Seeking Sustainability, Planning for Disaster

Part 1: Milestones and Mission

Each year, at the Consumer Cooperative Management Association (CCMA) conference, milestone awards celebrate new food cooperatives along as well as those that have survived for 30 years. Occasionally there is especially noteworthy recognition of 50 or more years of continuous cooperative enterprise. But of the latter co-ops there are very few.

Retailing groceries and related consumer goods is typically a highly competitive business, with moderate margins and little room for businesses that lack elements such as adequate capital or a strategic focus or a good location. Cooperatives add to these universal challenges their own mix of broadly democratic ownership, fickle members, and isolated business development. Consequently, out of hundreds of grocery cooperatives formed in earlier decades, most have been lost—except for what lessons we can derive from their efforts.

Attrition among food cooperatives is not well explained simply by the passage of time and the turnover typical to small retail businesses. Recent milestones have included an impressive number of 30-year cooperatives, formed in the early 1970s amidst the cultural and political ferment of those years, and annual CCMA conferences have highlighted from 10 to 20 such cooperatives. However, that wave of new co-ops crested over 30 years ago.

The surviving food co-ops have overcome many challenges and have matured to become dynamic, professionally managed operations with growing membership, strong balance sheets, and a deep impact in their community. But if the number of surviving food co-ops points to larger economic and market changes, it also provides disturbing evidence that many co-ops have not mastered business survival and sustainability. Along with changes in the cultural and political environment since the 1970s, take note of some problematic yet enduring co-op trends.

Whether a startup effort or in its fourth decade, a co-op requires adequate capital, support for management leadership, and a strong service orientation rooted in community ownership. Meeting these challenges, formerly in the absence of strong regional and national associations for mutual development, has resulted in a dismal track record for new and sustainable co-op development.

Consider the following figures, taken from a chronology of today’s food co-ops that is used in recognizing milestones:

• Food co-op organizations founded 1970-1976 (7 years): 103 remain.
• Food co-op organizations founded 1977-1988 (13 years): 28 remain.
• Food co-op organizations founded 1989-2006 (18 years): 15 remain.

Although the number of startups is unknown, the failure rate likely was higher in earlier years—perhaps fifty percent or more. On the other hand, co-ops formed more recently have not yet withstood the test of time!

Countering these declining numbers are widespread food co-op trends of expanding membership, stronger sales and consistent profitability, enhanced cooperative capital and stronger community impact. Management and professional abilities have advanced substantially. In addition, since the 1990s, food co-ops have made huge progress in overcoming isolated origins and have brought the majority of surviving co-ops into regional and national associations that are mutually strengthening. Nor do the above numbers reflect the development of additional stores by a couple dozen existing co-ops.

Nevertheless, the trend is disturbing. At least until quite recently, new co-op formations have been declining. And that is not a sustainable trend.

Are cooperative foundations sound? Food co-ops’ isolated, individual formation and cautious business outlook have resulted in an overall shrinking of market share. In my view, a business purpose understood to be primarily cost-saving and maintaining a specialty product niche, rather than a mission of shared ownership and expanding services, has undermined co-ops’ chances of survival or sustainability.

All this highlights the importance of new co-op development and the need for existing co-ops to invest not only in their own future store(s) but in the launching of new enterprise. The previous edition highlighted efforts to improve cooperative capital and development resources. This edition’s report on the mentoring of startup enterprises by veteran co-ops indicates some of the challenges to overcome. Overall, it appears that co-ops are held back by uncoordinated development and a widespread outlook that is risk-averse and satisfied with short-term rewards. continued page 27

Part 2: It’s About the Future

I define cooperatives’ fundamental mission as building democratic control of capital and democratic control of vital community services. In light of this mission, my daily readings lead me to consider upcoming challenges and possible responses. What will food co-ops do when the shit hits the fan?

Another way to describe cooperatives’ real mission is to say, “It’s about the future.” A sustainable cooperative is not merely owned by the present community, it will be comprised of and owned by the future community. The sustainable cooperative must always build not merely more member-owners but cooperative capital if it is to support that future. It must invest in the future for the sake of the future community.

Declining store development, summarized above, reflects changing market conditions, but for co-ops it also can reflect a failure to invest adequately in themselves and in the future. Being undercapitalized often reflects a narrow conception of cooperative enterprise, and this can undermine a mission of building democratic ownership.

Internal discussions among co-ops frequently assume that the co-op is nothing but a collection of individual interests and that its purpose extends only to efficient buying and selling. This notion is a reflection of stunted social solidarity, and it is found even in the statement of international cooperative principles. There, confused language about “shared economic responsibility and benefits” fails to state clearly that the cooperative has an identity, capital needs, and mission that are greater than the sum of its member parts.

Clarity is essential in a crisis, and our country already has entered its “long emergency.” Conceptions of the cooperative are going to matter a lot more when social and environmental challenges are foremost in the public mind. Prolonged challenges will lead to recognition that planning for the future is paramount—not least because that future is likely to offer reduced rather than greater comfort and security.

The importance of saving and investing, rather than limiting the co-op to immediate rewards, is underscored by recognition of growing threats to the status quo. Unfortunately, at present most people don’t recognize that some of these threats undermine assumptions that food always will be on the store shelves, that it will be affordable, and that people will be able to easily get to the store and back. But these are risky assumptions, already broken down for some rural and inner-city low-income populations and likely to break down further.

The existence of threats calls for disaster preparation, as discussed recently in these pages. But preparations will be inadequate if key threats and likely scenarios are not considered. Embedded in a culture of consumer gratification and denial of limits, food co-ops often manifest the same myopia, despite themselves. Nevertheless, because of their structure encouraging democratic participation and because of the way food ties together so many of the threats, food cooperatives may be an essential arena of community education and debate when challenge and crisis occurs.

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Dave Gutknecht is editor of Cooperative Grocer ([email protected]).