The Rural Voice, 2001-04, Page 40consumers to trace the history of a
package of meat right back to the
farm it came from.
In getting co-ops going he often
makes use of a top food consulting
company, LeCureux said.
Bringing in expertise is one of the
keys to making a venture work. "Hire
the rightmanager and get out of the
way," he advised.
But before even a manager is
hired, he advised being
selective in the qualifications
of those being chosen for the steering
committee. Every venture needs a
champion — "a wild-eyed visionary"
— to provide the drive to make it
happen. Everyone involved in the
project needs to understand their
roles and responsibilities. The.
steering committee, and eventually
the board of directors, needs doers,
critical thinkers, visionaries, a
secretary, a facilitator, a 'co-ordinator
and a team builder. He suggested
bringing non -farmers onto the board
who bring different areas of expertise
such as lawyers or bankers.
The board must understand that its
role is to hire and fire the manager,
provide fiscal over -sight and strategic
planning for the company. It is not to
make day-to-day decisions like the
colour of the brick on the plant.
Two characteristics of farmers can
get in the way of success, LeCureux
said. For one thing farmers like to
build consensus but on a board of
directors or steering committee, "You
have to have votes and everyone on
the board has to realize that, win or
lose, people have to fall in step."
As well, once in such a venture,
the farmer has to think about the
company, not how it affects his or
her own farming operation.
"If you're making every decision
on how it's going to affect my farm,
you're going to get in trouble."
Ironically it is farmers who have
the fewest personal options that may
be the most successful in creating
more options for their farm products,
he said. In the great plains area of the
U.S. a farmer is miles from towns or
other potential sources of
employment. If he's going to give up
farming he has to look at selling the
farm and unrooting the family to
move far away. Given this
alternative, farmers have been
desperately fighting to take control of
36 THE RURAL VOICE
their futures. But in Michigan, it's
easy for a farmer to take an off -farm
job to supplement income or he may
rent out the land completely and
continue living on the farm while
working in town. The motivation to
create alternative markets is not so
strong there.
Also speaking at the Formosa
meeting was George Alkalay who
has helped put together such new -
generation Ontario co-ops as the
Farm Fresh Poultry Co-op in
Harriston. Canadians are very good
at developing the type of niche
markets these ventures fill because
"we don't really have a choice," he
said.
Farmers have an opportunity to
add value to their product, Alkalay
said, but the closer you take your
product to the consumer, the more
expensive the investment will be.
"Primary processing is easy," he said,
which is why some co-ops stop at the
level of a kill and chill plant, for
instance. At the same time, however,
each step captures a bit more money
to the producer.
He echoed LeCureux's statement
that farmers must change their way
of thinking in planning a vertically -
integrated venture. "Instead of trying
to find a market for the product you
must look at the market and provide
a product for it. Finding the market
and selling into it is the challenging
part."
The simplest reason to co-operate
with other farmers is because you
can't do it yourself, Alkalay said.
That co-operation need not
necessarily be in the form of a co-op.
"Don't assume that a co-op is the
way to go," he advised. There are
other ways of meeting the needs of a
venture. A simple solution may be a
partnership or a limited partnership.
It might be best to explore a
corporation. There might be joint
ventures and strategic alliances.
"One of the traps we have to face
is that we think we have to own
bricks and mortar to add value,"
Alkalay said.
If a new -generation co-op is the
direction of choice, it still operates
like a traditional co-op with one vote
for each member. What members
who invest more get is a the right to
supply more product to the co-op.
Members sign binding supply
agreements controlling the amount
and quality of product to be delivered
to the company.
The co-op needs to know it will
have a consistent, quality supply,
Alkalay said. "When you have that
kind of agreement with your
producers who are also the owners,
you are have a real competitive
advantage."
, Membership in new -generation
co-ops is generally limited to the first
people who come along with enough
production to meet the needs of the
company, he said. "Once you fill the
needs of the company you won't sign
any more members."
The strength of a new -generation
co-op is that it allows farmers to
diversify and manage on-farm risks.
For instance in hogs, production and
processing are generally counter-
cyclical. If the price of hogs is high,
farmers make money and processors
don't. If hog prices drop, processors
are profitable while producers hit
hard times. "If you own hogs and hog
processing, you spread your risk,"
Alkalay said.
Being part of a further -processing
business also allows farmers to gain
more knowledge. "When a farmer
become a processor, you sit down at
the industry table."
This can reduce the tensions
between producers and processors.
"When you have an antagonistic
process youhave huge costs," he
said.
Alkalay agreed with LeCureux
that member commitment is
essential for success. "Don't
run to the government and ask for
help," he said. "As soon as you do
that, you're not acting like
entrepreneurs." If government money
is available you can take advantage
of it like any other business but the
basis of the co-op should be
membership investment.
But money is not a challenge if
the idea behind the co-op is sound.
"There is tons of money chasing too
few good projects," he said.
But getting good ideas is essential.
He advised people to visit Toronto
grocery stores and see what's being
sold there. "That's where the market
is headed," he said.
Giving producers an idea of where
the market is headed was Dr. Gordon
Surgeoner, former University of
(.)