording the rights and duties of farmers (members) and a marketing business (cooperative) with regards to marketing agricultural products.
• It is a CONTRACT between farmers and the marketing business.
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Marketing Agreements
• Are DIFFICULT to enforce unless tightly written--must be ENFORCED quickly and equitably.
• Have PROVISIONS for what happens when the contact is broken.
• Outlines LIQUIDATED DAMAGES that can be assessed for non-delivery.
• OUTLINES quality requirements.
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Energy Programs at USDA
• Section 9003: Biorefinery Assistance• Section 9004: Repowering Assistance• Section 9005: Bioenergy Program for
Advanced Biofuels• Section 9007: Rural Energy for America
Program (REAP): Replaces Section 9006• Section 9008: Biomass Research and
Development• Section 9009: Rural Energy Self-Sufficiency• Section 9011: Biomass Crop Assistance
Program
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Section 9007Rural Energy for America
• Enhancements from previous program:– More technologies available (now includes
small hydro and wave energy)
– Increases loan guarantees from $10M to $25M
– Establishes an energy audit grant program
– Allows grants for feasibility studies
– Increases combined guaranteed loan/grant combination from 50% to 75% of project costs (subject to statutory $ limits)
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Section 9007Rural Energy for America
• Program can be used to purchase a renewable energy system AND/OR
• Make energy efficiency improvements.
• Maximum grant is 25% of project cost:– Not to exceed $500,000 for an energy
system– Not to exceed $250,000 for energy efficiency
• Rural small businesses and agricultural producers
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Section 9007Rural Energy for America
• Any renewable energy or energy efficiency project as defined in the law: – Biomass, Anaerobic Digester, Geothermal
(electric generation and direct use), Hydrogen, Wind, Solar (photovoltaic and thermal) and [small hydro and ocean energy—added 2008]
– Energy Efficiency Improvements--improvements to a facility, building, or process that reduces energy consumption, or reduces energy consumed per square foot.
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Value-Added Producer Grants
• Program designed to assist producers to develop businesses that produce and market value-added agricultural products.
• Provides grants for planning or working capital purposes relating to the marketing of a value-added product.
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Value-Added Producer Grants
Applicant Eligibility• Independent producers;
• Farmer or rancher cooperatives;
• Agricultural producer groups;
• Majority-controlled producer-based business ventures.
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Value-Added Producer Grants
Purpose Eligibility• Planning activities, such as conducting
feasibility studies and developing business plans for processing and marketing value-added agricultural products.
• Working capital expenses for processing and marketing value-added agricultural products, including inventory, salaries, and office supplies.
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Value-Added Producer Grants
What is NOT Eligible?• Purchasing any processing equipment,
• Agricultural production expenses,
• Land purchases,
• “Research and Development”
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Small Minority Producer Grant
What is NOT Eligible?For cooperatives to assist small, minority
agricultural producers• Governing board and/or membership is at
least 75% minority• Provide technical assistance to small, minority
agricultural producers--market research; product and/or service improvement; legal advice and assistance; feasibility study, business plan, and marketing plan development; and training.
• Maximum grant--$175,000—no matching required.
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Other USDA Programs
• Farm Labor Housing—1% loan for up to 33 years
• Rural Business Opportunity Grants—Technical assistance, leadership training, establishment of business support centers, economic development plans.
• Rural Business Enterprise Grants--for projects that finance/facilitate development of small and emerging rural businesses…
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Tim O’Connell
Assistant to the State Director/
Cooperative Development Specialist
154 Waianuenue Ave., Room 303
Hilo, HI 96720
(808) 933-8313 (F)—8326