RBS Research 

Report 210

Small-Scale Grower

Cooperatives in the Northeast

United States

A Study of Organizational Characteristics, Manager, Member 

and Director Attitudes, and the Potential for Improving Regional

Inter-Cooperative Collaboration

United States

Department of

Agriculture
A b s t r a c t Between 1999 and 2001, managers, directors, and grower members of 25 small-scale

fruit and vegetable cooperatives (annual gross sales of $10M or less) in the Northeast

United States were surveyed to learn about their organizational characteristics, management strategies, and impacts on members. The results show the critical importance

of small-scale cooperatives to their members, and members' farms and families, as

well as reveal small-scale grower cooperative organizational fragility and vulnerability.

Among the important challenges identified are a general lack of manager stability,

underdeveloped business management skills, and maintaining member commitment.

However, many respondents are interested in working together to better their industry,

and potential areas for such inter-cooperative activities are identified.

Key words: cooperatives, small-scale, fruits and vegetables, northeast, statistics,

issues, federation.

Small-Scale Grower Cooperatives in the Northeast United States

A Study of Organizational Characteristics, Manager, Member and Director Attitudes,

and the Potential for Improving Regional Inter-Cooperative Collaboration

Duncan Hilchey, Gilbert Gillespie, Brian Henehan

United States Department of Agriculture

Rural Development-Cooperative Programs

RBS Research Report 210

August 2006

On the Cover: Checking on a shipment of Tuscarora Organic Growers (TOG) cooperative hothouse tomatoes in Pennsylvania are from the right: TOG member Mick

Kodner of Dancing Creek Farm, TOG member Tim Derstine of Hares Valley Growers,

Seth Kodner (Mick’s son) and Teresa Showalter, TOG Operations Manager. Photo by

TOG Manager Chris Fullerton, courtesy TOG.
P r e f a c e In the last two decades the number of small-scale fruit and vegetable cooperatives

(with sales of $10 million or less) in the Northeastern United States rose significantly.

The growing demand for high-quality fresh and processed produce, coupled with farmers' needs for alternative sales outlets, has fueled the interest of local agencies and

non-governmental organizations seeking innovative agricultural development opportunities.

The purpose of this study, funded by a cooperative research agreement with the USDA

Rural Development-Cooperative Programs, was to examine critical small-scale fruit

and vegetable cooperative management and organizational factors, and explore ways

in which these cooperatives could work together. The data for this study came from a

series of surveys of small-scale cooperative managers, their directors, and farmer

members. This report is intended for use by cooperative managers, directors, and

members, and for advisors who wish to assist new or established cooperatives in the

region or in other areas of the United States where there is interest in supporting family

farms.

Acknowledgments

The authors would like to thank our project advisors: Gary Balone of Eden Valley

Cooperative, Chris Fullerton of Tuscarora Organic Growers, Carol Stull and Brian

Caldwell of Finger Lakes Organic Growers Cooperative, Mary Lee Parsons of Coastal

Growers Cooperative (now defunct), Kathy Ruhf of the New England Small Farm

Institute, and Rick Van Vranken of Rutgers University Cooperative Extension. Special

thanks also go to Gretchen Gilbert and Carrie Holcomb, who provided assistance in

data entry, and Amy Christian for her help in report preparation. This study would not

have been possible without the support of the USDA Rural Business-Cooperative

Service, especially Tom Stafford, Tom Gray and Charlie Kraenzle, who were generous

with their time and resources. We are also indebted to the New York State Experiment

Station; Tom Lyson, director of the Community, Food, and Agriculture Program; and

Phil McMichael, chair of the Department of Development Sociology at Cornell

University.

This publication is written in memory of Carol Stull; former director and founding member of the Finger Lakes Organic Growers Cooperative, whose strong spirit and lasting

dedication to the cooperative movement will be long appreciated and remembered.

i
C o n t e n t s Abstract

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i

Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ii

List of Tables/Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Small-Scale Growers' Cooperatives on the Rise in the Northeast U.S. . . . . . . . .1

Fruit and Vegetable Demand Is Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Limitations of Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Results and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Response Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Sample Bias and Generalizability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

SECTION 1 General Characteristics of Small-Scale Grower Cooperatives in the

Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Small-Scale Fruit and Vegetable Cooperative Sales . . . . . . . . . . . . . . . . . . . . . .8

Organizational Structure and Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Cooperative Marketing Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Trade Area and Market Share Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Sales Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Seasonality of Cooperative Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Small-Scale Cooperative Competitive Advantages . . . . . . . . . . . . . . . . . . . . . . .9

Growth Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Growth Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Sources of Information and Technical Assistance . . . . . . . . . . . . . . . . . . . . . . . .11

Accounting Software Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

SECTION 2 General Characteristics of Managers . . . . . . . . . . . . . . . . . . . . . . . . . .13

Cooperative Manager Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Cooperative Manager Strengths and Weakness . . . . . . . . . . . . . . . . . . . . . . . .13

Manager Level of Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Managers' Potential Long-Term Opportunities with the Cooperative . . . . . . . . .15

Future Management Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 3 General Characteristics of Members . . . . . . . . . . . . . . . . . . . . . . . . . .15

Cooperative Member Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Cooperative Share of Member Farm Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Members' Best Marketing Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Cooperative Membership Contribution to Farmers and Families . . . . . . . . . . . .17

Cooperative Member Sales Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Member Farm Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Level of Member Satisfaction with Cooperative . . . . . . . . . . . . . . . . . . . . . . . . .20

ii
C o n t e n t s Small-Scale Cooperative Benefits to Members . . . . . . . . . . . . . . . . . . . . . . . . .20

How Members Businesses Would Be Affected if Their Co-ops Closed . . . . . . .20 .

Cooperative Member Attitudes and Concerns . . . . . . . . . . . . . . . . . . . . . . . . . .20

Members' Issues and Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

SECTION 4 Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Challenge Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Managers' and Directors' Comparative Analysis of Challenges . . . . . . . . . . . . .21

Potential Opportunities for the Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Potential of Intercooperative Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Interest in Joining a Regional Cooperative Federation . . . . . . . . . . . . . . . . . . . .21

Summary, and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Cooperative Structure and Organizational Challenges . . . . . . . . . . . . . . . . . . . .22

Cooperative Competitiveness and Stability . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Contribution of Cooperative to Family Farmers . . . . . . . . . . . . . . . . . . . . . . . . .23

Opportunities for Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Conclusions and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Recommendations to Northeastern Fruit and Vegetable Cooperatives . . . . . . . .29

Public Policy Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Suggestions for Further Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Literature Cited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Appendices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

Appendix I. Types of Northeastern Cooperative Members . . . . . . . . . . . . . . . .32

Appendix II. Issues and Concerns of Members by Cooperative Type . . . . . . . .32

Appendix III Comparative Analysis of Challenges by Respondent Type . . . . . .34

List of Figures/Tables

Figure 1 Distribution of Responding Cooperative Sales . . . . . . . . . . . . . . . . . . . . . .7

Figure 2. Cooperative Sales by Month and Type . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Table 1. Number of Fruit and Vegetable Grower Cooperatives, U.S. and Northeastern

U.S., 1987, 1991 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Table 2. Number of Fruit and Vegetable Cooperatives By Sales Volume, Northeast

U.S., 1994 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Table 3. Total Sales and Mean Sales of Fruit and Vegetable Cooperatives by Sales

Category, Northeast U.S., 1994 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . .3

iii
C o n t e n t s Table 4. Response Rate and Final Sample Count by Survey . . . . . . . . . . . . . . . . .6

Table 5. Number of Cases by Cooperative Type . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Table 6. Cooperative Type by State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Table 7. Responding Cooperative General Characteristics . . . . . . . . . . . . . . . . . .7

Table 8. Cooperatives Sales Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Table 9. Cooperative Structure and Strategic Planning by

Cooperative Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Table 10. Marketing Channel by Cooperative Type . . . . . . . . . . . . . . . . . . . . . . . . .9

Table 11. Trade Area Geography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Table 12. Market Share Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Table 13. Sales Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Table 14 Competitive Advantages Reported by Cooperative Type . . . . . . . . . . . .11

Table 15. Growth Strategies by Cooperative Type . . . . . . . . . . . . . . . . . . . . . . . . .12

Table 16. Growth Goals Achievement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Table 17. Information and Technical Assistance . . . . . . . . . . . . . . . . . . . . . . . . . .13

Table 18. Accounting Software Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Table 19. Cooperative Manager Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Table 20. Management Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Table 21. Needed Management Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Table 22. Level of Manager Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Table 23. Manager's Long-Term Opportunities with Cooperative . . . . . . . . . . . . . .16

Table 24. Management Future Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Table 25. Occupations of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Table 26. Demographic Characteristics of Members . . . . . . . . . . . . . . . . . . . . . . .17

Table 27. Member Business Characteristics by Farm Type . . . . . . . . . . . . . . . . .18

Table 28. Market Channel by Cooperative and Farm Type . . . . . . . . . . . . . . . . . .18

iv
C o n t e n t s Table 29. First, Best Marketing Channel for Members by

Cooperative and Farm Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Table 30. Mean and Median Member Sales by Cooperative Type

and Occupations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Table 31. Family and Non-Family Farm Workers on Member Farms . . . . . . . . . . .21

Table 32. Level of Satisfaction with Cooperative by 

Various Member Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Table 33. Benefits to Members by Cooperative Type . . . . . . . . . . . . . . . . . . . . . .23

Table 34. Composite Benefit Score by Member Category . . . . . . . . . . . . . . . . . . .24

Table 35. How Business Would Be Affected if Co-op Closed, by Co-op Type,

Farm Category and Percent of Sales to Co-op . . . . . . . . . . . . . . . . .25

Table 36. Member Attitudes and Concerns by Cooperative Type . . . . . . . . . . . . .25

Table 37. Member Attitudes and Concerns by Farm Type . . . . . . . . . . . . . . . . . . .26

Table 38. Issues and Concerns of Members by Farm Type . . . . . . . . . . . . . . . . .27 .

Table 39. Cooperative Challenges by [multiple categories] Composite Scores for

Each Topic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Table 40. Potential Business or Service Opportunities for the Cooperative . . . . .28

Table 41. Potential for Inter-Cooperative Collaboration by Manager and 

Member Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Table 42. Interest in Joining a Cooperative Federation by Respondent Type . . . .29

v

SMALL-SCALE GROWER COOPERATIVES IN THE

NORTHEAST UNITED STAT E S

A Study of Organizational Characteristics, Manager, Member and Director

Attitudes, and the Potential for Improving Regional Inter-Cooperative

C o l l a b o r a t i o n

I n t r o d u c t i o n

Small-Scale Growers' Cooperatives on the Rise

in the Northeast U.S.

The 12-state region of the Northeastern U.S.

p resently supports about 40 fruit and vegetable gro wers' cooperatives, a dramatic rise since 1987, when

t h e re were 27. The region is home to some of the

Nation's oldest fruit and vegetable cooperatives which

started during the Great Depression as a way to help

s t ruggling family farmers survive. “Small-scale cooperatives,” which are defined here as those with less

than $10 million in sales per year, numbered 35 (in

2000) in the Northeast, but only re p resent 1.8 perc e n t

of the region's $3.3 billion in fruit and vegetable cooperative sales (including value-added), and only 3.9

p e rcent of total regional fresh fruit and vegetable sales.

Because of their national markets and value-adding

activities, large grower cooperatives like Ocean Spray

and National Grape (Welch's) currently constitute the

lion's share in production and sales.

Table 1 shows the change in the number of fru i t

and vegetable growers' cooperatives in the Northeast

c o m p a red to the United States overall between 1987

and 2000. While the number of fruit and vegetable

cooperatives dropped by a third (32.5 percent) for the

United States on the whole, the number in the

Northeast region increased by 48 percent during the 13

year period. Thus, the Northeast's share of all fruit and

vegetable cooperatives in the U.S. has more than doubled since 1987 _ f rom 7 percent to 17 perc e n t .

The decline of fruit and vegetable cooperatives

outside the Northeast coincides with the consolidation

that has been taking place throughout the food system.

The overall attrition of fruit and vegetable cooperatives was noted by Skinner (1982). He theorized that

the concentration was linked to more intense market

re q u i rements for consistent quantities, qualities, and

reasonably stable pro c u rement prices of farm output.

Skinner concluded that addressing these market

demands efficiently by obtaining economies of size

was producing a more contracted cooperative sector.

1

344

299

232

27 36 40

0

50

100

150

200

250

300

350

400

1987 1991 2000

Number of cooperatives

U.S.

Northeastern U.S.

Source: USDA Rural Development-Cooperative Programs

Table 1—Number of Fruit and Vegetable Grower

Cooperatives, U.S. and Northeastern U.S., 1987,

1991 and 2000

2 7 3 6 4 0

U . S .

Northeastern U.S.
The Northeast, however, has not been immune to the

t rend in fruit and vegetable cooperative merg e r s ,

acquisitions, and business failures (Table 2).

A closer look at the data is necessary to better

understand the trends. While the total number of fru i t

and vegetable cooperatives in the Northeast dro p p e d

by 2 between 1994 and 2000, the number of small-scale

cooperatives remained the same at 35 (the number

starting equaled the number exiting). Furthermore, the

s h a re of cooperatives by sales class under $10 million

has shifted dramatically. The increase in the number of

the “micro-cooperatives” (with less than $2 million in

sales) has maintained small-scale cooperative numbers. Micro-cooperatives are presumably filling market

niches (e.g., organic blueberries, specialty produce) not

satisfied by larger cooperatives as well as mass market

g ro w e r-shippers and distributors.

An analysis of total and mean sales per cooperative between 1994 and 2000 shows that despite some

consolidation in regional fruit and vegetable cooperatives, total sales are up significantly (Table 3).

The distribution across sales categories indicates

that most sales volume is through large cooperatives.

F ruit and vegetable cooperatives with less than $10

million in sales, for example, accounted for over thre e -

quarters (87.5 percent) of the total number of cooperatives, but had only 1.8 percent of total regional cooperative sales-down from 3 percent in 1994. This

shrinkage is due to the increased number of micro -

cooperatives coupled with a decline in the number and

sales of cooperatives in the larger small-scale cooperative classes.

Fruit and Vegetable Demand Is Up

One of the likely factors leading to the rise in

small-scale grower cooperatives is the growth of produce consumption. From 1976 to 2000 vegetable consumption (fresh and processed) increased 28.0 perc e n t ,

f rom 359.2 lbs per capita to 459.8 lbs. Meanwhile, nonc i t rus fruit consumption (fresh and processed) gre w

f rom 263.8 lbs per capita to 295.4 lbs, an increase of 12

p e rcent (Carman et al., 2004.) Consumer concerns

about health and nutrition are generally credited for

the increases. The USDA and the Cooperative

Extension Service in particular, is promoting more

healthful diets through the use of food pyramids and

other food guides, which encourage increased plantbased food consumption. Fruit and vegetable consumption trends and public policies that support

d i rect marketing activities (farmers' markets, ro a d s i d e

stands, and u-pick) are likely to continue. However,

despite these trends, comparatively little public policy

has focused on cooperatives of any size in meeting the

g rowing demand for fresh, high-quality fruits and vege t a b l e s .

2

Table 2—Number of Fruit and Vegetable Cooperatives By Sales Volume, Northeast U.S., 1994 and 2000

1994 2000

----------------------------------------------- ------------------------------------------------ Percent change,

Sales category ($1,000s) # Cooperatives % of total # Cooperatives % of total 1994 to 2000

Less than $500 14 33% 18 45% 28.57%

$500 to $1,999 6 14% 7 18% 16.67%

$2,000 to $2,449 3 7% 2 5% -33.33%

$2,500 to $4,999 5 12% 4 10% -20.00%

$5,000 to $9,999 7 17% 4 10% -42.86%

Subtotal of $9,999 or less 35 83% 35 88% 0.00%

$10,000 or more 7 17% 5 12% -28.57%

Total 42 100% 40 100% -4.76%

Source: USDA, Rural Development-Cooperative Programs.
3

P u r p o s e

While the growth in the number of small-scale

cooperatives in the Northeast since the 1980s suggests

a possible robustness, past re s e a rch on fruit and vegetable cooperatives points to a number of challenges _

low volumes, high operating costs, finding and re t a i ning skilled managers, and an extremely competitive

marketplace. It was the intention of this study to gain a

g reater understanding of the key issues affecting small

cooperatives, provide guidance for formulating re g i o nal development strategies and policies, and to better

realize the potential of small growers' cooperatives in

the Northeast.

R e s e a rch objectives included increasing the

knowledge about Northeastern small-scale fruit and

vegetable cooperatives' stru c t u res and org a n i z a t i o n a l

needs, competitiveness, member issues and concerns,

impacts on farm families, and the prospects for promoting inter-cooperative relations. Hopefully, the

results of this project will be used by small fruit and

vegetable cooperatives to improve their viability and

success in meeting their own goals. Furthermore, we

think that Extension staff and others can use these

findings to meet the needs of the fruit and vegetable

g rowers more eff e c t i v e l y. More o v e r, land-grant

re s e a rchers may also find the results useful in identifying additional opportunities for both applied and theoretical re s e a rch on cooperatives.

Literature Review

Little re s e a rch has been conducted on small-scale

f ruit and vegetable cooperatives in the Northeast.

What re s e a rch has been conducted has focused larg e l y

on economics and business management practices. In a

study of Vermont grower cooperatives, for example,

Henehan and Pelsue (1986) found that manager experience and the adoption of a multiyear business plan

w e re key variables that influenced sales growth. Lewis

(1989) studied operating costs and concluded the keys

to successful fruit and vegetable cooperatives are management and product quality.

Hulse, Biggs and Wissman (1990) studied the

o rganization and operations of 34 small-scale fruit and

vegetable cooperatives across the U.S. (with annual

sales of $1 million or less) using diff e rent sales methods as the basis of comparison. Observing that cooperatives with below-average sales had a higher failure

rate, they concluded that sales volume may be associated with small-scale cooperative survival. Hulse et al.

also examined how these small cooperatives served

the needs of their members, and how new cooperatives might be started to provide producers with marTable 3—Total Sales and Mean Sales of Fruit and Vegetable Cooperatives by Sales Volume, Northeast U.S.,

1994 and 2000

1994 2000

__________________________________________ ______________________________________

Sales % of Mean Sales Sales % of Mean Sales

Sales volume ($1,000s) ($1,000s) Total per Cooperative ($1,000s) Total per Cooperatitve

Less than $500 $1,689 0 $120.6 $2,817 0.1 $156.5

$500 to $1,999 4,325 0 720.9 8,057 0.2 1,151.0

$2,000 to $2,449 3,360 0 1,119.8 4,675 0.1 2,337.3

$2,500 to $4,999 19,864 1 3,972.7 13,805 0.4 3,451.3

$5,000 to $9,999 50,363 2 7,194.7 28,916 0.9 7,229.0

$10,000 or more 2,035,529 97 290,789.9 3,211,217 98.2 642,243.3

Total Sales $2,115,130 100 $50,360.2 $3,269,487 99.9 $81,737.1

$9,999 or less $79,601 3 $2,274.3 $58,268 1.8 $1,664.8

Source: USDA, Rural Development-Cooperative Programs.

2Does not include sales of other products, service receipts and other income.
keting, supply purchasing, or other services. They

found diversity in membership, organizational stru ct u re, and management. To gain insights into the causes

of failure, they conducted case studies of four fruit and

vegetable cooperatives that had failed. Among the re asons they found were inability to reconcile diff e re n c e s

of opinion among directors, members and management; growers' sales to the cooperative only when the

price was right; difficulty in persuading growers to

pack produce to buyers' specifications; poor location;

low volume; decline in active membership; local

decline in vegetable farming; termination of supporting grants; grower production inexperience; costly

h i red help (for growers or cooperative); and lack of

understanding of cooperative philosophy and operation. Common to all four of the failed cooperatives was

a lack of member commitment to the cooperative.

Biggs (1990) found that, despite accounting for

only 4 percent of the principal fresh vegetables produced in the U.S., vegetable cooperatives made a significant contribution to the rural economies in which

they operated. However, he also noted several pro blems faced by small cooperatives. Competition fro m

p roducers in other areas appeared to be important for

the fresh vegetable cooperatives-including areas fro m

within the U.S. as well as other countries. Local oversupply of fresh vegetables can become a pro b l e m

when regional growers over-plant or ro w - c rop farmers

(such as corn and soybean producers) suddenly

change to vegetables, thus glutting the market.

Shortages of workers caused by immigration policies,

and problems with marketing, quality, and transportation were among the other issues frequently re p o r t e d

by grower cooperatives across the nation.

Bhuyan et al. (2001) reported that more and more

f ruit and vegetable cooperatives had difficulties in

meeting member expectations and satisfying cooperative principles while striving to be competitive. In

their study of New York, New Jersey, and

Pennsylvania fruit and vegetable cooperative members

and managers, they found that, while managers questioned member loyalty, members showed dissatisfaction with the leadership and skills of their cooperative's management and board of directors. They

recommended improvements in communication and

management business skills are needed, and that business strategies such as finding new markets, sales promotion, cooperation among cooperatives and/or

m e rgers, price discrimination based on a standard i z e d

attribute (e.g., product quality), need to be explore d .

In their annual national cooperative survey, Gray

and Kraenzle (2001) found that managers of smallscale cooperatives in general (with revenues of less

than $10 million) cited increasing costs, weather and

competition as their leading problems. They less frequently cited operational difficulties and low marg i n s

than did cooperatives overall. Low commodity prices,

operational difficulties, the agricultural economy, and

competition were the most frequently mentioned pro blems that managers of marketing cooperatives faced.

The literature suggest that small-scale fruit and

vegetable cooperatives in the Northeast struggle with

a wide range of issues, but still have the potential to

o ffer crucial benefits to farmers and rural areas. Few

studies have provided detailed descriptive analyses of

small-scale cooperatives' managers and members in

the Northeast, or have pointed to practical solutions to

cooperative problems through improving re g i o n a l

i n t e r-cooperative re l a t i o n s .

M e t h o d s

For the purposes of this study, “small-scale” fru i t

and vegetable marketing cooperatives are defined

operationally as member-owned marketing businesses

with $10 million in sales per year or less. The

“Northeast U.S.” was defined as the six states of New

England as well as New York, Pennsylvania, New

J e r s e y, West Vi rginia, Delaware, and Maryland. A base

list of cooperatives was generated by the USDA Rural

Development-Cooperative Programs from data collected in its annual census of cooperatives in the U.S. in

1999. Through networking with cooperative managers

and other key informants, several additional marketing cooperatives were added to this list.

To get the most complete information about the

cooperatives, we created three survey instruments: one

each for managers, directors, and members. We followed generally accepted survey pro c e d u res modified

f rom Dillman (1978). An advisory committee comprised of cooperative managers and technical assistance providers worked with the investigators in

developing and testing the questionnaires. Prior to

conducting the surveys we received a formal re v i e w

and approval from the Cornell University Committee

on Human Subjects. We provided assurances to

respondents that their identities would be kept confidential and that completing the survey would pose

minimal risk for the cooperative or individual members to be harmed or embarrassed.

Cooperative managers were first contacted by

phone for the dual purposes of ensuring that their

cooperatives qualified for the study, and of re c ru i t i n g

4
5

managers to assist with surveying their directors and

members. A questionnaire was then sent to managers,

accompanied by a cover letter explaining the study,

with a follow-up reminder postcard sent a week later.

A second mailing was sent to those who did not

respond in the first wave. Follow-up calls were made

to managers whose questionnaires were not complete.

In addition to the questionnaires, we requested copies

of financial documents of the previous year (1998),

including operating statements and a balance sheet.

We asked managers for the entire mailing list of their

cooperative members, and one director was re c ru i t e d

f rom each cooperative. Member and director surveys

w e re conducted in 1999 and 2000, using similar pro c ed u res as for managers.

The data were entered and verified using the

SPSS Data Entry package. As a basis of comparison to

aid in descriptive analysis; cooperatives, members,

and managers were broken down into the following

t y p e s :

Limitations of Methods

The value and accuracy of the data in this study

rely on participants' willingness to divulge business

and personal information. We believe the information

reported by the respondents to be reasonably accurate.

We acknowledge the possibility that some re s p o n d e n t s

either did not have accurate information about their

cooperatives or farms, or did not wish to provide accurate information. In our experience, however, most

reluctance to disclose information has been overc o m e

by emphasizing the value of the resulting study and

by providing written assurances that participants'

identities will not be re v e a l e d .

A second limitation to the accuracy of the data is

data interpolation. In some instances we asked re s p o ndents to categorize their response (e.g., selecting a

given sales category for their cooperative). This is done

sometimes to encourage respondents to provide some

information that might be considered pro p r i e t a r y. To

calculate the means of such data we assumed the

response to be the midpoint of the category, knowing

that the real number could be above or below that

number within the given range of the category.

A third limitation to the accuracy of the data is

subjectivity of the investigators. In several instances

we asked open-ended questions. It is possible that

responses to these questions could have been misinterp reted. We attempted to minimize this problem by

having more than one individual review and code the

d a t a .

Results and Discussion

Response Rates

In collaboration with the USDA Rural BusinessCooperative Service we compiled an initial list of 49

small-scale fruit and vegetable businesses presumed to

be cooperatives. Of these, we determined by phone

that 35 firms qualified as being cooperatives with

annual sales volume of $10 million or less in the pre v ious year (1998). Of the 35 qualifying cooperatives, 29

managers responded to our mailed survey, for a

response rate of 82.9 percent (see Table 4).

We asked each responding manager to identify a

d i rector to whom we could send the directors' quest i o n n a i re. Not all responding cooperatives had dire ctors, nor were all managers comfortable in sharing

d i rectors' contact information. Sixteen directors of the

26 cooperatives with boards responded to our dire ctors' survey. We had a similar experience with managers in surveying members. Nineteen of the 29 cooperatives provided their membership lists, yielding a

total of 592 members. Of this sample, 273 responded to

our mailed questionnaire _ for a response rate of 46

p e rcent. Of these, however, 47 were not members of

their cooperative in 1998, and so only 226 finally qualified for the analysis.

Sample Bias

We are generally satisfied that this sample re p resents the population of small-scale fruit and vegetable

cooperatives in the Northeast. The mean income of

small-scale grower cooperatives in our study ($1.77

million) was comparable to the mean income re p o r t e d

F ruit Cooperative

Vegetable Cooperative

Mixed Cooperative

Manager Ty p e

P a i d

Volunteer

<$500K in Sales

<$500K in Sales

Farm Ty p e

Primary

O c c u p a t i o n

P a r t - t i m e

R e t i re d

Cooperative Products Cooperative Sales

Vo l u m e
by cooperatives in the USDA's national cooperative

survey data for 1999 ($1.66 million). We were able to

get 14 of 16 (87 percent) known small-scale fruit cooperatives to respond, as well as 7 of 8 (87.5 perc e n t )

known mixed cooperatives (Table 5).

H o w e v e r, only 4 of 11 known vegetable cooperatives (36 percent) participated in the study.

F u r t h e r m o re, our sample may under- re p resent cooperatives in the larger sales categories (between $5 and

$10 million); according to the USDA annual survey of

cooperatives, there were four cooperatives in this category in 1999, but only two participated in our study.

Given these potential limits to generalizability, we

have been prudent in how we reported the data, and

we encourage others to exercise caution about overgeneralizing (especially about vegetable cooperatives)

while interpreting or reporting the re s u l t s .

The breakdown of cooperatives in the sample by

state location (Table 6) reveals that only half the states

in the Northeast have small-scale cooperatives re p resented. Maine and New York tied for the most cooperatives (7), quite likely because of their relatively larg e

f ruit and vegetable industries.

The following three sections provide selected

results from the manager, dire c t o r, and member surv e y s .

6

Table 4—Response Rate and Final Sample Count by Survey

# of respondents Response rate # used in analysis

Manager survey 29 of 35 82.9% 25

Director survey 16 of 26 62.0% 16

Member survey 273 of 592 46.0% 204

Table 6—Cooperative Type by State

State of Location

______________________________________________________________________________

Cooperative type MA ME NJ NY PA VT Total

Fruits 1 5 2 4 1 1 14

Vegetable 1 1 1 1 4

Mixed 1 1 1 2 1 1 7

Table 5—Number of Cases by Cooperative Type

Cooperative # Providing # Members

type # in NE (99) # in Sample membership responding

Fruit 16 14 (87.0%) 8 141

Vegetable 11 4 (36.0%) 4 26

Mixed 8 7 (87.5%) 5 57

Total 35 25 (71.5%) 17 204
SECTION 1 General Characteristics of

Small-Scale Grower Cooperatives in the 

N o r t h e a s t

The Northeastern small-scale fruit and vegetable

cooperatives in the study averaged slightly less than

50 members, and only 2 full-time year- round employees (Table 7). The average sales were appro x i m a t e l y

$1.77 million per cooperative: vegetable cooperatives

averaged $2.77 million, fruit cooperatives averaged

$1.86 million, and mixed cooperatives averaged $1

million. About one-third (32 percent) marketed org a n i c

p roducts. Most (80 percent) were incorporated and

had formal boards of directors (87.5 percent). Tw o -

t h i rds (64 percent) had paid managers (including all of

the incorporated cooperatives).

Half of small-scale fruit cooperatives had volunteer managers. Perhaps this is because they tend to

specialize in only one or two crops and then sell to re latively few buyers, and were able to keep their management stru c t u re simple and informal. Fruit cooperatives were also the least likely to be organic, perh a p s

because of the challenges of growing organic fru i t s .

Small-scale vegetable cooperatives that re s p o n ded (4) are older and larger than other small-scale cooperatives in the region, averaging three times the age of

mixed cooperatives and twice the median size in total

a c reage committed to production of fruit cooperatives.

Not surprisingly, they also reported more full-time,

y e a r- round employees.

On average, mixed cooperatives a re the youngest

of the cooperative types, averaging just about 15 years

old. Their mean membership size is about on par with

the other cooperative types, but the acreage committed

to production is a fraction of the others. Mixed cooperatives, however, tended to be more likely to deal in

o rganic products (57.1 percent). They are also more

diverse in their product offerings than were the other

types of cooperatives, handling an average of over 80

c rops in a season.

7

Table 7—Responding Cooperative General Characteristics

# Full-time, Total acreage

Means sales, Years # Members year-round committed to # of crops % with paid

Cooperative 1998 Operating in 1998 workers product, 1998 handled # (%) cooperative

type (millions of $) (mean) (mean) (median) (median) (mean) organic manager

Fruit 1.86 33.8 39.0 1.0 650.0 1.4 3 (21.4) 50.0

Vegetable 2.77 43.8 71.8 3.0 1,200.0 40.5 1 (25.0) 75.0

Mixed 1.00 14.9 49.9 1.0 95.0 83.7 4 (57.1) 85.7

Figure 1—Distribution of Responding Cooperative Sales
Small-Scale Fruit and Vegetable Cooperative

S a l e s

Tw e n t y - t h ree of 25 cooperatives responding had

sales under $5 million, and 12 cooperatives were under

$500,000 in annual sales. Only two cooperatives had

sales between $5 million and $10 million. This distribution of cooperative sales volume compares favorably

with USDA Rural Development survey data on similar

c o o p e r a t i v e s .

Small-scale cooperatives were, however, bro a d l y

distributed across sales categories under $5 million,

with the most frequent categories being $100,000 to

$499,000 (32 percent) and $1.5 million to $4.9 million

(28 perc e n t ) .

Organizational Structure and Planning

Eighty percent of the cooperatives were incorporated, and 87.5 percent had boards of directors. Only 4

of 25 cooperatives (16 percent) reported that they had

conducted feasibility studies or business plans during

cooperative start-up (Table 9). Likewise, only about

one-quarter (6 of 25) currently had strategic plans.

H o w e v e r, several managers were unsure about their

o rganizational planning activities at start-up because

their cooperatives were formed before their tenure s .

Cooperative Marketing Channels

Cooperatives in the study utilized a fairly narro w

set of marketing channels (Table 10). One-third (36 percent) employed multiple strategies. Fruit cooperatives

used a wide range of marketing channels, including

selling directly to a processor or packing house, or hiring a sales agent to do the same; vegetable cooperatives tended to use a combination of their own sales

s t a ff and sales agents who work on commission; mixed

cooperatives generally had managers who did most of

the marketing activities, such as sales calls to re s t a urants and supermarkets.

8

Table 8—Cooperative Sales Volume

1998 sales (% within product type)

__________________________________________________________________________________________________

Cooperative

type Less than $99,999 $100K to $499K $500K to $1.49M $1.5M to $4.9M $5M and over Total

Fruit 3 (21.4) 4 (28.6) 1 (7.1) 5 (35.7) 1 (7.1) 14 (100.0)

Vegetable 1 (25.0) 1 (25.0) 1 (25.0) 1 (25.0) 4 (100.0)

Mixed 3 (42.9) 3 (42.9) 1 (14.3) 7 (100.0)

Total 4 (16.0) 8 (32.0) 4 (16.0) 7 (28.0) 2 (8.0) 25 (100.0)

Table 9—Organizational Structure and Strategic Planning by Cooperative Type

Number and percent of cooperative

________________________________________________________________________________________________

Cooperative Have board Have a Conducted Prepared a

type Incorporated of directors strategic plan feasibility study business plan

Fruit 10 (71.4) 11 (84.6) 2 (33.3) 3 (21.4) 3 (21.4)

Vegetable 4 (100.0) 4 (100.0)

Mixed 6 (85.7) 6 (85.7) 4 (66.7) 1 (14.3) 1 (14.3)

Total 20 (80.0) 21 (87.5) 6 (24.0) 4 (16.0) 4 (16.0)
Trade Area and Market Share Tr e n d s

Almost half of small-scale fruit and vegetable

cooperatives considered the entire Northeast region to 

be part of their trade area (Table 11). Fruit cooperatives

had the largest trade areas, including “Northeastern

regional,” “national,” and “export” markets. Ve g e t a b l e

cooperatives, on the other hand, tended to have multistate markets. Reflecting their size diversity, some

mixed cooperatives' trade areas were split between

substate regional (e.g., multicounty), while others cove red the Northeast re g i o n .

Managers were asked to characterize their cooperatives' market share trends, using “gro w i n g , ”

“declining,” “stable,” or “not sure” to describe their

co-ops’ share of total wholesale fruit and vegetable

sales in their trade area. On the whole, less than half

the cooperatives reported having growing market

s h a res (Table 12). However, while vegetable and fru i t

cooperatives showed varying trends, most mixed

cooperatives (5 of 6 responding) reported having a

g rowing market share .

Sales Tr e n d s

Over half of the respondents (54.5 percent) indicated that their sales are increasing, including three of

four vegetable cooperatives (Table 13). Nine of 22

respondents (40.9 percent) however reported declining

or unstable sales.

As one would expect from the analysis of market

s h a re and sales trends, cooperatives with incre a s i n g

market share tended to have increasing sales.

C o n v e r s e l y, those with declining market share tended

also to have declining or unstable sales.

Seasonality of Cooperative Sales

Managers were asked to report the months of the

year that they were selling products. Figure 2 depicts

the mean percentage of cooperatives actively selling

p roducts during each month. The data suggests mixed

cooperatives are more active through the year than

either fruit or vegetable cooperatives. Most vegetable

cooperatives were selling from midsummer thro u g h

the fall, while fruit cooperatives' sales peak in late

s u m m e r. This is probably due to the quick harvest and

sale of fruit products at their peak of quality and

ripeness. Several cooperatives brought in complementary products (such as shellfish, flowers, and citrus) to

meet customer needs during the winter and to maintain a cash flow that supported their cooperative staff .

Small-Scale Cooperative Competitive

A d v a n t a g e s

A c c o rding to 83.3 percent of responding managers, “quality” was the single strongest competitive

advantage their cooperatives had, followed by “service” (58.3 percent) and “products off e red” (54.2 percent) (Table 14). Almost three-quarters (71.4 percent) of

mixed cooperatives indicated that they benefited fro m

being “locally based.”

9

Table 10—Marketing Channel by Cooperative Type

Type of Marketing Channel

_____________________________________________________________________________________________

Cooperative

type Direct wholesale Sales agent Multiple Processor Total

Fruit 1 (7.1) 5 (35.7) 4 (28.6) 4 (28.6) 14 (100.0)

Vegetable 1 (25.0) 3 (75.0) 4 (100.0)

Mixed 4 (57.1) 1 (14.3) 2 (28.6) 7 (100.0)

Total 5 (20.0) 7 (28.0) 9 (36.0) 4 (16.0) 25 (100.0)

Table 11—Trade Area Geography

Trade area Number (% share)*

Local (county or adjacent counties) 6 (24.0)

Regional (multicounty area) 7 (28.0)

Statewide 6 (24.0)

Multistate (two or more states) 9 (36.0)

Northeast region 11 (44.0)

Other US regions 2 (8.0)

USA 6 (24.0)

Export 3 (12.0)

*Respondents could indicate more than one trade area
Growth Strategies

Roughly three-quarters of the cooperatives (72

p e rcent) reported having some type of growth strategy

(including downsizing); however, seven fruit and vegetable cooperatives (no mixed) indicated they do not

m e a s u re growth at all. Seventy-one percent of mixed

cooperatives, on the other hand, reported “aggre s s i v e ”

g rowth strategies. Most cooperatives that had gro w t h

goals were meeting them.

Growth Goals

About 70 percent of cooperatives reported that

they were achieving their growth goals (whatever

those might be). A larger share of mixed cooperatives

indicated they were achieving their growth goals, as

did a larger share of cooperatives with sales gre a t e r

than $500,000.

10

Table 13—Sales Trends

Sales trend category

(% within market share)

_____________________________________________________________________________________________

Cooperative type Increasing Stable Declining or unstable Total

Fruit 6 (50.0) 6 (50.0) 12 (100.0)

Vegetable 3 (75.0) 1 (25.0) 4 (100.0)

Mixed 3 (50.0) 1 (16.7) 2 (33.3) 6 (100.0)

Market share

Declining 1 (20.0) 4 (80.0) 5 (100.0)

Stable 4 (44.4) 1 (11.1) 4 (44.4) 9 (100.0)

Growing 6 (85.7) 1 (14.3) 7 (100.0)

Not sure 1 (100.0) 1 (100.0)

Total 12 (54.5) 1 (4.5) 9 (40.9) 22 (100.0)

Note: Only 22 of 25 cooperatives managers answered this question.

Table 12—Market Share Trends

Market share trends in trade area

(% within Cooperative type)

_____________________________________________________________________________________________

Cooperative

type Growing Declinning Stable Not sure Total

Fruit 4 (30.8) 4 (30.8) 5 (38.5) 13 (100.0)

Vegetable 1 (25.0) 1 (25.0) 1 (25.0) 1 (25.0) 4 (100.0)

Mixed 5 (83.3) 1 (16.7) 6 (100.0)

Total 10 (43.5) 5 (21.7) 7 (30.4) 1 (4.3) 23 (100.0)

Note: Only 23 of 25 cooperative managers answered this question.
Sources of Information and Te c h n i c a l

A s s i s t a n c e

Small-scale fruit and vegetable cooperatives

reported using a wide range of information and technical assistance sources. The leading source of help

was from Cooperative Extension (68 percent), followed

by accountants (52 percent) and publications (40 percent). Mixed cooperatives, additionally, reported a

g reater use of “other cooperatives” (71.4 perc e n t ) .

Accounting Software Utilization

Managers were asked to describe the accounting

information management software they use. Table 20

shows that “off the shelf” accounting software was

used most commonly by the 16 cooperatives re p o r t i n g

using software .

11

Figure 2—Cooperative Sales by Month and Type

Table 14—Competitive Advantages Reported by Cooperative Type

Competitive advantages (% within cooperative type)

_______________________________________________________________________________________________

Cooperative Being locally

type Quality Service Products offerrd based Price Size

Fruit 9 (69.2) 5 (38.5) 5 (38.5) 2 (15.4) 2 (15.4) 1 (7.7)

Vegetable 4 (100.0) 3 (75.0) 2 (50.0) 1 (25.0)

Mixed 7 (100.0) 6 (85.7) 6 (85.7) 5 (71.4) 2 (28.6) 2 (28.6)

Total 20 (83.3) 14 (58.3) 13 (54.2) 7 (29.2) 4 (16.7) 4 (16.7)

Note: Managers could report more than one advantage.

0

10

20

30

40

50

60

70

80

90

100

Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.

% of co-ops selling

Fruit

Vegetable

Mixed

Fruit

Vegetable

Mixed
12

Table 15—Growth Strategies by Cooperative Type

Describe cooperative’s growth strategy (% within product type)

_________________________________________________________________________________________________

Cooperative does Does not measure

Cooperative Grow at level of Plans to not measure growth, plans to

type Aggressive Moderate inflation downsize growth downsize

Fruit 3 (21.4) 3 (21.4) 2 (14.3) 1 (7.1) 4 (28.6) 1 (7.1)

Vegetable 1 (25.0) 1 (25.0) 2 (50.0)

Mixed 5 (71.4) 2 (28.6)

Total 8 (32.0) 6 (24.0) 3 (12.0) 1 (4.0) 6 (24.0) 1 (4.0)

Cooperative

achieving

growth goals 7 (43.8) 5 (31.3) 2 (12.5) 2 (12.5)

Table 16—Growth Goals Achievement

Cooperative is achieving growth

goals

(% of category)

_________________________________________

Cooperative type Yes No Total

Fruit 8 (61.5) 5 (38.5) 13 (100.0)

Vegetable 2 (66.7) 1 (33.3) 3 (100.0)

Mixed 6 (85.7) 1 (14.3) 7 (100.0)

Total 16 (69.6) 7 (30.4) 23 (100.0)

Sales category

<$500K 6 (60.0) 4 (40.0) 10 (100.0)

>$500K+ 10 (76.9) 3 (23.1) 13 (100.0)

Total 16 (69.6) 7 (30.4) 23 (100.0)

Note: only 23 of 25 cooperative managers answered this question.
SECTION 2 General Characteristics of

M a n a g e r s

Cooperative Manager Characteristics

Managers were asked about their personal characteristics and experiences. As Table 21 shows, smallscale cooperative managers can be generally characterized as highly educated middle-aged males with more

than a decade of experience (paid managers, 14.5

years; volunteer managers, 8.8 years). Over half of the

managers (56.5 percent) had previous cooperative

experience before taking their current positions.

Cooperative Manager Strengths and We a k n e s s

“Human relations” and “organization” were top

s t rengths reported by managers (Table 22). Only two

reported having strong “financial” and

“marketing/sales” skills. Paid and unpaid managers

displayed diff e rent skill sets. Perhaps because they

deal with one crop and few markets, fruit cooperatives

tended to have volunteer managers.

P e rhaps because so many were volunteers, a

t h i rd of fruit cooperative managers reported needing

to improve their delegation and organization skills

( Table 23). Few managers overall indicated diff i c u l t y

with marketing and finances. There were no significant

d i ff e rences between paid and volunteer managers in

p e rceived need for management impro v e m e n t s .

Manager Level of Personal Fulfil l m e n t

Cooperative managers, across cooperative types,

generally felt positive about their experiences (only

one reported a “low” level of fulfillment). Paid managers, however, reported a higher level of fulfillment

than volunteers.

13

Table 17—Information and Technical Assistance

# of cooperatives receiving assistance from sources (% within cooperative type)*

__________________________________________________________________________________________________

Cooperative Cooperative Other Other

type Extension Accountants Publications Consultants cooperatives Universities Attorneys organizations

Fruit 9 (64.3) 8 (57.1) 6 (42.9) 6 (42.9) 3 (21.4) 5 (35.7) 4 (28.6) 3 (21.4)

Vegetable 3 (75.0) 2 (50.0) 1 (25.0) 1 (25.0) 1 (25.0) 1 (25.0)

Mixed 5 (71.4) 3 (42.9) 3 (42.9) 1 (14.3) 5 (71.4) 1 (14.3) 1 (14.3) 1 (14.3)

Total 17 (68.0) 13 (52.0) 10 (40.0) 8 (32.0) 8 (32.0) 7 (28.0) 6 (24.0) 4 (16.0)

*Cooperative managers could report more than one source.

Table 18—Accounting Software Utilization

Accounting Software # Using Notes

Off the shelf 11 Off-the-shelf software in use includes Peachtree, Microsoft

Excel, Quicken, QuickBooks 99, Mind Your Own Business, and

SBT Accounting.

Custom 4 Custom software is generally designed by a software engineer

for a particular cooperative client.

Specialized 1 Commercially available programs specifically for produce

handlers: Granite State Software.
14

Table 20—Management strengths 

Management strengths (% within product type)

____________________________________________________________________________________________________

Cooperative Human Marketing/

type relations Organization Versatility Finances sales Commitment Other Total

Fruit 4 (33.3) 4 (33.3) 2 (16.7) 1 (8.3 1 (8.3) 2 (100.0)

Vegetable 1 (25.0) 1 (25.0) 2 (50.0) 4 (100.0)

Mixed 2 (28.6) 1 (14.3) 1 (14.3) 1 (14.3) 2 (28.6) 7 (100.0)

Manager type

Paid 5 (33.3) 1 (6.7) 3 (20.0) 2 (13.3) 1 (6.7) 1 (6.7) 2 (13.3) 15 (100.0)

Volunteer 2 (25.0) 4 (50.0) 1 (12.5) 1 (12.5) 8 (100.0)

Total 7 (30.4) 5 (21.7) 3 (13.0) 2 (8.7) 2 (8.7) 1 (4.3) 3 (13.0) 23 (100.0)

Table 21—Needed Management Improvements

Improvements needed reported by management (% within product type)

____________________________________________________________________________________________________

Marketing/ Communi- Having

Manager type Delegation Organization sales Finances cation less to do Other* Total

Paid 4 (28.6) 2 (14.3) 1 (7.1) 2 (14.3) 1 (7.1) 4 (28.6) 14 (100.0)

Volunteer 2 (25.0) 2 (25.0) 2 (25.0) 1 (12.5) 1 (12.5) 8 (100.0)

Cooperative

type

Fruit 4 (33.3) 2 (16.7) 2 (16.7) 1 (8.3) 3 (25.0) 12 (100.0)

Vegetable 1 (33.3) 1 (33.3) 1 (33.3) 3 (100.0)

Mixed 1 (14.3) 2 (28.6) 1 (14.3) 1 (14.3) 2 (28.6) 7 (100.0)

Total 6 (27.3) 4 (18.2) 3 (13.6) 2 (9.1) 1 (4.5) 1 (4.5) 5 (22.7) 22 (100.0)

* “Other” includes education (general and computer), and how to create interest among farmers.

Table 19—Cooperative Manager Demographics

Cooperative manager characteristics

_____________________________________________________________________________________________

% With previous

Age % Having some Years as manager cooperative

(mean) % Male college (mean) experience

All cooperatives 48.4 84.0% 92.0% 12.5 56.5%
Managers' Potential Long-Term Opportunities

with the Cooperative

Managers were asked to describe their potential

long-term opportunities with their respective cooperatives. These responses were coded as “good,” “uncertain,” or “poor.” Despite reasonable levels of fulfillment, 88 percent of managers reported that their

long-term opportunities with the cooperative were

“uncertain” or “poor” (Table 23). Only 3 of 25 managers (all paid managers) indicated that their opportunities in the long term were “good.” Paid managers

w e re more likely to report “good” long-term opportunities than volunteers. No mixed cooperative managers felt “good” about their futures with their coopera t i v e .

Future Management/Employment Goals

Managers were asked about their future goals.

Over half (52 percent) indicated that they wanted to

see some type of growth (e.g., in sales, profits, or market share). However, more than one-third (36 perc e n t )

reported that they planned to leave their position (and,

in one case, already had done so). Half of the paid

managers and nearly forty-three percent each of fru i t

and mixed cooperatives were preparing to leave.

SECTION 3 General Characteristics of

M e m b e r s

Cooperative Member Characteristics

Members of small-scale grower cooperatives in

the Northeast can be categorized in several useful

ways: by the type of product they produce (e.g., fru i t ,

vegetables, mixed produce), by the status of the operator (e.g., primary occupation, part-time and re t i re d ) ,

and by the self-reported level of sales to their cooperative (e.g., above average, about average and below

average). Table 25 presents a typology of Northeastern

small-scale fruit and vegetable cooperative members.

Primary and part-time fruit cooperative members re presented the largest share of re s p o n d e n t s .

Overall, farming is the primary occupation of

over half (54.5 percent) of the cooperative members

( Table 25). This compares with 50.3 percent of the principal farm operators of the U.S. farm population in

1997 and 57.5 percent in 2002 (USDA Census of

A g r i c u l t u re). Vegetable and mixed product cooperatives have members whose primary occupation is

farming. Fruit cooperatives, however, tended to have

m o re members who were re t i rement and part-time

p roducers than either vegetable or mixed cooperatives.

This is likely because fruit operations are usually a single perennial crop, which may re q u i re less management eff o r t .

15

Table 22—Level of Manager Fulfillment

Level of fulfillment by co-op type

______________________________________________________________________________________________

Cooperative type High Medium Low Total

Fruit 3 (23.1) 10 (76.9) 13 (100.0)

Vegetable 1 (25.0) 2 (50.0) 1 (25.0) 4 (100.0)

Mixed 2 (40.0) 3 (60.0) 5 (100.0)

Manager type

Paid 5 (38.5) 8 (61.5) 13 (100.0)

Volunteer 1 (11.1) 7 (77.8) 1 (11.1) 9 (100.0)

Total 6 (27.3) 15 (68.2) 1 (4.5) 22 (100.0)
16

Table 23—Manager's Long-Term Opportunities with Cooperative

Manager's long-term opportunities with

cooperative

______________________________________________________________________________________________

Manager type Good Uncertain Poor Total

Paid 3 (18.8) 9 (56.3) 4 (25.0) 16 (100.0)

Volunteer 6 (66.7) 3 (33.3) 9 (100.0)

Cooperative type

Fruit 2 (14.3) 7 (50.0) 5 (35.7) 14 (100.0)

Vegetable 1 (25.0) 2 (50.0) 1 (25.0) 4 (100.0)

Mixed 6 (85.7) 1 (14.3) 7 (100.0)

Total 3 (12.0) 15 (60.0) 7 (28.0) 25 (100.0)

Table 24—Management Future Goals

Management future goals

_______________________________________________________________________________________________

Growth oriented Stepping down Status quo Total

Cooperative type

Fruit 6 (42.9) 6 (42.9) 2 (14.3) 14 (100.0)

Vegetable 3 (75.0) 1 (25.0) 4 (100.0)

Mixed 4 (57.1) 3 (42.9) 7 (100.0)

Manager type

Paid 8 (50.0) 8 (50.0) 16 (100.0)

Volunteer 5 (55.6) 1 (11.1) 3 (33.3) 9 (100.0)

Total 13 (52.0) 9 (36.0) 3 (12.0) 25 (100.0)

Table 25—Occupations of Members

Farm type

_______________________________________________________________________________________________

Cooperative

type Primary occupation Part-time Retirement Total (202)

Fruit 43.2% 38.1% 18.7% 100% (139)

Vegetable 80.8% 11.5% 7.7% 100% (26)

Mixed 78.4% 21.6% 100% (37)

Total 54.5% (110) 31.7% (64) 13.9% (28) 100.0% (202)*

* Two respondents did not indicate their farm type, making the total 202 instead of 204.
Averaging about 55 years, cooperative members

reported being about the same age as American farmers overall. Retirement farmers tended to be slightly

m o re female (at 14.3 percent) than other cooperative

types, although women re p resent less than 10 perc e n t

of the total cooperative member population. On the

whole, cooperative members tended to be white, but

the blueberry cooperatives of Maine did have a small

Native American membership. Part-time cooperative

members were the most educated, with almost 62 percent attaining at least “some college.” Less than half of

primary farmers spent any time in college, and, perhaps reflecting generational diff e rences, less than a

quarter of re t i rees have college experience.

Member respondents for whom farming was

their primary occupation reported considerably more

workers (e.g., employees and laborers) than did the

other types of members (Table 27). The average

respondent had been a member for 17.4 years. The

mean number of miles to delivery point was 38,

although primary-occupation farmers traveled an

average of 56.6 miles. Primary-occupation farms also

had significantly greater acreage in farm crops and

farm gross receipts than other cooperative members.

For more member business characteristics by farm and

co-op type, see (Appendix I).

Cooperative Share of Member Farm Sales

On the whole, Northeastern cooperative members generated almost two-thirds (64.4 percent) of their

farms sales through their cooperatives (Table 28). Fru i t

p roducers utilized their cooperatives for sales (77 percent) far more than vegetable (41.2 percent) and mixed

cooperative members (33.2 percent). With a gre a t e r

variety of products, vegetable and mixed cooperative

members utilized a more diverse array of marketing

outlets and strategies, such as retailing and dire c t

wholesaling to restaurants and small gro c e r s .

Likewise, primary-occupation cooperative members relied significantly less on their cooperatives (54.2

p e rcent) than did those of other farm types, and more

on other marketing options.

Members' Best Marketing Channel

Only 61 percent of respondents reported their

cooperatives as their “best” marketing outlets (Ta b l e

29). Members of fruit cooperatives, re t i red and parttime farmers were more likely than vegetable and

mixed cooperative members and primary-occupation

farmers to think of their cooperatives as their “best”

marketing channel.

Cooperative Membership Contribution to

Farmers and Families

To ascertain how and to what degree the cooperatives contributed to the viability of farms and farm

families, we asked the members about their sales volume; the proportion of their farm sales that come fro m

their cooperatives; how satisfied they were with the

cooperative; and the degree to which their cooperative

p rovided them a given range of benefits. We chose not

to directly ask cooperative members their volume of

sales through their cooperatives. Instead, we asked

members to report their total farm sales and the percent of farm sales through their cooperative. We

assumed that this computation would yield more

financial data than if we asked for their sales dire c t l y.

17

Table 26—Demographic Characteristics of Members

Demographic characteristics

____________________________________________________________________________________________________

Household

# Respon- income % % Income

Member type dents % of Total Mean age (years) % Female % White % College <$80,000 from farming

Retirement 28 13.9 69.25 14.3 88.9 22.2 88.4 29.25

Part-time 64 31.6 53.98 9.7 96.7 61.7 79.7 15.34

Primary

occupation 110 54.5 52.36 8.6 97.2 47.6 67.6 80.58

All 202 100.0 55.31 9.7 95.9 48.5 74.5 54.32
Co-op Member Sales Vo l u m e

O n e - h u n d red and thirty-six of 204 re s p o n d i n g

cooperative members reported their total farm sales

and percent of sales through their cooperatives (Ta b l e

30). Responding cooperative members reported an

average of $151,552 in sales through their cooperative

in 1998, which is quite large compared to the average

farm sales of all fruit and vegetable farmers in the

Northeast. The average vegetable farm in the re g i o n

generated $49,817 in sales in 1997, while the average

Northeast fruit farm generated $68,988 in sales (estimated from USDA Census of Agriculture). However,

half the respondents reported sales through their cooperative at less than $31,250. The lower median sales

suggest that there were a number of respondents with

relatively high sales skewing the mean.

Mixed cooperative members reported significantly lower sales through their cooperatives than either

vegetable or fruit cooperative members. Respondents

whose primary occupation was farming sold signifi18

Table 27—Member Business Characteristics by Farm Type

Typology of Northeastern cooperative members

_____________________________________________________________________________________________

Total farm gross

Total workers # of Years Miles to cooperative Farm receipts 1998

Farm type (mean) as members delivery point crop acres (# of respondents)

Retirement 5.9 18.4 12.4 54.3 $30,011 (15)

Part-time 8.8 14.1 19.6 39.4 $25,679 (35)

Primary occupation 23.4 19.1 56.6 142.8 $395,116 (77)

Overall Mean 16.4 17.4 38.0 98.6 $250,180 (127)

Table 28—Market Channel by Cooperative and Farm Type

Market channel used

__________________________________________________________________________________________________

% Direct

Cooperative type % Cooperative % Wholesale % Retail wholesale % Other Total

Fruit 77.1 11.9 6.2 1.9 2.3 100.0

Vegetable 41.2 9.4 35.2 14.2 0.0 100.0

Mixed 33.2 28.6 26.3 6.9 4.9 100.0

Total 64.4 14.7 13.6 4.4 2.5 100.0

Farm category

Retirement 74.7 10.8 .0 1.9 12.6 100.0

Part-time 77.8 10.6 2.4 .1 9.0 100.0

Primary occupation 54.2 16.3 6.7 4.1 18.8 100.0

Total 64.5 13.7 4.4 2.5 14.8 100.0
cantly higher levels of farm products through their

cooperatives than did part-time and re t i rement farme r s .

Member Farm Wo r k e r s

An analysis of cooperative members' farm workers (Table 31) shows that an average of 2.27 full-time,

y e a r- round paid workers were supported by each

cooperative member farm. This included family and

non-family employees. On average, another 14.1 paid

and part-time or seasonal family and non-family workers were also supported by the typical small-scale

g rower cooperative member. Most of this employment,

h o w e v e r, was generated by members whose primary

occupation is farming.

19

Table 30—Mean and Median Member Sales by Cooperative Type and Occupation

Member Sales

______________________________________________________________________________________

Cooperative type Mean Number Median

Fruit $156,935 93 $31,250

Vegetable $241,193 21 $26,000

Mixed $52,257 24 $10,000

Total $151,552 138 $26,241

Farm type

Retirement $14,289 17 $8,320

Part-time $15,489 37 $6,500

Primary occupation $244,624 82 $62,900

Total $153,494 136 $26,241

Note: The mean and median statistics for cooperatives sales were computed by multiplying the respondents' reported total gross income for

1998 by their reported percent of total sales through their cooperative.

Table 29—First, Best Marketing Channel for Members by Cooperative and Farm Types

First best sales marketing outlet (% within farm category)

_________________________________________________________________________________________

Cooperative type Cooperative Retail Direct wholesale Wholesale Other Total

Fruit 79 (72.5) 13 (11.9) 5 (4.6) 7 (6.4) 5 (4.6) 109 (100.0)

Vegetable 8 (40.0) 7 (35.0) 4 (20.0) 1 (5.0) 20 (100.0)

Mixed 11 (35.5) 10 (32.3) 3 (9.7) 6 (19.4) 1 (3.2) 31 (100.0)

Farm type

Retirement 13 (68.4) 5 (26.3) 1 (5.3) 19 (100.0)

Part-time 37 (69.8) 6 (11.3) 3 (5.7) 6 (11.3) 1 (1.9) 53 (100.0)

Primary occupation 47 (54.0) 19 (21.8) 9 (10.3) 8 (9.2) 4 (4.6) 87 (100.0)

Total 98 (61.3) 30 (18.8) 12 (7.5) 14 (8.8) 6 (3.8) 160 (100.0)
20

Level of Member Satisfaction with Cooperative

Cooperative members were asked about their

level of satisfaction with their cooperatives. Overall,

m o re than 80 percent were satisfied with their cooperatives. While the level of satisfaction varied somewhat

a c ross diff e rent member characteristics, analysis of

variance indicated that this was not significant except

with re g a rd to the degree a member would be hurt if

the cooperative closed. Table 32 provides the average

level of satisfaction broken out according to member

characteristics (the highest mean level of satisfaction

for each category is in b o l d). The overall mean was

1.09 on a scale of -2 to 2. Among cooperative types,

members of mixed cooperatives reported the highest

level of satisfaction (1.24), followed by fruit cooperative members (1.13) and vegetable cooperative members (.73). However, the data indicate that the most satisfied members were those who would be aff e c t e d

most if their cooperative were to close (e.g., those who

would be out of business (1.57) or hurt considerably

(1.35), members with 1 to 10 acres (1.33), members

with household income of $60-$79,999 (1.33) and $80-

$99,999 (1.27), re t i rement farms (1.29), members with

cooperative sales between $5,000 and $24,999 (1.26),

and farms with 6 to 10 years membership (1.22)).

Small-Scale Cooperative Benefits to Members

We asked members to rate (on a scale of 0 to 3) a

variety of benefits their cooperatives provide. Table 33

p resents the results by cooperative type and farm type.

On the whole, “provides access to markets” (2.55) was

the leading benefit, followed by “enhances farm

income” (2.22). A second tier of benefits included

“ p rovides improved farm viability” (1.97) and “production information” (1.97), “maintains prospects for

the next generation farm” (1.94), and “provides social

support” (1.94). While “provides advantage in purchasing inputs” received the lowest rating (1.81) overall, this benefit was second only to “access to markets,”

a c c o rding to members of vegetable cooperatives.

C o n v e r s e l y, the members of vegetable cooperatives did

not rate “production information” benefits as highly as

members of other types of cooperatives. There were no

statistically significant diff e rences in benefits between

members' farm type.

Computing the mean across all benefit categories

yields a “composite benefit” score for comparison

a c ross member characteristic categories (Table 34). The

overall composite mean is 2.03 (the highest mean level

of satisfaction for each category is in b o l d). Members

who indicated the highest composite benefit from their

cooperative included members who are “involved

heavily” in their cooperative (2.54); members who

would be “hurt considerably” if the cooperative closed

(2.42); members whose household income is $60,000 to

$79,999 (2.48); farms with 1-to-5-year memberships

(2.38); members whose sales to the cooperative are

$100,000 or more (2.33); and farms with 75 percent to

100 percent of their sales to the cooperative (2.28).

How Members Businesses Would Be Affected if

Their Co-ops Closed

In order to measure the relative importance of the

co-op to their farm business, members were asked how

they would be affected by the closure of their cooperative. Overall, over half (50.5 percent) would be hurt

considerably or out of business if their co-op closed. A

l a rger share of fruit co-op members would be hurt or

out of business (55 percent) than either mixed (43.2

p e rcent) or vegetable (36 percent) co-op members.

Part-time and primary-occupation farms felt more vulnerable than did re t i rement farms and members with

limited sales through their co-op.

Cooperative Member Attitudes and Concerns

Cooperative members were asked to rate their

level of agreement with a variety of attitude statements (on a scale of 0 to 2, where 0 = little or none; 1 =

some; and 2 = much). Overall, the highest level of

a g reement was with the following statements: “cooperative tries to obtain highest returns for members”

(1.74); “the cooperative treats all members equitably”

(1.64); and “for a cooperative to succeed, member education is important” (1.56). The least agreement was

with “cooperative benefits only the larger farms” (.16);

“cooperative re q u i res its members to invest too much

equity” (.18); and “cooperative should pay higher

prices to those who deliver large volume of pro d u c t ”

(.19). There were no significant diff e rences in attitudes

by cooperative type or farm type. It should also be

noted that there was support for mergers and joint

v e n t u res especially among fruit and vegetable cooperatives. However, agreement with the idea that the

cooperative provides a good investment alternative to

farmers with limited financial re s o u rces was less than

1 (“some”).

Members' Issues and Concerns

We also asked cooperative members to rate “how

important” various factors were, and “how much need

for improvement” there was for each factor (on a scale

w h e re 0 = little or none; 1 = some; 2 = much). While

reporting that many management factors are important, only the need for “higher prices” and “impro v e d
marketing strategies” were reported as being over 1 in

need for improvement (i.e., between needing “some”

and “much” improvement) (see Table 32, Appendix II).

SECTION 4 Challenges and

O p p o r t u n i t i e s

Challenge Matrix

We asked managers and directors how challenging various issues were. Eleven topics were bro k e n

down into a series of questions with Likert scales (0 to

4). The scale was later collapsed to 0 to 2, with 0 = “no

challenge”; 1 = “some challenge,” and 2 = “great challenge.” Composite means scores were created by averaging the questions for each topic. The results shown

in Table 39 reveal that, in general, vegetable cooperatives, older cooperatives, and cooperatives with paid

managers report a greater level of challenge than other

c o o p e r a t i v e s .

Managers' and Directors' Comparative Analysis

of Challenges

We asked managers and directors to rate the level

of challenge to various management issues. Appendix

III provides the mean responses of managers and

d i rectors, plus the mean for both, and the mathematical diff e rence between the two means. The top challenges were “membership commitment” (1.27) and

“marketing” (1.23). However, marketing was the dire ctors' number-one concern (1.37), followed by strategic

planning (1.29). While “re s o u rce access” was ranked as

the least challenging (.70), it yielded the biggest diff e rence between managers and directors (.44). Dire c t o r s

w e re nearly twice as likely to indicate it was a chall e n g e .

For a more detailed breakdown of the comparative analysis of challenges, see Appendix I. For example, the key membership commitment challenge was

“delivering consistent volume of pro d u c t . ”

Potential Opportunities for the Cooperative

On a scale of 0 to 2, cooperative managers, dire ctors, and members rated their level of interest in a

g roup of potential business strategies for their cooperatives. Table 40 indicates that on the whole, the re s p o ndents thought “cooperatively purchasing supplies,

inputs and/or services” was a potential opportunity

for the cooperative. However, directors' top opportunity was “value-adding” (e.g., processing, packaging,

p roviding product information (1.23)).

Potential For Inter-cooperative Activities

Both managers and members ranked “agre e m e n t

to jointly purchase supplies with other cooperatives”

as the number one inter-cooperative opportunity (see

Table 41). Over half of managers also reported intere s t

in “annual conference,” “pooled liability insurance,”

“joint education and training,” and an “informal

phone network.” Members reported similar levels of

i n t e rest, but half or more of members also expre s s e d

i n t e rest in “joint marketing agreements” and “legislative actions.”

Interest in Joining a Regional Cooperative

F e d e r a t i o n

Managers, directors, and members were asked to

indicate their level of interest in a “regional federation

of cooperatives,” which could implement inter- c o o p e rative activities such as those in Table 42 on page 29.

Overall, about three-quarters of all respondents (75.6

p e rcent) indicated at least qualified interest (see Ta b l e

44). Most indicated they “might be interested if time

21

Table 31—Family and Non-Family Farm Workers on Member Farms

Number of family working Number of non-family working

____________________________________________ ______________________________________________

Paid Paid Unpaid Unpaid Paid Paid Unpaid Unpaid

Farm type full-time part-time full-time part-time full-time part-time full-time part-time

Retirement .38 1.31 .31 .58 .12 4.08 .00 .19

Part-time .17 2.16 .22 .79 .11 6.40 .00 .05

Primary occupation 1.31 1.54 .48 .46 2.52 17.84 .33 .07

Total .83 1.71 .38 .58 1.44 12.42 .18 .08
and money costs were not great” (63 perc e n t ) .

Cooperative directors reported the strongest interest in

participating in a federation.

Summary and Discussion

Cooperative Structure and Organizational

C h a l l e n g e s

The results of our surveys of directors, managers,

and members of 25 small-scale fruit and vegetable

cooperatives in the Northeast United States show that

these businesses vary greatly in organizational stru ct u re: ranging from simple, one-crop, volunteer- m a naged fruit cooperative marketing pools, to pro f e s s i o nally managed cooperatives with several hundre d

members and 250 types of products. The cooperatives

in this sample averaged 47 members, 2 full-time yearround employees, and $1.77 million in sales. Financial

and organizational instability appear to trouble new

and old, and small and large cooperatives, alike.

H o w e v e r, the oldest cooperatives (50 or more years)

report some of the greatest diff i c u l t y. Despite feeling

generally positive about their experience, 88 percent of

managers in this study reported seeing themselves as

having “poor” or “uncertain” futures with their cooperatives, and 36 percent (including mostly paid managers) were planning to leave their positions.

Cooperative Competitiveness and Stability

Many small-scale fruit and vegetable cooperatives perceive their strength as marketing “quality”

p roducts. However, these cooperatives appear on the

whole unpre p a red for the competitive and ever- c h a n ging business environment, and some are not likely to

survive the next 10 years. Less than half of the cooperatives reported having a growing market share, and 41

p e rcent reported declining or unstable sales. Despite

highly educated and experienced managers, a surprising number of cooperatives in the sample neither set

goals nor measured operational performance. Very few

cooperatives pre p a red feasibility studies and business

plans at the start-up of their cooperatives.

F u r t h e r m o re, despite three-quarters reporting having

some type of growth strategy (including downsizing);

only about one-quarter have formal strategic plans.

Membership commitment (e.g., delivering consistent

volume and quality) was ranked as managers' and

d i rectors' number one challenge.

22

Table 32—Level of Satisfaction with Cooperative by

Various Member Categories

Level of satisfaction

__________________________

Count Mean*

Cooperative type

Fruit 141 1.13

Vegetable 26 .7

Mixed 37 1.24

Farm type

Retirement 28 1.29

Part-time 64 1.16

Primary Occupation 110 1.01

Acreage category

1 to 10 acres 41 1.33

11 to 50 acres 70 1.14

51 to 100 acres 36 .94

101 and more acres 54 .94

Farm year category

1 to 5 years 13 1.08

6 to 10 years 16 1.13

11 to 25 years 44 .98

26 to 50 years 64 1.17

51 to 75 years 37 1.08

76 or more years 27 1.07 

Number of years as member

category

1 to 5 years 48 1.19

6 to 10 years 36 1.22

11 to 25 years 52 1.08

26+ years 50 .96

Cooperative sales category

0 to $4,999 36 .77

$5,000 to $24,999 27 1.26

$25,000 to 99,999 41 1.20

$100,000 and above 34 .91

Gross 1998 household

income

Less than $20,000 17 1.18

$20,000 to $39,999 53 1.11

$40,000 to $59,999 44 1.18

$60,000 to $79,999 27 1.33

$80,000 to $99,999 14 1.29

$100,000 and above 34 .76

How would business be

affected if co-op closed

Out of business 7 1.57

Hurt considerably 94 1.35

Hurt some 52 1.10

Minor effect 34 .68

No effect 13 .23

*Level of satisfaction was ranked on a scale of -2 to 2, with -2

meaning “Very dissatisfied;” -1 = “Dissatisfied,” 0 = “Not sure,” 1 =

“Satisfied” and 2 = “Very satisfied.” The closer to the number 2.00,

the higher the level of satisfaction.
Contribution of Cooperative to Family Farmers

Farming is the primary occupation of more than

half (54.5 percent) of the cooperative members. On

average, members generated almost two-thirds (64.4

p e rcent) of their farm sales from their cooperative.

Over 60 percent chose their cooperative as their best

marketing outlet. Member mean sales through the

small-scale fruit and vegetable cooperatives in the

region were $151,551.98 (median = $26,000). Overall,

members reported a high level of satisfaction with

their cooperatives, although members of vegetable

cooperatives were less satisfied than were members of

f ruit and mixed product cooperatives. Members

reported that the leading benefits provided by their

cooperatives were access to markets and enhanced

farm income. Members generally believe their cooperatives try to obtain highest returns and treat all members equitably. Very few believed that their cooperatives benefited only larger farms. However, in general,

members also reported that they wanted to see higher

prices and improved marketing activity. But they also

believe that for cooperatives to succeed, member education is important. Members of vegetable cooperatives in particular believed that their managers and

b o a rdmembers needed improvement. Most members

believe their cooperative membership pro v i d e s

i m p roved farm viability and maintains prospects for

the next generation on the farm to “some” degre e .

Nearly half (47 percent) reported that they would be

“hurt considerably” if their cooperative closed, and

nearly three-quarters claimed they would be hurt “at

least some.”

Opportunities for Collaboration

Most small-scale cooperative managers, members, and directors in the study were interested in

forming a regional federation, especially if the time

and cost were not too great. Cooperatives were particularly interested in shared purchasing of inputs, an

annual conference, regionally pooled liability insurance, joint marketing, and joint education.

Conclusions and Recommendations

This descriptive analysis of small-scale cooperative managers, directors, and members in the

Northeast corroborates previous studies, which highlight the importance of small-scale cooperatives in

i m p roving the livelihoods of family farmers. We did

not explore how members would cope if their cooperatives closed or did not exist, but clearly the above data

suggest that small-scale grower cooperatives on the

whole play a critical role in the sustainability of their

family farm members' businesses and in the welfare of

their families.

23

Table 33—Benefits to Members by Cooperative Type

Member benefit category*

__________________________________________________________________________________________

Maintains

prospects Provides

Provides Enhances Provides for next- Provides advantage in

Cooperative access to farm improved Production generation social purchasing

type markets incomes farm viability information farm support inputs

Fruit 2.43 2.21 2.00 2.14 1.95 1.91 1.66

Vegetable 2.76 2.17 1.88 1.12 2.21 2.08 2.67

Mixed 2.73 2.30 1.95 1.92 1.69 1.95 1.69

Farm type

Retirement 2.29 2.08 1.96 2.23 2.13 2.19 2.17

Part-time 2.39 2.21 1.81 2.00 1.72 1.92 1.78

Primary Occupation 2.70 2.27 2.07 1.90 2.02 1.90 1.75

Total 2.55 2.22 1.97 1.97 1.94 1.94 1.81

* Benefits conferred were ranked on a scale where 0 = none; 1 = a little; 2 = some; and 3 = much.
24

Table 34—Composite Benefit Score by 

Member Category

Benefit Score

Mean

Count Score

Cooperative type

Fruit 141 2.02

Vegetable 26 2.14

Mixed 37 1.97

Farm type

Retirement 28 2.18

Part-time 64 1.90

Primary occupation 110 2.07

Acreage

1 to 10 acres 41 2.20

11 to 50 acres 70 2.13

51 to 100 acres 36 1.79

101+ acres 54 1.91

Number of years as member

1 to 5 years 48 2.38

6 to 10 years 36 2.05

11 to 25 years 52 1.96

26+ years 50 1.82

Percent sales to cooperative

No sales to cooperative 18 1.32

1 to 24% 31 1.65

25 to 49% 22 1.86

50 to 74% 21 2.04

75 to 100% 112 2.28

Cooperative sales

0 to $4,999 36 1.54

$5,000 to $24,999 27 2.17

$25,000 to 99,999 41 1.94

$100,000+ 34 2.33

Gross 1998 household income

Less than $20,000 17 1.89

$20,000-$39,999 53 1.94

$40,000-$59,999 44 2.15

$60,000-$79,999 27 2.48

$80,000-$99,999 14 2.17

$100,000 plus 34 1.76

Farm sales to cooperative

Above average 43 2.22

About average 71 2.23

Below average 70 1.75

Effect on business if cooperative closed

Out of business 7 1.90

Hurt considerably 94 2.42

Hurt some 52 2.01

Minor effect 34 1.35

No effect 13 1.21

Current level of participation in cooperative

Involved very little 79 1.57

Involved moderately 80 2.19

Involved heavily 42 2.54
25

Table 35—How Farm Business Would Be Affected if Co-op Closed, by Co-op Type, Farm Category and Percent

of Sales to Co-op

How farm business would be affected if co-op closed

_________________________________________________________________________________________

Out of Hurt

business considerably Hurt some Minor effect No effect Total

Co-op type

Fruit 5 (3.6%) 71 (51.4%) 35 (25.4%) 21 (15.2%) 6 (4.3%) 138 (100%)

Vegetable 0 (0%) 9 (36.0%) 6 (24.0%) 6 (24.0%) 4 (16.0%) 25 (100%)

Mixed 2 (5.4%) 14 (37.8%) 11 (29.7%) 7 (18.9%) 3 (8.1%) 37 (100%)

Total 7 (3.5%) 94 (47.0%) 52 (26.0%) 34 (17.0%) 13 (6.5%) 200 (100%)

Farm type

Retirement 1 (3.6%) 11 (39.3%) 9 (32.1%) 6 (21.4%) 1 (3.6%) 28 (100%)

Part-time 3 (4.8%) 31 (50.0%) 14 (22.6%) 10 (16.1%) 4 (6.5%) 62 (100%)

Primary Occupation 3 (2.8%) 51 (46.8%) 29 (26.6%) 18 (16.5%) 8 (7.3%) 109 (100%)

Table 36—Member Attitudes and Concerns by Cooperative Type

Cooperative type

________________________________________

Member attitudes and concerns (scale 0 to 2) Fruit Vegetable Mixed Total

Cooperative tries to obtain highest returns for members 1.81 1.59 1.53 1.73

The cooperative treats all members equitably 1.69 1.52 1.51 1.64

For cooperative to succeed, member education is important 1.60 1.57 1.42 1.56

Cooperative management is responsive to member concerns and

suggestions 1.51 1.45 1.66 1.53

Directors listen to member concerns and act in best interests of members 1.50 1.62 1.6 1.53

Members of cooperative have good working relationships with each other 1.50 1.64 1.57 1.53

Members of cooperative fulfill responsibilities conscientiously 1.49 1.33 1.5 1.48

Cooperative has worked to increase volume utilization for my commodities 1.46 1.39 1.31 1.43

I patronize cooperative out of loyalty 1.30 1.24 1.24 1.28

Cooperative should pay higher prices to those who deliver better quality

product 1.22 1.52 1.29 1.27

To stay competitive, cooperative may need to examine mergers or joint

ventures 1.10 1.10 0.69 1.03

Cooperative provides good investment alternative to farmers with limited

financial resources 0.81 0.52 0.69 0.75

I patronize cooperative only if prices are better than other firms 0.42 0.42 0.61 0.45

Cooperative should pay higher prices to those who deliver large volume

of product 0.10 0.73 0.22 0.19

Cooperative requires its members to invest too much equity 0.19 0.14 0.17 0.18

Cooperative benefits only the larger farms 0.10 0.50 0.17 0.16
H o w e v e r, despite the need for and growth of

small-scale cooperatives since the 1980s, this class of

f ruit and vegetable cooperatives is comprised of many

o rganizationally fragile and strategically vulnerable

businesses, and a number of them are not likely to survive without some fundamental changes in org a n i z ation and operation. Like other recent studies, the

results point to lack of member commitment, leadership deficiencies, and poor business planning as the

leading barriers to meeting small-scale cooperative

g rowth goals. These issues must to be aggressively and

satisfactorily addressed for the recent growth of smallscale fruit and vegetable cooperatives to continue.

Similar to Bhuyan et al, (2001), we found that

management and members of small-scale gro w e r

cooperatives had astute observations about each other.

Indeed, the significant polarity of their views on some

issues is quite telling. Management generally sees the

need for members to improve quality and volume of

their products, while members perceive that their

managers need to be more effective sellers. Therein lies

the fulcrum of tension upon which the viability of a

cooperative rests. The vulnerability of small-scale

g rower cooperatives might be measured by how out of

balance the two strategic interests of management and

g rowers are. Should managers become more eff e c t i v e

marketers, and sales and profitability increase, members might become more loyal and consistent suppliers

of quality products. Likewise, should members

i m p rove the quality and volume of their pro d u c t s ,

managers might have increased opportunities to find

markets and increase sales. This is not a chicken-andegg question of which comes first—obviously, smallscale cooperatives must work on these objectives

simultaneously and continually. Managers need to

develop better marketing and financial management

skills, and members need to increase quality and volume. How best to implement these strategic impro v ements becomes the key question.

Of course, small-scale grower cooperatives must

look for direct technical assistance from traditional

s o u rces of information and education such as Land

Grants, cooperative consultants, government agencies,

and publications. However, learning from each other

may simply be the best educational method of all. It

was for this reason that we explored the concept of a

federation of small-scale fruit and vegetable cooperat i v e s .

26

Table 37—Member Attitudes and Concerns by Farm Type

Farm type

________________________________________

Retire- Primary

ment Part-time Occupation Total

(scale 0 to 2)

Cooperative tries to obtain highest returns for members 1.88 1.78 1.67 1.73

The cooperative treats all members equitably 1.72 1.57 1.65 1.64

For cooperative to succeed, member education is important 1.73 1.53 1.53 1.56

Cooperative management is responsive to member concerns and suggestions 1.69 1.47 1.51 1.53

Cooperative has worked to increase volume utilization for my commodities 1.56 1.45 1.37 1.42

I patronize cooperative out of loyalty 1.26 1.11 1.37 1.28

Cooperative should pay higher prices to those who deliver better quality product 0.85 1.25 1.38 1.26

To stay competitive, cooperative may need to examine mergers or joint ventures 1.12 1.03 1.00 1.03

Cooperative provides good investment alternative to farmers with limited financial

resources 0.96 0.90 0.63 0.76

I patronize cooperative only if prices are better than other firms 0.48 0.41 0.48 0.46

Cooperative should pay higher prices to those who deliver large volume of

product 0.12 0.14 0.25 0.19

Cooperative benefits only the larger farms 0.08 0.15 0.18 0.16

Directors listen to member concerns and act in best interests of members 1.65 1.48 1.52 1.53

Cooperative requires its members to invest too much equity 0.08 0.22 0.18 0.18

Members of cooperative fulfill responsibilities conscientiously 1.54 1.47 1.46 1.47

Members of cooperative have good working relationships with each other 1.62 1.51 1.52 1.53
27

Table 38—Issues and Concerns of Members by Farm Type

How much need

How important for improvement

Farm type (0 to 2)* Factor (0 to 2)* Farm type

Retirement 1.83 Higher prices 1.13 Retirement

Part-time 1.92 1.25 Part-time

Primary occupation 1.92 1.29 Primary occupation

Total 1.91 1.26 Total

Retirement 1.14 Improved marketing strategies .76 Retirement

Part-time 1.46 1.02 Part-time

Primary occupation 1.56 1.17 Primary occupation

Total 1.48 1.07 Total

Retirement .95 Better leadership and management skills for .46 Retirement

Part-time 1.27 cooperative manager .63 Part-time

Primary occupation 1.39 .75 Primary occupation

Total 1.30 .67 Total

Retirement 1.00 Better use of information technology .52 Retirement

Part-time 1.31 .98 Part-time

Primary occupation 1.30 .89 Primary occupation

Total 1.27 .87 Total

Retirement 1.00 Better leadership and management skills 62 Retirement

Part-time 1.36 for cooperative board .72 Part-time

Primary occupation 1.26 .74 Primary occupation

Total 1.26 .72 Total

Retirement .86 More voice in cooperative decisions .28 Retirement

Part-time 1.18 .51 Part-time

Primary occupation 1.13 .50 Primary occupation

Total 1.11 .47 Total

Retirement 1.19 More opportunities through the cooperative .83 Retirement

Part-time 1.17 .89 Part-time

Primary occupation 1.05 .72 Primary occupation

Total 1.10 .79 Total

Retirement .71 More encouragement from cooperative to innovate .68 Retirement

Part-time .95 .64 Part-time

Primary occupation 1.04 .78 Primary occupation

Total .97 .72 Total

Retirement .77 More services for members .65 Retirement

Part-time 1.14 .86 Part-time

Primary occupation .88 .63 Primary occupation

Total .95 .71 Total

Retirement .87 Better payment options .35 Retirement

Part-time .96 .42 Part-time

Primary occupation .92 .58 Primary occupation

Total .93 .50 Total

Retirement .61 More dependable distribution of patronage refunds .32 Retirement

Part-time .65 .43 Part-time

Primary occupation .78 .34 Primary occupation

Total .72 .36 Total

Retirement .40 Greater dividend payments .25 Retirement

Part-time .79 .55 Part-time

Primary occupation .71 .47 Primary occupation

Total .70 .47 Total

* Responses were ranked on a scale where 0 = a little or none; 1 = some; 2 = much.
28

Table 39—Cooperative Challenges by [multiple categories] Composite Scores for Each Topic

Cooperative challenge

_______________________________________________________________________________________________

Effective

Member Financial Qualified Manage- Transpor

commit- Shared Strategic Effective manage- manage- ment Informa- tation Resource

ment vision Marketing planning board ment ment teams tion flow issues access

Respondent type

Manager 1.26 1.10 1.09 .93 .90 .84 .83 .77 .75 .66 .48

Director 1.28 1.07 1.37 1.29 1.08 1.20 1.11 .88 1.03 .89 .92

Cooperative type

Fruit 1.23 .93 .77 .83 .79 .73 .67 .75 .64 .50 .39

Vegetable 1.38 1.55 1.70 1.17 1.03 1.00 1.19 1.04 1.25 1.06 .71

Mixed 1.25 1.20 1.37 1.00 1.03 .96 .93 .64 .67 .75 .52

Cooperative age

1 to 9 years 1.18 .88 .90 .77 .89 .78 .52 .70 .63 .65 .28

10 to 49 years 1.19 1.05 1.12 .62 .69 .75 .91 .52 .73 .84 .44

50+ years 1.46 1.49 1.31 1.52 1.13 1.04 1.16 1.14 .93 .46 .81

Sales (1998)

Up to $499K 1.17 1.03 1.03 .81 .74 .81 .53 .56 .75 .88 .28

$500K+ 1.35 1.17 1.14 1.05 1.04 .87 1.10 .96 .75 .46 .67

Manager type

Paid 1.36 1.34 1.28 1.19 1.13 1.02 1.24 1.03 .84 .62 .66

Volunteer 1.08 .69 .76 .48 .47 .53 .10 .31 .59 .72 .17

Number of

members

1 to 24 1.20 .97 1.04 .69 .82 .77 .67 .62 .74 .77 .38

25 or more 1.34 1.27 1.15 1.24 .99 .93 1.02 .95 .77 .52 .61

Cooperative is

achieving goals

Yes 1.17 .92 1.02 .77 .78 .58 .71 .64 .60 .55 .45

Total 1.26 1.10 1.09 .93 .90 .84 .83 .77 .75 .66 .48

Note: The highest composite scores for each challenge category are in boxes.

Table 40—Potential Business or Service Opportunities for the Cooperative

Respondent type

__________________________________________________________

Level of interest cooperative has in...* Manager Director Membe All

Cooperatively purchasing supplies,

inputs and/or services 1.17 1.17 1.19 1.19

Value adding 1.09 1.23 0.98 1.00

Retail sales 0.55 1.00 0.82 0.80

Exporting 0.74 0.54 0.77 0.75

Workshops for members/management 0.59 0.62 0.74 0.72

Member loans 0.23 0.54 0.34 0.34

* Responses were ranked on a scale where 0 = little or no interest; 1 = some interest; 2 = much interest.
Recommendations to Northeastern Fruit and

Vegetable Cooperatives

1 . Invest in management training, especially in the

“ h a rd” skills areas of marketing, accounting,

information management, and member re c ru i tment and member re l a t i o n s .

2 . I m p rove utilization of existing technical assistance re s o u rces to improve strategic planning,

including financial performance benchmarking

and evaluation; increase contact with state-based

USDA cooperative development specialists and

i n c rease participation in existing cooperative

development organizations in the region such as

the Cooperative Development Institute (CDI) and

Keystone Development Center (KDC), and

Cooperation Works!, a national network of cooperative development organizations of which CDI

and KDC are a part. Additional educational and

o rganizational support may come from the

Northeast Cooperative Council (NECC), and the

Mid-Atlantic Alliance of Cooperatives. CDI is

developing networking tools including an interactive cooperative directory for sourcing pro ducts, and an “on-line community network” that

could potentially link cooperative managers and

facilitate peer-to-peer education and information

s h a r i n g .

3 . Consider inter-cooperative activities such as joint

v e n t u res in value-adding, coordinated off - s e a s o n

sales, and coordinated input purchases, which

can potentially improve efficiency and pro f i t a b i l it y.

29

Table 42—Interest in Joining a Cooperative Federation by Respondent Type

Respondent type

(% within respondent type)

______________________________________________________

Interest in joining cooperative federation Manager Director Member Total

Definitely not interested 4.3 0.0 7.0 6.3

Probably not interested 17.4 7.1 18.9 18.1

Might be interested if time and costs were

not great 56.5 64.3 63.7 63.0

Definitely interested 21.7 28.6 10.4 12.6

____ ____ ____ ____

Total 100.0 100.0 100.0 100.0

Table 41—Potential for Inter-Cooperative Collaboration by Manager and Member Response

(Ranked in high to low in order of management response)

Manager Member

(% within (% within

respondent type) Inter-cooperative opportunity to participate in respondent type)

18 (72.0) Agreements to jointly purchase supplies with other cooperatives 151 (74.8)

18 (72.0) Annual conferences for small-scale grower cooperatives in region 117 (57.9)

17 (68.0) Regionally pooled liability insurance for cooperative staff, managers

and members 115 (56.9)

15 (60.0) Joint education and training for managers and members 129 (63.9)

14 (56.0) Informal phone network of managers 81 (40.1)

12 (48.0) Agreements with other cooperatives to jointly market products 128 (63.4)

12 (48.0) Supporting development of new cooperatives in the Northeast 62 (30.7)

11 (44.0) Coordinated boycotting activities or poor credit lists 70 (34.7)

11 (44.0) Joint legislative actions 101 (50.0)

10 (40.0) Development fund with revolving lines of credit for cooperative and/or

members 69 (34.2)
4 . Work to strengthen relationships with core members, especially those members whose primary

occupation is farming.

5 . I m p rove social relationships among managers,

members and directors through org a n i z a t i o n a l

development training/team building workshops.

Consider organizing post-harvest member family

activities to re i n f o rce the social bonds between

members, directors, management and outside

s u p p o r t e r s .

6 . Make more concerted efforts to improve the

salaries and benefits of managers. Impro v e

re c ruitment strategies, provide sales incentives,

and evaluate all cooperative personnel annually.

Consider creating a package of benefits and

incentives for volunteer managers, even modest

ones which are simply more demonstratively

supportive and appre c i a t i v e .

7 . Actively improve member education. Consider at

least biannual third party (outside) training for

new and long-time members to remind them of

their responsibilities and commitments.

8 . Consider strategies that simultaneously incre a s e

prices paid to members and improve cooperative

e ff i c i e n c y, such as paying product quality diff e re n t i a l s .

9 . Invest in upgrading accounting and information

technology which improves efficiency and comm u n i c a t i o n .

1 0 . Take advantage of opportunities to engage with

other marketing cooperatives, re g a rdless of scale

or pro d u c t .

Public Policy Recommendations

1 . Develop a national financial benchmarking initiative for small-scale fruit and vegetable cooperatives to help guide strategic management decis i o n s .

2 . Encourage business-to-business activities such as

strategic alliances between cooperatives in diff e rent climatic regions; fund pilot projects and case

studies of successful inter-cooperative activities.

3 . Encourage inter-cooperative input purchases (via

collaborating with supply cooperatives) to bring

individual cooperative operating costs down.

4 . P rovide programs for business management

training of managers, especially in the area of

marketing, accounting, member relations and

re c ruitment, and information management techn o l o g y. Support training for using such systems.

5 . Fund or otherwise support existing private sector

e fforts to develop unique cooperative accounting

and information management systems.

6 Support cross-sectoral and inter- regional management mentoring and exchange pro g r a m s .

7 . Support/facilitate manager and director tours of

small-scale fruit and vegetable cooperatives in

other countries (especially in Canada and

E u ro p e ) .

8 . Reinstate the Cooperative Directors Institute formerly at Pennsylvania State University, which

was discontinued in 2002.

9 . Maintain support for state-based USDA cooperative development specialists with mandates for

balancing assistance to new and existing cooperatives, and for increasing technical assistance in

the areas of strategic planning, accounting, marketing, and member re l a t i o n s .

1 0 . Continue and expand cooperative development

training programs through Cooperation Wo r k s !

to enable “agriculture development specialists”

(NY), and Cooperative Extension field staff to

serve the needs of small cooperatives.

11 . Consider strategies for improving the “image” of

small-scale fruit and vegetable marketing cooperatives among farmers. Increase visibility of smallscale fruit and vegetable cooperatives in USDA

publications and in the agriculture and popular

p re s s .

1 2 . Build the capacity of Marketing our Cooperative

Advantage (MOCA) in developing marketing

campaigns (both national and regional) to win

consumer approval of cooperatives through an

emphasis on supporting family farms.

1 3 . Consider establishing a national group, or a subg roup of an existing national organization, which

can support small-scale cooperatives. There are

p e rhaps hundreds of incorporated and non-incorporated agricultural production business entities

that would qualify as small-scale cooperatives. A

national organization would have the scale and

re s o u rces to be more viable than the type of

smaller regional organization examined in this

s t u d y.

Suggestions for Further Research

1 . Conduct more detailed study of the social and

economic impacts of cooperatives on communities where members are concentrated.

2 . Develop risk management decision-making tools

to assist farmers in determining if cooperative

membership is in their families' best intere s t .

30
3 . E x p l o re the feasibility of a national or international small-scale cooperative federation.

4 . Given that a number of cooperatives included in

the original smple have ceased business operations, it would be useful to study why those

cooperatives went out of business or terminated

o p e r a t i o n s .

Literature Cited

Antill, Cary, W., E.E. Dorr, H.V. March, Jr., B.J.

Morzuch. 1984. The Economics of Cooperative

Marketing of Fresh Vegetables in Massachusetts.

R e s e a rch Bulletin No. 690/June.

B e rg e r, Peter L., and Richard John Neuhaus. 1977. To

Empower People: The Role of Mediating Structures in

Public Policy. Washington, DC: American

Enterprise Institute for Public Policy Researc h .

Biggs, Gilbert W. 1990. “Cooperative Activity in

Vegetable Industry: Significant Contributor to

Rural Economy.” Farmer Cooperatives. Vol. 56, No.

1 0 .

Bhuyan, Sanjib, R. Va n Vranken, B Henehan, R.

Poorbaugh, B. Onyango, F. Hossain, and R.

G o v i n d a s a m y. 2001. Performance Analysis of Fruit

and Vegetable Marketing Cooperatives in the

Northeast U.S. The State University of New Jersey,

Rutgers. Report # P-02804-1-2001.

Carman, Hoy, R.R. Cook, R. Sexton, 2004. “Marketing

California’s Agricultural Production,” Chapter 4

in California Agriculture Dimensions and Issues

2 0 0 4, University of California

Dillman, Don. 1978. Mail and Telephone Survey: The To t a l

Design Method. New York: John Wi l e y.

G l a s e r, Barney G., and Anselm L. Strauss. 1967. The

Discovery of Grounded Theory: Strategies for

Qualitative Researc h. Chicago: Aldine.

Hansen, Niles. 1990. “Do Producer Services Induce

Regional Economic Development?” Journal of

Regional Science, Vol. 30, No. 4, pp. 465-476.

Henehan, Brian, and N.H. Pelsue, Jr. 1986. Vermont

Farmer Cooperatives Mean Business. Vermont 

Agricultural Experiment Station. RR 50.

University of Vermont, Burlington.

H i l c h e y, Duncan, T. Lyson, G.W. Gillespie Jr. 1995.

Farmers' Markets and Rural Economic Development:

E n t re p reneurship, Business Incubation, and Job

C reation in the Northeast. Farming Alternatives

P rogram. Cornell University.

Hulse, Fred, G.W. Biggs, R.A. Wissman. 1990. Small 

F resh Fruit and Vegetable Cooperative Operations.

United States Department of Agriculture .

Cooperative Information Report No. 27,

Economics, Statistics and Cooperative Service.

Lewis, E.L. 1989. Management, “Quality Behind

Successful Fruit, Vegetable Marketing

Cooperatives.” Farmer Cooperatives. Vol. 56, No. 4.

S e y m o u r, W.R. 1988. “Federation Brings Market Step 

Closer To Small Vegetable Grower Cooperatives.”

Farmer Cooperatives. Vol. 55, No. 4.

S k i n n e r, R.A. 1982. “Regional Marketing Cooperative

G rowth Increasingly Significant.” F a r m e r

C o o p e r a t i v e s. Vol. 49, No. 8.

Strauss, Anselm L. 1987. Qualitative Analysis for Social 

S c i e n t i s t s. New York: Cambridge.

USDA. 1994. Ag. Statistics, Table 653. Per Capita

Consumption of Major Food Commodities, U.S.

1 9 8 5 - 9 3 .

Kraenzle, Charles. 1995 Farmer Cooperative Statitistics,

1994 USDA R B S Service Report 49. Appendix

Table: Number of cooperative and memberships

by major business activity and state, 1993, p. 27.

Vi rginia Cooperative Extension Service Publication.

1986. Development of Marketing and Management

Services of the Horticultural Producers Federation.

Publication 448-020. December.

31
32

c o n t i n u e d

Appendix I—Types of Northeastern Cooperative Members

Total Miles to Total farm gross Percent farm Percent

Cooperative Farm employees # of years cooperative Farm crop receipts 1998 sales to Income from

type category (mean) as member delivery point acres (# of respondents) cooperative farming

Fruit Retirement 6.2 16.9 10.8 48.2 $27,154 (14) 0.7 27.4

Part-time 9.5 15.3 12.4 29.0 $26,030 (29) 87.3 15.4

Primary occupation 29.9 19.9 66.6 183.7 $410,805 (45) 67.3 78.9

Total 17.9 17.6 34.7 100.4 $222,969 (88) 77.5 46.5

Vegetable Retirement 2.0 35.5 32.5 132.5 $70,000 (1) .0 50.0

Part-time 1.3 21.5 94.3 191. 7 $8,000 (1) 3.3 24.5

Primary occupation 18.4 27.2 58.4 114.9 $520,714 (14) 51.0 90.1

Total 15.2 27.4 60.9 125.2 $460,500 (16) 41.2 81.6

Mixed Part-time 7.1 1.5 38.5 49.7 $27,180 (5) 44.3 12.3

Primary occupation 13.6 10.5 35.8 78.4 $258,205 (18) 30.2 76. 9

Total 12.2 8.7 36.4 72.8 $207,982 (23) 33.2 63.6

Total Retirement 5.9 18.4 12.4 54.3 $30,011 (15) 74.7 29.3

Part-time 8.8 14.1 19.6 39.4 $25,679 (35) 77.8 15.3

Primary occupation 23.4 19.1 56.6 142.8 $395,116 (77) 54.2 80.6

Total 16.4 17.4 38.0 98.6 $250,180 (127) 64.5 54.3

Appendix II—Issues and Concerns of Members by Cooperative Type

How much

need for

Cooperative How important improvement Cooperative

type (0 to 2)* Factor (0 to 2)* type

Fruit 1.91 Higher prices 1.27 Fruit

Vegetable 1.92 1.14 Vegetable

Mixed 1.92 1.25 Mixed

Total 1.91 1.25 Total

Fruit .61 Better payment options .61 Fruit

Vegetable .33 .33 Vegetable

Mixed .19 .19 Mixed

Total .50 .50 Total

Fruit .46 Greater dividend payments .46 Fruit

Vegetable .65 .65 Vegetable

Mixed .43 .43 Mixed

Total .47 .47 Total

Fruit .36 More dependable distribution of patronage refunds .36 Fruit

Vegetable .52 .52 Vegetable

Mixed .27 27 Mixed

Total .36 36 Total
33

Appendix II—Issues and Concerns of Members by Cooperative Type (Continued)

How much

need for

Cooperative How important improvement Cooperative

type (0 to 2)* Factor (0 to 2)* type

Fruit .96 More encouragement from cooperative to innovate .73 Fruit

Vegetable 1.05 .95 Vegetable

Mixed 1.00 .59 Mixed

Total .98 .72 Total

Fruit 1.50 Improved marketing strategies 1.09 Fruit

Vegetable 1.63 1.25 Vegetable

Mixed 1.34 .89 Mixed

Total 1.48 1.07 Total

Fruit 1.29 Better use of information technology .89 Fruit

Vegetable 1.42 1.16 Vegetable

Mixed 1.11 .64 Mixed

Total 1.27 .87 Total

Fruit 1.13 More voice in cooperative decisions .52 Fruit

Vegetable 1.20 .37 Vegetable

Mixed 1.00 .36 Mixed

Total 1.12 .47 Total

Fruit .94 More services for members .71 Fruit

Vegetable 1.04 .95 Vegetable

Mixed .94 .56 Mixed

Total .95 .70 Total

Fruit 1.11 More opportunities through the cooperative .79 Fruit

Vegetable 1.35 .90 Vegetable

Mixed .94 .71 Mixed

Total 1.10 .78 Total

Fruit 1.28 Better leadership and management skills .73 Fruit

Vegetable 1.57 for cooperative board 1.11 Vegetable

Mixed 1.03 .44 Mixed

Total 1.26 .71 Total

Fruit 1.23 Better leadership and management skills .63 Fruit

Vegetable 1.70 for cooperative manager 1.21 Vegetable

Mixed 1.31 .53 Mixed

Total 1.30 .67 Total
34

c o n t i n u e d

Appendix III—Comparative Analysis of Challenges by Respondent Type

Respondent type

___________________________________________

Manager Director Member All

Membership Commitment Challenges

Delivering consistent volume of product 1.52 1.47 1.36 1.38

Delivering consistent product quality 1.60 1.6 1.43 1.46

Providing sufficient capital investment 1.08 1.21 1.04 1.05

Pool of willing and qualified directors 0.84 0.86 0.85

Marketing Challenges

Becoming supplier of choice to key customers 1.32 1.71 1.29 1.32

Effective promotion and advertising 0.64 1.38 1.09 1.06

Efficient distribution 1.16 1.14 1.15

Providing customer services 1.00 1.00 1.00

Maintaining product quality 1.32 1.53 1.40

Effective Information Flow Challenges

Adequate computer software and hardware 0.63 0.86 0.71

Member communication 1.00 1.27 1.19 1.17

Board communication 0.75 0.79 0.76

Record keeping 0.79 0.86 0.82

Customer data analysis 0.39 0.86 0.57

Customer communication 0.92 1.27 1.05

Resource Access Challenges

Access to educational organizations 0.36 0.69 0.69 0.65

Access to cooperative development expertise 0.6 1.08 0.76

Access to legal assistance 0.6 0.71 0.64

Access to accounting assistance 0.56 0.71 0.62

Access to consulting assistance 0.46 1.00 0.66

Access to land grant university/Extension 0.21 0.62 0.35

Strategic Planning Challenges

Clear mission and vision 0.88 1.07 1.10 1.08

Existence of up-to-date, working strategic plan 1.04 1.21 1.10

Testing financial and operational performance regularly 0.88 1.57 1.13

Shared Vision Challenges

Ability to arrive at a shared vision among members 1.28 1.15 1.24

Vision understood across membership 1.28 0.85 1.13

Board providing adequate leadership 1.08 1.07 1.08

Management operating within shared vision 0.67 0.93 0.76

Balancing grower needs and management needs 1.16 0.92 1.04 1.05

Challenges to Hiring and Retaining Qualified Management

Clear position description 0.75 1.08 0.86

Competitive wage and benefits package 1 1.14 0.88 0.91

Existence of succession plan 0.96 1.14 1.03

Effective annual evaluation 0.72 0.92 0.79

Good relations with board 0.48 0.71 0.56

Retaining qualified management 0.96 1.00 1.20 1.17

Avoiding management burn-out 0.83 1.15 0.95

Challenges to a Highly Effective Board

Motivating board 1.08 0.93 1.03

Director nomination process in place 0.52 0.77 0.61

Flexibility and creativity 0.88 0.69 0.82

Succession plan for leaders 1.12 1.15 1.13

Evaluating performance of itself, manager and cooperative 1.21 0.93 1.11
35

Appendix III—Comparative Analysis of Challenges by Respondent Type (Continued)

Respondent type

___________________________________________

Manager Director Member All

0.83 1.15 0.95

Using meeting time effectively 1.00 1.36 1.13

Effectively delegating authority 0.92 1.21 1.03

Ability to make corrections in policy 0.68 0.77 0.71

Sufficient trust between members and management 0.64 1.07 0.99 0.95

Challenges to Developing Effective Teams

Effective board and management team 0.80 0.77 1.07 1.03

Effective management and staff relationships 0.50 1.00 0.68

Unified membership 1.04 0.93 1.00

Existence of teams of advisors 0.58 0.64 0.61

Transportation Challenges

Assembling products from member farms 0.60 0.86 0.69

Distributing products to customers 1.04 1.14 1.07 1.07

Tracking whether loads are profitable 0.22 1.00 0.50

Developing alliances and coordination with other distributors 0.75 0.69 0.73

Financial Management Challenges

Achieving profitability 1.24 1.43 1.40 1.38

Access to loans 0.52 1.07 0.72

Equity financing 0.64 1.00 0.77

Managing operating expenses 0.92 1.29 1.05
U.S. Department of Agriculture

Rural Business–Cooperative Service

Stop 3250

Washington, D.C. 20250-3250

Rural Business–Cooperative Service (RBS) provides research,

management, and educational assistance to cooperatives to

strengthen the economic position of farmers and other rural

residents. It works directly with cooperative leaders and

Federal and State agencies to improve organization,

leadership, and operation of cooperatives and to give guidance

to further development.

The cooperative segment of RBS (1) helps farmers and other

rural residents develop cooperatives to obtain supplies and

services at lower cost and to get better prices for products they

sell; (2) advises rural residents on developing existing

resources through cooperative action to enhance rural living;

(3) helps cooperatives improve services and operating

efficiency; (4) informs members, directors, employees, and the

public on how cooperatives work and benefit their members

and their communities; and (5) encourages international

cooperative programs. RBS also publishes research and

educational materials and issues Rural Cooperatives magazine.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race,

color, national origin, age, disability, and where applicable, sex,

marital status, familial status, parental status, religion, sexual

orientation, genetic information, political beliefs, reprisal, or

because all or a part of an individual's income is derived from

any public assistance program. (Not all prohibited bases apply

to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille,

large print, audiotape, etc.) should contact USDA's TARGET

Center at (202) 720-2600 (voice and TDD). 

To file a complaint of discrimination write to USDA, Director,

Office of Civil Rights, 1400 Independence Avenue, S.W.,

Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or

(202) 720-6382 (TDD). USDA is an equal opportunity provider

and employer.