harveyc

I spent 25 years working for the largest agricultural lending institution in the U.S., which itself is a cooperative. I am now a member of one of its local cooperative associations which is operating well. This institution loans funds to farmers, ranchers, nursery operators, etc. as well as marketing and processing cooperatives. Many cooperatives did well but many did very poorly. Many farmers lost fortunes in these cooperatives when they went bankrupt, not getting paid for their crops and losing their equity investments. California Canners & Growers, Tri-Valley Growers, Guild Winery, and Rice Growers Association are just a few cooperatives I've had some extensive experience with. The failures of this cooperatives caused great hardships for many of these farmers and some went out of business themselves.

Some fundamental problems agricultural marketing and processing cooperatives face are:
(1) Retaining adequate capital and running the operation like a business. Member farmers want to get paid the maximum they can for their crop and this will often result in poor liquidity and capital in the cooperative, making survival difficult.
(2) Limiting production to levels that can be handled and marketed efficiently and profitably. Growers will typically want to maximize production in hopes of maximizing their own personal profit even in times of surplus production and low crop prices. The mentality is "let someone else cut production". The cooperative if owned by the growers, so management and the board find it difficult to set policies to limit production.
(3) Maintaining a quality product. Management and the board are often reluctant to institute policies that penalize growers adequately to discourage delivery of inferior products. The end product, as a result, also suffers.

Besides the problems above, a cooperative of IBS members would be faced with additonal challenges. Some members would want production to be all organic. Some would want production to maximize yields and profits. Some would want the operation to turn out to be a good financial investment while some would want the operation to benefit the local native population. Some would want production to include diverse varieties while others would want to select only proven high-yielding varieties with satisfactory market acceptance. Some members would be in the position to provide substantial capital to start the cooperative while others would be challenged to come up with more than $100.

If you get your cooperative off the ground and keep it running for five years I would honestly be amazed but, in all sincerety, I wish you the best of luck.

Harvey

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