How to Establish a
Cooperative
3rd Annual USDA Outreach Conference
Virginia State University
Petersburg, Virginia
March 18, 2010
Tony Banks
Virginia Farm Bureau Federation
Commodity/Marketing Department
Richmond, VA
Purpose
• What Are Cooperatives?
• Advantages and Disadvantage
• Development Steps
2
What Is A Cooperative?
A business
• Owned and democratically controlled by the
people who use its services
• With benefits distributed equitably to them
based on use
3
What Is A Cooperative?
Purpose
• Obtain market access or broaden market
opportunities
• Improve product or service quality
• Reduce costs (purchasing)
4
What Is A Cooperative?
Extension of grower’s farm
• Cooperative enhances farming operation
• Growers own their cooperative.
• Lack of support for the cooperative means
failure.
5
Advantages of Cooperatives
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User-members drive business
Patronage-based benefits
Market access
Capital pooling
Structure - Easy for large numbers of
members to use
Disadvantages of Cooperatives

Members have to give up some
independence

Time to develop

Group decision-making
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Everyone needs to commit to the
cooperative

Voting board members have to be
producers

Board v. manager responsibilities
Cooperative Development Steps
• Meeting to define economic
need/opportunity
• Exploratory meeting
– Potential members
– Steering committee/leadership
– Education about cooperatives
• Survey potential members
8
Cooperative Development Steps
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Feasibility study
Business plan
Legal documents
Business startup
Board education
9
Bill Brockhouse
U.S. Department of Agriculture
Rural Development
Rural Business-Cooperative Service
Cooperative Programs
Washington, DC
bill.brockhouse@wdc.usda.gov
Phone: (202) 720-2021
10
Laurette Tucker
U.S. Department of Agriculture
Rural Development
Virginia State Office
Richmond, VA
laurette.tucker@va.usda.gov
Phone: (804) 287-1594
11
Virginia Farm Bureau Federation
Cooperative & Enterprise
Assistance
• State’s largest farm membership
organization
• Represent our members’ political,
economic and social interests
• Provide educational, informational and
economic services to our members
Virginia Farm Bureau
• Assist individual and groups of producers
developing
– higher value markets
– value-added products
– renewable energy enterprises
• Commodity/Marketing Dept.
• Virginia Foundation for Agricultural
Innovation & Rural Sustainability
(VAFAIRS)
Virginia Farm Bureau & VAFAIRS
• VAFAIRS is a USDA-funded Rural
Cooperative Development Center
• Partner with outside experts
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USDA
VDACS, VDMME, VEP
VA Cooperative Extension
VA Tech, VSU, Longwood, VCU
Private Consultants
Many Others
Virginia Farm Bureau & VAFAIRS
• Provide assistance new ventures for the
following
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Project advice
Feasibility study
Surveys and analysis
Business/marketing planning
Grant writing education/assistance
Organizational structure
Virginia Farm Bureau & VAFAIRS
• Provide assistance existing ventures for
the following
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Organization-wide strategic planning
Board/officer strategic planning
Board/office education
Grant/finance education/assistance
Virginia Farm Bureau & VAFAIRS
• Virtual Business Center www.vafairs.com
– FREE on-line business assistance tool
• Planning
• Financial modeling
• Financial statements
– Helpful Resource Links
• Technical services
• Financial services
• Educational Conferences & Workshops
• Price Risk Management
VFBF Commodity/Marketing &
VAFAIRS** Contacts
Al Glass - 804-290-1156, Al.glass@vafb.com
Tony Banks - 804-290-1114, Tony.banks@vafb.com
Jonah Bowles 804-290-1117, Jonah.bowles@vafb.com
Chris Cook 804-290-1111, chris.cook@vafb.com **
Spencer Neale 804-290-1153, Spencer.neale@vafb.com
WWW.VAFB.COM
WWW.VAFAIRS.COM
Tony Banks
Assistant Director
Commodity/Marketing Dept.
Virginia Farm Bureau Federation
PO Box 27552
Richmond, VA 23261
804-290-1114
Tony.banks@vafb.com