New Generation Co-ops

Gary Sliworsky (Ag. Rep.)

If you have been doing any reading about agriculture in the past few years you will have come across phrases like “value added” and “further processing”. And the term “New Generation co-op” is often referenced when we hear these terms. So what are New Generation Co-operatives?
New Generation Co-operatives are similar to traditional co-operatives with some key differences. The main difference is members of the co-operative contract with the co-op to deliver a set amount of produce. The amount you can deliver depends on the number of shares purchased in the co-op. This means that the level of investment required by members of a New Gen co-op is much greater than a traditional co-op. Once a co-op has the required amount of produce the membership is closed.
The delivery right assures producers of a market for their product, and the cooperative of a steady supply of its primary input. If a producer cannot meet the quality or quantity commitments with his own product, he must make arrangements to purchase the product from elsewhere to fulfill the delivery requirements.
So why choose a New Generation Co-Op? While there is no definitive answer, a New Generation structure may be a better choice than another type of business structure:
·when equal membership control is important;
·when a sense of co-operative effort is required;
·when members have a greater comfort level with the co-operative structure and the co-operative structure is more easily explained and understood;
·when community acceptance of the business is important. Since co-ops have a long-standing commitment to education, local control and concern for local community they may be more attractive to some communities than an alternate business model.
A New Generation co-op is not a miracle solution for all circumstances, and there are factors that are critical to the success of a New Gen Co-operative. These may include:
·a group of motivated and determined producers with a vision and who have leadership abilities;
·a market for the product that can be profitably supplied and where a reliable supply of raw product is critical to success;
·a window of opportunity for the co-op to enter the industry and to obtain investment from producers;
·the hiring of professional management for the processing facility.
If you would like more information on New Generation co-operatives contact the OMAF publication order centre at 1-888-466-2372 and request the following factsheets:
•New Generation Co-operatives Order No. 02-017
•How to Form a Co-operative Order No. 02-019
Dates to Remember
Nov. 2 - Top of The Line Beef Cattle Sale, Stratton Sales Yard, Preview 11:00 am, Sale 1:00 pm.