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Successful co-ops come in all sizes and income levels

By LINDA McGURK
Indiana Correspondent

COVINGTON, Ind. — What do Sunkist, Best Western, Land O Lakes and Touchstone Energy have in common? You may not realize it, but they’re all cooperatives.

Combined, United States cooperatives contribute more than $210 billion to the national economy, have nearly 130 million members and employ more than half a million people. Yet, the business model is so little known that most people don’t recognize a cooperative when they see it.

Commonly used by farmers – 30 percent of farmers’ products in the U.S. are marketed through some 3,000 farmer-owned cooperatives – they can also be a way to spur growth in rural America.

“Cooperatives benefit rural communities in a couple of ways,” said Debbie Trocha, executive director of the Indiana Cooperative Development Center (ICDC). “One, they create jobs; two, they keep the dollars in the local community.”

The ICDC is currently offering seven workshops across the state on how to form and finance a cooperative. Targeting chambers of commerce, the banking community, small business owners and people involved with economic development, the workshops are meant to give participants a better idea of how cooperatives work, and how to start and finance one.

“A lot of times when people think of cooperatives they think of ag cooperatives, but that’s not all there is,” Trocha said during a Sept. 11 workshop in Covington. “Cooperatives run the gamut from Fortune 500 companies to single, small storefronts.”

The Lost River Market and Deli co-op in rural Paoli, Ind., would fit the latter description. In 2005, when a group of Paoli residents started tinkering with the idea of opening a natural-foods store in their community, ICDC provided guidance and funding. A full-service store, featuring locally and regionally produced foods, opened for business two years later.

With nearly 600 members and 15 employees, the grocery cooperative projects $1 million in sales its first year in business, according to the co-op’s website.

Trocha said food co-ops like the one in Paoli can be a good fit for rural areas, provided there’s enough community support, and she thinks they have a lot of growth potential.

“Part of what’s driving that is the growing interest in locally-produced food,” she said. “People are concerned with where their food is coming from, especially with all these recalls we’ve had. They are concerned with what they feed their families.”

Mark Beckman, a business programs specialist with the USDA, said he receives a lot of calls from people who would like to start cooperative grocery stores in rural areas.

“A cooperative can be an advantage to a rural community if it can bring something to that community that you couldn’t get otherwise,” he said.

And, unlike distant shareholders in a corporation, the members of the cooperative are vested in the local community. “These people are not going offshore, and they’re not going to contract the parts to China,” Beckman said.

Mike Booe of the Community Action Program of Western Indiana attended the workshop to learn more about the cooperative business form.

“(Cooperatives) are popping up everywhere, you see more and more of it,” he said. “I think natural-food cooperatives are the up and coming thing, I really believe in it.

But I think you really need to have that local support.”

Cooperatives are different from corporations in a number of ways. Like any business, co-ops have to be profitable to stay in business, but profitability is not the main objective. Instead, the focus is on service.

Cooperatives are owned and controlled by their members and every member is entitled to one share, or vote, in the company. Unlike shareholders in a corporation, members of a co-op can’t buy more votes by increasing their stake in the company.

“Decisions are made in the co-op based on consensus. You want everybody on the same bandwagon, moving in the same direction,” Trocha said.

The remaining workshop dates are:

*Sept. 18, 2-4 p.m., Whitley County Government Center in Columbia City
*Oct. 14, 10 a.m.-noon, Anderson Public Library in Anderson
*Oct. 16, 10 a.m.-noon, Jennings County Public Library in North Vernon
*Oct. 21, 2-4 p.m., Dubois County REC in Jasper
Register by contacting Trocha at 317-275-2247 or e-mailing dtrocha@icdc.coop

9/17/2008