Local food

Cooperative Farmers Markets

An abundance of fresh vegetables stacked on a table at an outdoor market.

Here in Ohio, the growing season is ramping up quickly! In some communities, farmers markets have already kicked off their season and in others, local food enthusiasts won’t have to wait long to enjoy the market. The estimated 8,000+ farmers markets across the United States[1] are an important way farmers sell to customers directly.

Based on the most recent U.S. Department of Agriculture (USDA) Census of Agriculture, in Ohio an estimated 8% of farms sell approximately $90 million worth of products directly to consumers.[2]

Advocates of farmers markets, like the Farmers Market Coalition, cite benefits like:

  • Helping farm businesses succeed – Farmers with direct-to-consumer sales are more likely to remain in business than other farms, according to USDA data.[3] Producers with farms that sell food through direct channels, like farmers markets, were more likely than all U.S. farms to be female and aged 34 or younger.[4]
  • Creating community food access points – 99% of farmers markets responding to a 2019 USDA survey sell fruits and vegetables and about half of responding markets accepted Federal Nutrition Programs like Supplemental Nutrition Assistance (SNAP)[5]
  • Positive community impact – About half of farmers markets responding to a 2019 USDA survey had a paid market manager and just over 5,000 markets across the U.S. engaged over 31,000 volunteers.[6]

A stall of vibrant, fresh vegetables like tomatoes and cucumbers, at an outdoor farmers market.

Farmers Markets and Business Structures

Starting and growing a successful farmers market involves many moving parts – building a community of farmers, engaging with local community leaders and patrons, effective marketing, and strong operational plans. Among the important aspects for new and established markets to consider is their business structure – like whether the market is an independent legal entity like a corporation or part of a larger umbrella organization. A market’s business structure can impact how decisions are made for a market, the extent of personal liability for market leaders, eligibility for certain types of funding like grants or charitable donations, how the market is taxed, and more.[7]

The Farmers Market Legal Toolkit from the Center for Agriculture and Food Systems at Vermont Law School provides helpful information about business structures for farmers markets, along with information about accepting public benefits and managing risks at markets.

Cooperatives as a Business Structure for Farmers Markets

An illustration of raised hands in rainbow colors.Cooperatives are one of various business structure choices for farmers markets. Cooperatives are member owned and controlled businesses that distribute benefits based on use and grounded in principles like democratic member control and concern for community.[8] Cooperatives operate across sectors from insurance and financial services to housing, purchasing, and utilities. In agriculture, cooperatives market various food and agriculture products, procure supplies and inputs, and provide services, like financial services.[9]

Farmers markets structured as cooperatives might be owned and governed by farmers who sell at the market, by community members who shop at the market, or by both groups in a “multistakeholder” cooperative.

Cooperative markets owned and governed by farmers are one form of marketing collaborations for farmers. Learn more about “Marketing Collaborations for Farmers” in our blog post here.

Some of the potential benefits of structuring a farmers market as a cooperative might include:

  • Member engagement and decision-making – Many decisions for a cooperative are made by a board of directors elected from and by the members. Members elect the board and can cast their vote on certain major issues for the cooperative. Democratic control is a defining principle of cooperatives and members generally vote using a “one member, one vote” set up. Cooperatives generally distribute their profit to members based on their use of the business.[10]
  • Community focus – As a business, the focus of a cooperative is on providing benefits to its members.[11] The internationally recognized cooperative principles highlight that “[c]ooperatives work for the sustainable development of their communities.”[12] This member and community orientation might create opportunities for cooperative farmers markets to develop a community-orientation and focus.
  • Existence of the market beyond current leaders – Operating a farmers market can be a lot of work. To ensure the successful operation of a market well into the future, it may be important to consider how to effectively share or transfer responsibilities for leadership and how to create a stable structure. As independent legal entities that are governed by a board, cooperatives may have opportunities to share leadership responsibilities and generally can exist perpetually as long as appropriate formalities are met.[13]
  • Limitation of liability and easily updated membership – Generally, cooperatives are legal entities created by filing appropriate forms with a state agency. As independent legal entities, generally the personal liability of each member in a cooperative is limited to the equity the member holds in the cooperative. Cooperatives set up as separate legal entities can add and remove members.[14]

However, cooperatives may have disadvantages compared to other potential business structures for farmers markets. For example, cooperative markets may be limited in their ability to legally use volunteers and unpaid staff compared to nonprofits, they may be limited in raising certain kinds of capital compared to corporations, and they rely on strong engagement and participation from members compared to structures that rely on just one or a few members like limited liability companies.[15]

People in business professional dress standing in a circle holding wooden gears together.

 

Like any decisions for a business with varied and far-reaching consequences, those interested in exploring the right business structure in their specific situation should consult knowledgeable competent professionals, like attorneys, accountants, and others. This information is provided for educational purposes only. It is not legal advice. It is not a substitute for the potential need to consult with a competent attorney in the appropriate jurisdiction.

Take a deeper dive into the cooperative business model, including cooperative legal frameworks, governance, financial concepts, and more with Co-op Mastery: Beyond Cooperatives 101 at go.osu.edu/coopmastery.

 

References

[1] 2019 National Farmers Market Managers 2019 Summary. (Aug. 2020). U.S. Department of Agriculture National Agricultural Statistics Service. https://downloads.usda.library.cornell.edu/usda-esmis/files/pz50hd694/gx41n598k/jd473j98z/nfar0820.pdf

[2] Data from the 2022 Census of Agriculture “Ohio: Market Value of Agricultural Products Sold Including Landlord’s Share, Food Marketing Practices, and Value Added Products: 2022 and 2017” and “Ohio Historical highlights: 2022 and Earlier Census Years,” U.S. Department of Agriculture National Agricultural Statistics Service.

[3] Key, N. (2016). “Local Foods and Farm Business Survival and Growth.” U.S. Department of Agriculture Economic Research Service. https://www.ers.usda.gov/amber-waves/2016/march/local-foods-and-farm-business-survival-and-growth/

[4] Direct Farm Sales of Food: Results from the 2020 Local Food Marketing Practices Survey. U.S. Department of Agriculture National Agricultural Statistics Service. https://www.nass.usda.gov/Publications/Highlights/2022/local-foods.pdf

[5] National Farmers Market Managers. (Aug. 2020). U.S. Department of Agriculture National Agricultural Statistics Service. https://downloads.usda.library.cornell.edu/usda-esmis/files/pz50hd694/gx41n598k/jd473j98z/nfar0820.pdf

[6] National Farmers Market Managers. (Aug. 2020). U.S. Department of Agriculture National Agricultural Statistics Service. https://downloads.usda.library.cornell.edu/usda-esmis/files/pz50hd694/gx41n598k/jd473j98z/nfar0820.pdf

[7] “Why does the market’s business structure matter?” Farmers Market Legal Toolkit. Center for Agriculture and Food Systems, Vermont Law School. https://farmersmarketlegaltoolkit.org/business-structures/why-your-choice-matters/

[8] (2014). Co-op Essentials: What They Are and the Role of Members, Directors, Managers, and Employees. USDA Rural Development Cooperative Programs.

[9] Wadsworth, J., Lapp, K., & Rivera, J. (2021). Agricultural Cooperative Statistics 2019. Washington, D.C.: U.S. Department of Agriculture Rural Development Service Report 83.

[10] “Co-ops 101: An Introduction to Cooperatives.” (2012). U.S. Department of Agriculture Rural Development, Cooperative Information Report 55. Retrieved from http://www.rd.usda.gov/files/cir55.pdf

[11] Zueli, K. & Cropp, R. (2014). “Cooperatives: Principles and practices in the 21st century.” UW Extension.

[12] “Cooperative identity, values & principles.” (n.d.). International Cooperative Alliance. Retrieved from https://www.ica.coop/en/cooperatives/cooperative-identity

[13] “Legal Foundations of a Cooperative.” (1995). U.S. Department of Agriculture Rural Business – Cooperative Service, Cooperative Information Report 45, Section 9. Retrieved from https://www.rd.usda.gov/sites/default/files/CIR45-9.pdf

[14] “Legal Foundations of a Cooperative.” (1995). U.S. Department of Agriculture Rural Business – Cooperative Service, Cooperative Information Report 45, Section 9. Retrieved from https://www.rd.usda.gov/sites/default/files/CIR45-9.pdf

[15] “Cooperatives.” Farmers Market Legal Toolkit. Center for Agriculture and Food Systems, Vermont Law School. https://farmersmarketlegaltoolkit.org/business-structures/cooperatives/#topic-overview

Marketing Collaborations for Farmers

Marketing is “creating, communicating, delivering, and exchanging offerings that have value,” according to the definition adopted by the American Marketing Association. As is clear from the definition, marketing is broad! It encompasses concepts around product, price, place, and promotion.

At the 2023 Farm Science Review (FSR), CFAES Center for Cooperatives program director, Hannah Scott, shared collaborative approaches to marketing that may help fruit and vegetable farmers grow their businesses. From cooperative efforts to reach customers to group buys for marketing supplies, the key question for collaborative approaches is whether a group can do something better together than they can individually.

Colorful pattern of lettuce, tomatoes, eggplants, and carrots on tan background.

Collaborative Promotion

To help reach customers and promote their farms and products, farmers might consider taking advantage of collaborative programs like Ohio Proud, a program of the Ohio Department of Agriculture to promote Ohio grown, raised, or processed food and agriculture products. Other community-led efforts to promote local food, like the Pike County Local Foods Directory, led by Pike County OSU Extension, may be opportunities for farmers to reach new customers and raise awareness.

Interested in Collaborative Promotion Strategies? Here are some things to consider:

  • Are there existing programs your farm could engage simply and efficiently?
  • How can your farm share promotional items from these collaborative programs? Using social media or placing materials around your community?
  • If you help create new materials, who will “own” keeping them updated?

Controlling Costs through Joint Purchasing

Does your farm use marketing supplies that others also often use? Think of items like bags, boxes, cartons, crates, stickers, signage, and more. Sometimes purchasing supplies as a group may help farmers access bulk discounts while reducing the inventory they need to hold themselves. Group buys might also help control shipping costs and reduce administrative burdens.

Interested in Collaborative Purchasing? Here are some things to consider:

  • Will group purchasing save costs on goods and/or shipping?
  • Do the logistics work for the group?
  • Be aware of potential risks and plan for them, including potential risks around payments for goods, the quantity purchased, storage and timing considerations, and more.
  • Ensure that communications around the what, when, where, and how, for group purchases are clear and consistent.

Collaborative Marketing Approaches to Enhance Product Diversity

Sometimes offering a diverse array of products might help a business attract more customers. For example, farmer’s markets often work to recruit a diverse group of vendors so they can offer customers everything from fruits and veggies to meat and proteins, dairy, baked goods, and more. In some instances, business-to-business (B2B) sales, including approaches like multi-farm CSA’s, may help farmers or markets increase their product offerings or extend their marketing season.

Interested in Collaborative Approaches to Enhance Product Diversity? Here are some things to consider:

  • How can you manage for the quality and safety of products you do not produce?
  • Does product diversity actually help sales in the market channel you are in?
  • What strategies might you need to help manage risk and set clear expectations around terms of B2B sales?
  • Does the market channel where you sell products allow for B2B sales? For example, some farmer’s market rules may not allow for sales of items a vendor did not produce themselves.

An illustration of a laptop with retail store awning and paper airplane next to brick buildings to represent online business marketing.

Cooperation to Reach New Market Channels

Some market channels require higher volumes of product more consistently than others – think k-12 institutions or wholesale buyers – and these markets might be challenging for some farmers to enter. Producer-owned cooperatives that market products on behalf of their members may offer opportunities for farmers to pool products to reach higher volumes more consistently. Some farmer’s markets may be producer-led cooperatives (like the Chillicothe Farmers Market in Ross County, Ohio). Cooperatives may be a useful approach where pooling product or resources helps solve a challenge, but they can also be complex.

Interested in the Producer-Owned Cooperative Model? Here are some things to consider:

  • Who will be involved as members and what will be their role?
  • How will the group make decisions?
  • How can the group manage risk?
  • Will working together create the intended benefit? Can that benefit be clearly identified and communicated to members?

Access the slides for the presentation, “Marketing Collaborations to Improve your Farm’s Bottom Line” here!

 

To learn more about cooperative and collaborative approaches in agriculture, reach out to the CFAES Center for Cooperatives at Ohio State at go.osu.edu/cooperatives or 740-289-2071. The publication, “Cooperative Farming: Frameworks for Farming Together” published by Northeast SARE is also a great place to start learning about cooperative and collaborative approaches in agriculture.

Farm Science Review is a three-day, annual outdoor event hosted by Ohio State University featuring commercial exhibits, educational programs, and field demonstrations showcasing the future of agriculture. The presentation was part of 15 different learning sessions at the OSU Extension Fruits & Vegetables exhibit at FSR. The OSU Extension Fruit & Vegetable team posts educational resources and updates at https://u.osu.edu/vegnetnews/

Beef Co-op’s Marketing Efforts Offer Insights for Local Food Entrepreneurs

For every business, getting marketing right is key. For food entrepreneurs selling directly to consumers at farmer’s markets, farm stands, online, in grocery stores, and via subscriptions, telling their story through marketing is vital to reaching their target customer demographic to enhance sales. But how do food entrepreneurs — especially those selling locally produced products through local supply chains –know which marketing channels to use?

The farmer-owners of Buckeye Valley Beef Cooperative, a young co-op marketing locally raised beef in southwest Ohio, set out to answer that question. They wanted to know how they could maximize their marketing efforts to generate new customers and sales for their farmer-owners. In 2019, the co-op proposed and was awarded a project to the 2019 Sustainable Agriculture Research & Education (SARE) Farmer/Rancher grant program. Their project would help the co-op develop, implement, and then measure the effectiveness of four new advertising channels: Google ads, billboards, radio advertisements, and Facebook ads. The co-op placed their ads, some of which were created in consultation with marketing professionals at the companies they purchased advertising through, and then tracked whether their efforts translated into new customer orders. What they learned can offer insights to other local food producers, particularly those selling meat.

Readers can learn more about the project, the co-op’s experiences, and the results in a presentation by a founding member of the co-op available above as a part of The Ohio State University College of Food, Agricultural, and Environmental Sciences online Farm Science Review.

What Did the Co-op Learn?

  • Facebook ads and radio ads on the local public radio channel were the most effective new advertising channels the co-op tested. Facebooks ads resulted in an astounding 10900% return on the dollars invested in the channel. Also, co-op members were surprised to learn that radio ads resulted in an 85% return on their investment.
  • Some new advertising channels took a lot of time and energy to learn. The co-op relies on volunteer labor and they took a team approach to implementing the new advertising methods. Even so, learning the ins-and-outs of utilizing certain channels took a significant time investment.
  • Word of mouth is still the most effective marketing strategy for the co-op. Sales from customers who reported learning about the cooperative by word of mouth dwarfed sales generated from customers who reported finding out about the co-op through one of the new advertising channels. This reinforces the idea that food entrepreneurs should ensure they are paying close attention to customer experiences and creating ways for their customers to share their excitement about their products.

About Buckeye Valley Beef Cooperative

Buckeye Valley Beef Cooperative was formed in 2016 by southwest Ohio farmers who wanted to expand their markets for locally raised beef and to increase their farmer incomes. The co-op markets beef to retailers and directly to consumers. You can learn more about the cooperative via the video, Buckeye Valley Beef Cooperative: Our Story  The co-op’s farmer members were supported by the CFAES Center for Cooperatives in their start-up and the development of their SARE proposal.

Community-owned co-op grocery stores key in revitalizing food deserts

Community-owned Grocery in Detroit

Detroit People’s Food Co-op, opening later this year in a food desert, is an example of a community-driven project.

Food insecurity and lack of area grocery stores in low-income neighborhoods hold much blame for hunger in America. Local and state governments, along with national leaders have prioritized the elimination of “food deserts,” with large retailers promising to open or expand stores in underserved areas.  Some got past the planning stage or closed shortly after opening. The article “Why community-owned grocery stores like co-ops are the best recipe for revitalizing food deserts” looks at 71 supermarkets that had plans to open in a food desert since 2000, and explores why some groceries succeeded while others failed.

The supermarkets driven by government or commercial interests had a mixed track record, but nonprofits and those driven by community involvement tended to succeed.

Author Catherine Brinkley, Assistant Professor of Community and Regional Development at the University of California – Davis noted, “Importantly, 16 of the 18 community-driven cases were structured as cooperatives, which are rooted in their communities through customer ownership, democratic governance and shared social values.”

Policymakers and officials interested in improving wellness in food deserts should consider community ownership and involvement. If you are involved in efforts to bring a supermarket to an underserved community and want to consider cooperative business options, contact the OSU CFAES Center for Cooperatives by calling 740-289-2071 ext. 111.

Scaling-up to Sell to Schools

 

Farm fresh food benefits not only students but the farmers that grow it for students. Scaling-up to sell to schools presents challenges, but farmers have achieved success through cooperation, collaborative relationships with buyers and year-round purchasing programs.

Farmers benefit from Farm to School

Institutions are a dependable market that provides farmers with timely and reliable payments. Clarity of a cafeteria’s needs allows farmers to plan production and delivery in advance. Schools streamline procurement, delivery and invoicing processes so farmers can focus their energy on producing high-quality food to nourish students.

Selling to schools is good for the local economy. Schools purchased $790 million of local food in 2013-2014. 42,587 Schools across the United States participated in Farm to School activities according to the USDA Farm to School Census. ¹ Case studies of public schools in Minnesota and Georgia found $82 of every $100 spent stayed in the local economy. ²

Some schools incorporate agriculture and nutrition education into Farm to School programming. Farmers that are passionate about inspiring the next generation of healthy eaters may have an opportunity to partner with educators to teach youth about what it takes to get food from the farm to the cafeteria.

Challenges selling to schools

Schools purchase a large volume of product. Small operations often struggle to produce a volume sufficient for foodservice needs. Cooperative marketing is a solution. An agricultural cooperative can aggregate multiple farms products to achieve intuitional volumes. A co-op offers farmer-members other benefits such as group food safety certifications, shared distribution and reduced costs on supplies. The Preston Growers Cooperative formed in response to the West Virginia Farm to School initiative. Working together, farmers achieve institutional volumes, maintain quality and offer a wider selection of products to local schools.

Farmers receive lower prices from institutional sales than other direct marketing channels. School buyers have tight budget constraints when making food purchasing decisions. The average school lunch cost $2.90 to prepare, only $1.07 of the total cost is allocated to food. The remaining $1.83 goes to labor, preparation and indirect costs. ³ Marketing Michigan Products: A Step-by-Step Guide from Michigan Farm to School is a free online resource that helps farmers prepare bid documents, price their products and negotiate contract agreements.

The school cafeteria is vacant during much of peak fruit and vegetable season. Minimal processing, such as freezing fresh food for future use, can be a solution. Cafeteria staff may process the food in the school cafeteria or coordinate with a food hub or co-packer to process the food in an approved facility. The Ohio Department of Education’s Summer Food Service Program provides a consistent market for farmers by purchasing food when school is not in session. Meals are served to youth enrolled in summer education programs at local YMCAs, libraries and other partner organizations.

Success

Farmers that have successfully sold to schools suggest developing working relationships with school dieticians, buyers and food service staff. Farmers should clarify vendor requirements, volume, packaging, delivery, insurance, payment terms and necessary food safety certifications prior to making the first delivery. Regular communication throughout the school year is vital to success.

For more information on Farm to School in Ohio visit http://farmtoschool.osu.edu/.

To learn about the Ohio State University Dining Service’s goal to purchase 40% local and sustainable Food by 2025 visit https://dining.osu.edu/sustainability/local-and-sustainable-food/.

References

  1. “Farm to School Census.” 2015. U.S. Department of Agriculture Food Nutrition Service.
  2. Christensen, L., Jablonski, B., Stephens, L. & Joshi, A. “Economic Impacts of Farm to School: Case Studies and Assessment Tools.” Sept 2017. National Farm to School Network. Retrieved April 27, 2018 from http://www.farmtoschool.org/Resources/EconomicImpactReport.pdf.
  3. “School Lunch and Breakfast Cost Study-II.” 2006. U.S. Department of Agriculture Food Nutrition Service.

*Originally published in Farm and Dairy newspaper 5/4/2018

Casa Nueva: A New Flavor of Foodservice

Low salaries, high turnover and lack of employee engagement are prevalent in food service. Eight food entrepreneurs had a solution; they would create a restaurant that empowered employees through ownership. In 1985 they opened Casa Nueva, the first worker-owned cooperative restaurant in Ohio, in the heart of downtown Athens.

In 1987 Casa Nueva worked with the Appalachian Center for Economic Networks (ACEnet) to develop and market a product line of salsas and other value-added goods. The restaurant added a cantina in 1993, and a second kitchen in 2003.

Worker ownership in practice

Casa Nueva carries out daily operations with the help of worker-owners and non-owners (associates). 1/3 of staff are worker-owners, 2/3 are associates. Associates have an opportunity to apply for ownership after working 1000 hours in the restaurant, serving on special committees and earning positive performance evaluations. The co-op board of directors vote to approve or disapprove the associate’s application for ownership. All new owners contribute equity. The cost is offset by a raise that goes into effect when an associate becomes a member of the cooperative. Other benefits of membership include: voting rights, paid time-off, insurance and scheduling preference.

For over 30 years Casa has provided worker-owners with meaningful work, sustainable jobs and opportunities for advancement. Fresh ingredients, Mexican-inspired flavors, culture, music and art delight locals and students of Ohio University, the city’s main economic driver.

Founder Leslie Schaller shares Casa Nueva’s Story