Because it’s Co-op Month, each October in this space, I like to revisit the fundamentals of the cooperative business model. The seven principles of a cooperative are:
- Open, voluntary membership
- Democratic member control
- Member economic participation
- Autonomy and independence
- Education, training, information
- Cooperation among cooperatives
- Concern for community
These principles, also known as the Rochdale Principles, were established back in 1844 when a group of weavers banded together in the face of societal changes brought by the Industrial Revolution. They were looking for a way to organize a business that addressed economic survival with a focus on the mutual benefits of its member-owners. Their self-interest led to cooperative interests. They pooled resources to build a business that none of them would be able to capitalize or operate alone.
You might not be able to recite those seven principles on demand, but we see them in action through the cooperative businesses in our region. Whether it’s financial services, electricity, alternative fuels, buying cooperatives, or supply and marketing organizations like MFA, these principles are at the heart of how cooperatives organize their operations. As members, we are part of an entity that makes payroll, builds facilities and delivers services and expertise that extend past what we can muster individually.
You can easily find an example for each principle. As I write this, I still see headlines of how electric cooperatives here in Missouri have been helping their sister cooperatives in Louisiana in the wake of Hurricane Ida. That’s cooperation among cooperatives. You have likely been invited to a cooperative annual meeting. That’s open membership and democratic control. And you may know someone whose child received a scholarship through a cooperative charity. That’s concern for community.
Undoubtedly, you’ve seen the evolution of the cooperatives in which you claim membership. In today’s world, especially, nothing is static, and change brings challenges to any business. In particular, the agricultural supply chain, including cooperatives such as MFA, has been affected by the margin pressures farmers have dealt with, too.
This economic reality forces change. Private sector agricultural input companies have sought consolidation as a way to spread costs and leverage market power. Startups have entered the agriculture industry in hopes of establishing new channels of distribution. Consolidation at the farm level is accelerating as farmers seek to increase their buying power.
Responsible business management can account for much of this change. However, some factors (think COVID-19 or wild swings in world trade) are Black Swans that we have to address upon arrival.
MFA’s success closely mirrors the success of our member-owners. We’ve had a few challenges from the factors I mentioned above. But fiscal 2021 was a good year for our cooperative. We attribute a considerable portion of our success to focusing on efficiency and structure. We have listened to the membership and intensified efforts to increase efficiency in delivering the products and services you need. Those efforts met with some good fortune in markets and, at least for part of the year, favorable weather.
But even inside a single season, you can’t count on favorable conditions—markets, weather or otherwise. So going forward, we will maintain our focus on efficiency. We will continue to vet and deliver new technology. And we will step up education and training efforts.
These moves rest on the simple fact that we believe what MFA does should be—and will be—measured by the value we deliver. Value is more than a price proposition. We must deliver the products and services members need and do it in a way that enhances their profitability.
But is that value directly related to a specific product or service or measured in more extensive terms, such as the fact that you own and have a voice in a part of the retail chain in your neighborhood?
To me, that question lays out some of the challenges for cooperatives ahead. Members expect a co-op to maintain local assets and represent its farmer-owners in an increasingly concentrated supply chain. The expectation of value needs to be clear, even in the face of thin margins. I can assure you that this challenge is communicated to every MFA employee.
In line with those seven cooperative principles, our mission is to grow MFA by providing products, services and expertise that benefit you, our member-owners.
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