Cooperative Services Branch
June 8, 2021
Cooperatives, Economic Development and Food Security
Many rural communities struggle with food insecurity; either due to limited access to a grocery or through closures. This loss has impacts well beyond access to food; jobs are lost, other businesses around the groceries close, soft skills and creation of wealth in the community diminishes.
The traditional economic development practice of recruiting a business may be successful, provided there is sufficient profit to attract an investor. However, this may be the reason a firm is not present. Some communities and economic development professionals are taking a closer look at the cooperative business model as a solution. Conducting business cooperatively can solve an economic need, create wealth, and develop leadership skills in the community; a win-win solution.
The cooperative model is attracting attention. Mark Winne, well known founder of the Community Food Security Coalition, a 2001 recipient of USDA’s Plow Award, and author of several books on food systems and public health featured Sitka as one of 7 new innovative food communities in his most recent book “Food Town USA”.
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Sitka, Alaska is a small island community on the Alaskan panhandle; population 8,647, which can only be accessed by ferry or plane. Winne indicated that groceries on the island are up to 20 percent more expensive than in other |
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communities in Alaska and 35 percent higher than average in the lower 48 states. This in part was the incentive for Ann Betty to start a buying club back in 2010. A group of 13 families went together to submit a bulk order and share shipping costs. The number of people participating grew during the year, so the group began to discuss forming the Sitka Food Cooperative.
They solicited assistance from the Alaskan Cooperative Development Program at the University of Alaska[1] to discuss the development of a cooperative. Cooperatives in many ways are similar to other businesses, they own facilities, provide services, and follow prudent business practices. They are incorporated, have boards of directors, investors, and customers. However, they differ in the interaction between directors, investors, and customers.
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Cooperative businesses operate using three commonly recognized principles, member ownership, member control and member benefits. Unlike other business entities a cooperative is made up of members, rather than partners or shareholders, with a common interest is an solving an economic need. Members own the cooperative through contribution of equity, control the cooperative through democratic voting, and share in the net proceeds of the cooperative based on patronage or use of the cooperative. The focus of this bulletin is to highlight cooperatives as a tool for economic development by showcasing a community that has cooperatively addressed affordable access to food. |
By May of 2011 monthly deliveries outgrew the space they were using. A larger low-cost space was located where monthly orders could be sorted and picked-up by members while informational meetings were held to gauge interest. Not only did the cooperative model allow the group to provide high quality food at an affordable price, it also helped support the values of the community.
In September of 2011 the group incorporated as a cooperative and opened their membership to the general community. Assistance from Food Cooperative Initiative[2] a specialist in grocery cooperatives help to put policies, and operating procedures in place. A seed grant from FCI also provided the opportunity for further training of board members. One such opportunity was the Up and Coming conference hosted by the Indiana Cooperative Development Center[3].
The mission of building a strong vibrant food system that is accessible to all soon included other cooperative principles. The cooperative put concern for community into practice by sponsoring local events and community dinners as well as partnering with the Youth Advocates of Sitka to provide healthy snacks for the after-school program. They have also developed a round-up program that provides funding to community programs such as Sitkans Against Family Violence for the “Safe Shelter” and the “Blessings in a Backpack” initiatives. These are just two of the organizations supported by the program… each year members vote on which programs to support and each year several thousand dollars are distributed to the organizations selected.
In 2011 annual sales were $25,000. The co-op ended 2020 with sales in excess of $530,000, of which $172,815 was regional farm purchases coordinated by the cooperative. At the same time members indicated savings of 20 to 25 percent on their grocery bill. Not only were sales growing, the membership was also growing. At the end of 2020, the co-op had 270 active household and business members.
Managing the growth and gaining operational efficiencies has been a focus during a time when product and shipping costs have been increasing. This focus has allowed the co-op to remain profitable during times of rapid growth positioning them to achieve their vision of a store front open to everyone.
Despite or perhaps because of COVID, the cooperative continues to prosper providing members with 7.5 tons of food a month, an increase of 31% over the previous year. March 2020, more changes were necessary when the community hall used for delivery/pick-up days closed temporarily. The board and manager developed a creative solution. A new distribution location was quickly found, orders were sorted and prepared for curbside pick-up, and a delivery service was created for members unable to collect their order.
The Sitka Food Co-op has shared their experience with others interested in using the cooperative model to meet needs in their own communities, noting one of the added benefits of the co-operative is it’s empowering.
For more information on food cooperatives check out the following free resources:
Food Cooperative Initiative
Rural Development Publications for Cooperatives (see Food Hub series in Service Reports)
[1] Center funded in part through a USDA Rural Cooperative Development Grant
[2] Ibid; FCI has free resources downloads specific to co-op grocery start-up
[3] Ibid
This bulletin was produced by Deborah Rausch: deborah.rausch@usda.gov
Link for this bulletin: https://content.govdelivery.com/accounts/USDARD/bulletins/2c51f2b
[Please note: the focus on the Sitka Food Cooperative in this bulletin is for example and informational purposes and does not signify endorsement over other companies' products and services. If you would like to reach out with your own cooperative story, we would love to hear it, simply contact us.]
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