Seeking Sustainability, Planning for Disaster

Part 1: Building on what we have

This edition’s food cooperative and industry review introduces a new approach for an annual report that has been a feature of Cooperative Grocer for nearly 20 years. In today’s new era, cooperatives have access to more and better comparative data than ever, thanks to national cooperative programs. But at the same time, market competition is stronger than ever, and competitors’ interest in co-op numbers is high. Consequently, proprietary concerns are keeping much of that data in the hands of co-op general managers but out of these pages.

Over those two decades, while the natural/organic food industry has grown exponentially, most of cooperative growth and success has been within existing co-ops—through expansion or relocation of existing stores more than from launching new enterprises. Most of these longstanding co-ops have been successfully expanding for years. However, in an increasingly competitive marketplace, maintaining that trend must be earned rather than assumed.

Why my title about sustainability and disaster preparation, continued from the previous editorial? Because, as I view what we do and why, “It’s all about the future.” Sustainability remains our chief challenge, and planning must include recognition of deep threats to cooperatives and society. I intend to review those threats and their opportunities. But before reaching possibly difficult conclusions, I’d like to examine trends in food co-op formation as well as the changing environment we all face.

Among my aims in this section is to highlight a central aspect of how today’s food cooperatives got to where they are. For if the launching of new cooperatives is one indicator of sustainability as a business sector, food co-ops do not have a very impressive record. As noted previously, a representative list of today’s co-ops indicates that most were formed in 1970-1976 and that the number of surviving co-ops started in the subsequent thirty years (1977-2006) is much smaller by comparison. And since the newer stores also are typically smaller in size, this illustrates my point that most of the growth within today’s food co-op sector has been in thriving established co-ops rather than new ones.

One reader asked whether the failure rate of co-ops has been high not only because of common business shortcomings but also because of co-op’s historic pattern of individual formation, with each operation succeeding or failing on its own. There is little doubt that isolated formation has lessened food co-ops’ chances of survival and that, by contrast, a sector which now has more unity and mandated leadership offers a direction that could improve upon the existing pattern. But national efforts will have to evolve much further in order to significantly affect the success rate of startup efforts.

Remarkably, in the past 20 years the number of additional stores opened by existing co-ops is approximately equal to the number of successful co-op startups! (By successful I merely mean remaining in operation for at least two years.) At least a couple dozen of the older co-ops have opened additional retail sites or are planning to do so. Further, the growth in member-owners and sales levels by existing co-ops that open new stores is obviously much greater than the membership and sales numbers for startup co-ops.

Clearly, there are risks of failure even when a healthy co-op opens a new store, and the losses can be substantial. On the other hand, the likelihood of failure is greater for startups. Of course, beginning efforts need assistance from other co-ops, and most of today’s successful co-ops themselves started out quite small. Fortunately, in the past two years, our national organizations have committed resources aimed at providing stronger and more systematically developed resources for new co-ops.

But where is the national program for expansion into additional stores? The historic pattern summarized here indicates that more resources should be put into strengthening aspects of additional store development in existing, healthy co-ops. Certainly we should continue to nurture startups and offer such groups vital resources and guidance—advice, incidentally, that the grassroots groups may or may not follow. But shouldn’t stronger support for additional stores within existing co-ops be a priority? This direction is likely to result in distinctly stronger growth in cooperative capital, membership, and sales. And one model of co-op expansion—through existing stores converted to become part of a larger cooperative—offers a strategic option that is much less capital intensive, as discussed in this edition’s report from New Mexico.

Part 2: Crises and Cooperatives

Of course, existing co-ops have their own organizational and cultural barriers, including attitudes such as, “We’re unique!” and having many co-op owners who want all the rewards of cooperation immediately rather than saving and planning for additional growth. These obstacles and others need attention in a strategic plan for more co-op stores.

Again, a more thoughtful outlook recognizes that, “It’s about the future.” Building on what we have is the best course and soon may be the only feasible course. A cooperative can help lead its community in addressing serious challenges to assumptions about comfort and security. Prolonged challenges, which are likely, will lead to wider recognition that planning for the future is urgent and paramount.

In preparing for threats, education becomes a key co-op key responsibility. (Education supports selling groceries and selling groceries supports education.) Many food co-ops already make efforts to address such public concerns as the allocation of billions of dollars under the farm bill, support of family farms, and fostering of organic and sustainable food production, while campaigning to limit the spread of factory farms and genetically modified crops. But on other local and global challenges as well, food co-ops—because of their democratic outlook and broadly participatory structure and because food is linked to so many fundamental issues—can make essential contributions to community education and debate.

Along with global warming, upcoming interrelated crises center on declining access to cheap energy, especially oil, and declining natural resources, from accessible water to species diversity. The opportunities revolve around local production and conservation. Most of these positive developments are being created at the grassroots, or at best on a regional basis. But where we all arrive as a nation and society, for good or ill, with greater cohesion or chaos, will depend on broad public action and public policy in a new direction.

A period of deepening crisis is already here and needing greater recognition. Cooperatives’ job of educating ourselves and our communities is expanding. An era of spot food shortages and significant food price inflation has begun, brought on by weather disasters and depletion of acquifers; more recently by the inflation of corn and soybean prices (and hence other food costs) arising from the heavily subsidized and fraudulent promise of biofuels; and by global trends that often are disguised by trade propagandists.

Price inflation in food in the U.S. is at least eight percent thus far in 2007, the highest rate in many years, and this inflation likely will continue until we reach a changed political environment. Will your cooperative’s marketing vision address scarcity and conservation? Will it address the needs of people in declining circumstances? These difficult questions touch on energy options and global warming challenges inherent in maintaining the food supply and in maintaining most other aspects of social life. They ask what responses we will make to a world of diminishing resources.

Part 3: Energy and Empire

Present food production and distribution is heavily dependent on massive supplies of fossil fuel for its cultivation, fertilizing, processing, and transport. Electricity from coal, its foremost source, will become more expensive if we strengthen carbon emissions controls. Petroleum and natural gas are in greater demand than ever, while supplies are tightening (gas) or declining (oil). Peak oil, marking when the most accessible sources have been tapped and production cannot meet growing demand, has already occurred or is occurring—we’ll recognize it in the rear-view mirror. Peak oil means that everything that is petro-dependent will become more expensive.

Unfortunately, the U.S. public is largely habituated to profligate use of energy in support of its current habits and is resistant to messages urging citizens to do with less. Despite the truly alarming estimates of the consequences of current military, industrial, and consumer practices, few organizations or politicians are urging serious conservation. Yet conservation encompasses multiple, practical steps that are available to every citizen and corporation, steps that have an immediate impact on energy consumption, on expenses, and on ecological balance. The difficulty is in adjusting our expectations, even our purpose, in light of a changing world. Yet conservation will be necessary, whether or not we are ready.

The current favored outlook, requiring little or nothing in the way of changed behavior, is to anticipate technical innovation that will support present behavior. This is illusory, ignoring financial instability, minimizing technical obstacles, and glossing over the certainty of severe consequences from global warming. Even a leader from the electric cooperative sector, speaking at food co-ops’ national conference, summarized the options for reduced atmospheric carbon dioxide with barely a mention of conservation—an embarrassing illustration of our dilemma. The speaker reviewed these energy options, each accompanied by major uncertainty or expense: 1) efficiency, 2) renewables, 3) nuclear, 4) clean coal, and 5) carbon sequestration.

Efficiency, however, while it reduces relative energy consumption, is not the same as conservation. Efficiency usually refers to better management of energy delivery and to technical innovation, simple or complex, that uses less energy to accomplish intended work. Conservation, on the other hand, covers a very wide range of options and is fundamentally based on doing with less and saving what we have. Turning down the air conditioning and driving less are neither technical innovations nor increased efficiency so much as examples of changed behavior. For cooperative leaders as well as public officials, conservation requires a shift in perspective.

The rulers’ spin is merely more of the same, guaranteeing that the eventual adjustment will be painful: Privatize formerly public services; keep people dependent on cars while seeking more efficient ones; promote the belief that tinkering with technology will support current levels of consumption; keep the public confused and afraid. And whatever it requires, secure the world’s chief petroleum reserves through war and subversion of other governments and economies, a longstanding pattern. The U.S. continues to sacrifice thousands of lives in the Mideast in order to maintain access to the oil there, and by its military bases appears prepared to do so for many years. Having overseen the bombardment and occupation of Iraq, Congress itself recently approved further war funding which directs that Iraq privatize its oil industry, a main objective of the entire bloody exercise.

But the plan is faltering and is in crisis. Says libertarian Republican presidential candidate Ron Paul, “No matter how much you love the empire, it is unaffordable.”

War carries a high price, and we should not pay it. But in any case it won’t increase the world supply of oil. There are no equivalent substitute fuels, and every alternative has its own limitations and substantial costs. Entropy is real, with every processing step involving energy lost, and as a tradable source of concentrated energy, nothing trumps petroleum. Biofuel production, while possibly sustainable on a localized basis, is politically corrupt; it is raising the price of food for people here and in other countries; it is not reducing total greenhouse gas emissions; and it is increasing the worldwide destruction of sensitive soils and biotic diversity in grasslands and forests.

Sustainability clearly implies that a food system that is extremely petro-dependent must change radically. Stepping outside the bubble of consumerist comfort and hope means, among other things, we must step up our educational efforts around conservation and local food production.

For a five- and ten-year planning outlook, get your mind and your co-op around these conditions: Major changes in the food supply are underway, and retailers are in the middle. There will be continuing price inflation and occasional food shortages. There will be economic contractions due to exceeding natural limits.

Many people will be hard-pressed to take care of their homes and communities. On the other hand, opportunities will be enhanced for cooperation and local efforts in the mode of self-help and sustainability.

Less travel in the future is a given. Shared transportation of all kinds will become more important—another opportunity for cooperative solutions. (Our national co-op leaders should plan for an end to most air travel and a transition to national conferences beamed electronically, allowing greater participation through regional gatherings, on the model of Bioneers.)

Long-distance food supplies will become more difficult and less consistently available. Fuel cost increases and fuel shortages, water rationing, weather disasters, and food-related conflicts will become more common. Again, opportunities for cooperative, locally based approaches will increase concomitantly.

Recognition is growing. Resources are being wasted and are visibly declining. Low-energy practices and possibly sustainable food production are gaining a fragile foothold. But as a consequence of decades of destructive public policy and farming practices, local food sources will likely not be able to meet increased demand. What will your co-op be doing at that point?

Next Issue: Can democracy be revived?

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