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2010-10-08 / Features

Cooperatives:

A business model for the times?
By Jean Cole HTF Editor

PART 1 OF A 3-PART SERIES

Part 1: Cooperatives in the U.S. and Minnesota – Facts & Figures

October is National Co-op Month so I decided to do a little research. I learned that Minnesota leads the nation in number of cooperatives and in cooperative memberships.

Rich in history, the cooperative movement has its roots in 18th century Europe as people moved from farms to cities. No longer able to grow their own food, they relied on privately owned stores to provide nourishment. Often, the prices were high and the selection was limited.

As less-powerful members of these new cities, the workers, consumers, farmers and producers banded together to gain economic clout. They improved their options through joint purchases of supplies and services, and kept their costs low. They answered to themselves, and when change was needed, it was made. They became a co-op — a business run by the people, for the people.

DO YOU KNOW THESE PEOPLE? The Virginia Work Peoples Assoc. Co-op Store at 214 2nd Avenue North. Date is uncertain, estimated circa 1930, but maybe your guess is closer! Side awning says, “Osuuskauppa”- Finnish for “cooperative.” According to Harry Lamppa, this building burned down. Photo courtesy of Virginia Area Historical Society. DO YOU KNOW THESE PEOPLE? The Virginia Work Peoples Assoc. Co-op Store at 214 2nd Avenue North. Date is uncertain, estimated circa 1930, but maybe your guess is closer! Side awning says, “Osuuskauppa”- Finnish for “cooperative.” According to Harry Lamppa, this building burned down. Photo courtesy of Virginia Area Historical Society. Rather than rewarding outside investors with its profits, a co-op returns surplus revenue to its members in proportion to how much they use the co-op. This democratic approach to business benefits the co-op, its members and the communities it serves.

In Minnesota, the cooperative movement spans the Grange mercantiles of the 1800s through the Finnish cooperative stores of the early 1900s, to the new senior housing cooperative industry that began 27 years ago.

* * * *

Today, more than 800 million people around the world belong to cooperatives, and at least 100 million of them are employed by co-ops. And more often than you probably realize, co-ops have a roll in your everyday life.

Consider the cup of coffee and cranberry muffin you recently enjoyed. That premium Sumatra Siborong-Borog coffee was likely purchased from a grower co-op in Indonesia. The flour in the muffin started as wheat from a farmer-owned, grain elevator co-op in the Midwest – maybe Minnesota. And those cranberries might be from Ocean Spray, a producer-owned coop.

Today, cooperatives provide just about any good or service their members need. They offer credit and financial services, health care, child care, housing, insurance, legal and professional services. They sell food, farm supplies, hardware and recreational equipment. They provide utilities, such as electricity, telephone, television and Internet service.

Locally, think of Lake Country Power, the many co-op credit unions and mutual insurance agencies, Natural Harvest Food Co-op, Range Funeral Home, Range LP, and Northeast Service Cooperative in Mt. Iron. In September, Hibbing had a groundbreaking ceremony for Realife Hibbing South, a cooperative housing development for seniors age 55 and over. Our Grand Rapids readers may be members of the Paul Bunyan Telephone Cooperative, which provides Internet, television and telephone services.

* * * *

Stay with me the next couple of weeks, as I dig a little deeper into cooperatives - their history, and their future.

Part 2 will focus on the history of the cooperative movement on the Iron Range. (You all know how we love to talk Range history!)

Part 3 will take a look at the cooperative business model and its innovative hybrid forms. In these difficult economic times, some entrepreneurs are rethinking businessas usual and trying new models. Tune in!

Source: Information used with permission from Go.Coop and Cooperativenetwork. coop. Find more information about coops at www.go.coop.

Co-ops in U.S.

Two in every five people in the U.S. belong to a cooperative.

That’s 40 percent of the U.S. population.

In the U.S., 48,000 cooperatives serve 120 million citizens.

* Cooperatives come in all sizes, from small buying clubs to businesses included in the Fortune 500. Many are household

names—Land O’Lakes, Ocean Spray, Sunkist, ACE Hardware,

Nationwide Insurance, and the Associated Press.

* 29 cooperatives have annual sales in excess of $1 billion. They represent a mix of industries: agriculture, food, hardware,

health care, finance, utilities, bottling, recreational equipment

and communications.

* 30 percent of farmers’ products and farm supplies in the U.S. are marketed through more than 3,000 farmer-owned cooperatives.

A majority of the nation’s farmers and ranchers

belong to these co-ops.

* 900 rural electric cooperatives operate nearly half of the electric distribution lines in the U.S., covering three-quarters

of the land mass. They provide electricity for more than 37

million people in 47 states.

* Consumer-owned and controlled cooperatives pioneered prepaid, group-practice health care. Today cooperative healthmaintenance

organizations (HMOs) provide health-care

services to more than 1.2 million American families.

* 10,000 U.S. credit unions have more than 84 million members and assets in excess of $600 billion.

* 250 purchasing co-ops offer group buying and shared services to more than 50,000 independent businesses.

* 6,400 housing cooperatives provide 1.5 million dwellings for some three million residents with a wide range of income

levels and housing needs.

* There are about 500 retail food co-ops in the U.S. 270 telephone cooperatives provide service to 2 million

households.

* 250 purchasing cooperatives offer group buying and shared services to more than 50,000 independent businesses.

* 50 million Americans are served by insurance companies owned by or closely affiliated with cooperatives. There are more than 1,000 mutual insurance companies that total more than $80 billion in net written premiums.

(Source: www.cooperativenetwork.coop)

Co-ops in Minnesota

1,000 co-ops with 3.4 million members.

Co-ops account for $6.07 billion in gross sales, employ approximately 46,000 Minnesotans, and pay nearly $64 million in taxes each year.

Minnesota became one of the first states to enact a law authorizing cooperatives, and has the largest number of cooperatives in the nation.

GRAIN, FARM SUPPLY, AND FUEL: Approximately 200 retail farm supply cooperatives provide crop inputs, animal feed, grain marketing, and petroleum products to farmers and residents. These cooperatives and their regional cooperative suppliers CHS Inc. and Land O’ Lakes account for $5.5 billion of annual retail sales in Minnesota. CHS Inc. and Land O’Lakes also rank as two of the largest employers headquartered in Minnesota with combined revenues of nearly $20 billion annually.

DAIRY: Minnesota dairy cooperatives market over 90 percent of the milk produced in the state. MAC dairy cooperative members include: Associated Milk Producers Inc. (AMPI), CROPP Organic Valley, Dairy Farmers of America Inc., Foremost Farms USA, Land O’ Lakes, Bongards’ Creameries, and Swiss Valley Farms.

ELECTRIC: Minnesota has 43 electric co-ops that distribute electricity across the state and several co-ops that generate and transmit power.

HOUSING: Minnesota is a leader in housing cooperatives, particularly in senior housing. The state is home to more than 70 senior housing coops, which is more than double all the other states combined.

FARM CREDIT SERVICES: Together, the following federally chartered farm credit cooperatives finance Minnesota farm families and agribusinesses with $3.8 billion in loans: AgStar Financial Services, Farm Credit Services of Minnesota Valley, AgCountry Farm Credit Services, and AgriBank. AgriBank, headquartered in St. Paul, is the largest farm credit bank in the U.S. with more than $46 billion in annual loan volume. CoBank also serves agricultural co-ops, utility co-ops, and other needs in rural Minnesota.

CREDIT UNIONS: Credit unions are not-for-profit financial cooperatives owned and governed by members via volunteer boards of directors. Credit union earnings are returned to owner/members in the form of lower loan rates, higher interest on deposits, and lower fees. There are approximately 300 credit unions in Minnesota.

HEALTH CARE: Minnesota’s health care cooperatives are a diverse lot. HealthPartners HMO is a nonprofit which follows cooperative principles, and a new health care cooperative for farmers is currently being developed.

ETHANOL: One of the fastest growing Minnesota cooperative sectors is involved with the ethanol industry.

FOOD: The Twin Cities metro area has the highest concentration of food co-ops of any metro area in the U.S.

TELECOMMUNICATIONS: Minnesota is home to local telephone co-ops that offer advanced telecommunications services.

SUGAR: Nearly 96 percent of sugar production in Minnesota occurs at co-op facilities.

OTHER TYPES OF COOPERATIVES: Several consumer cooperatives exist in Minnesota, as well as several worker-owned cooperatives.

(Source: www.cooperativenetwork. coop)

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