Where Have All the Co-ops Gone?

by CR Lawn, Fall 2003

Fedco Seeds grew out of the “new wave” food co-operative movement of the 1970s, starting in 1978 as a project of the Maine Federation of Co-operatives. Fedco stands for Federation of Cooperatives. The Federation also ran a co-operative food warehouse in the late seventies and early eighties.

I was saddened last winter when member-owners of Northeast Cooperatives, the regional food cooperative warehouse, voted to merge with United Natural Foods, Inc., a huge private distributor. Northeast members acquiesced in the merger under extreme financial duress, having been told by General Manager George Southworth that it was their only alternative to bankruptcy. How could Northeast, despite rapid growth, yearly sales exceeding $130 million, a new physical plant, and a strong network of more than 1,200 buying clubs, retail co-ops and private stores, nevertheless have lost so much money?

In the fiercely competitive, rapidly growing natural foods market, Northeast had chosen to slug it out against United in a coast-to-coast expansion battle. Although Southworth was fond of talking about how Northeast had to become the 600-pound co-op gorilla, in the end it more closely resembled the 98-pound weakling. United, a combination of Stowe Mills and Cornucopia plus 22 other mergers, had 10 times the sales and 80 times the equity of Northeast.

With the demise of Northeast, of 28 consumer co-operative food distributors in 1982, only three are left standing! I have seen a similar pattern in the wholesale seed industry and in the organic and natural foods industry during the same time period. General Mills owns Cascadian Farms. An investment group bought out Walnut Acres.

In the wake of consolidations, consumer prices generally increase and choices decline. After a spate of mergers seed giant Seminis doubled its prices and shrank its selection. The pattern has been no different in the natural foods sector.

I talked to co-op store workers in three different states. All agreed that under United, jobs had been lost, prices had gone up, service had deteriorated, and product choices had narrowed. As Annie Gaillard of Buffalo Mountain (Hardwick, VT) lamented, “We’ve lost control of our industry.” Under United, “what sells is what counts.”

Northeast used to offer minimal cost workshops to train people how to run their stores better. These were needed because “90% in the co-op grocery industry are winging it.” Now they are gone. Northeast had a Management-for-Hire program. They’d get someone in to manage your store for a while or to help you find a manager and they often gave good personnel advice. Gone. Northeast had a recycling program for aseptic soy milk boxes. That was gone within a week.

United’s limited selection, large case lot requirements and high prices are particularly burdensome to buying clubs, according to Kip Penney, longtime Maine co-oper and now on the Belfast Coop Store Board. Alice Rubin of Willimantic (CT) goes further, accusing United of wanting buying clubs and small co-op stores out of business.

“I can’t always get what I want,” laments Robin Leslie of Buffalo Mountain. Rubin echoes that concern. Because United is so large, they have cut the smaller producers out of the distribution picture. “Everything is a trial just to get your food and you don’t have any place else to go. No choice,” she says.

Actually, there is a choice more and more co-opers are turning to. The small Associated Buyers warehouse in New Hampshire is serving an increasing number of co-ops in the region. Associated chose a different path from Northeast, one which calls into question the “get big or get out” assumptions that the co-op distributors increasingly adopted. Content to serve their niche, flexible about case lots, Associated seems to be thriving.

Rubin, though finding much to praise about Northeast, feels they acted too much like a regular business instead of a co-op. They needed more member support but didn’t come out and ask for it until too late. Lamented Gaillard, “Southworth came to Northeast from Trader Joe’s and his vision was always corporate. There are so few co-op managers who understand what a co-op is,” she concluded, noting with hope that the University of Nova Scotia has just created a master’s degree program for training people to be cooperative managers.

Consolidation constricts our choices as consumers. True in the natural foods industry, just as true in the seed industry. At least a dozen items we have been carrying were dropped in the past year by our multinational suppliers, usually without prior warning. Sometimes we can cushion the blow by buying up remaining stocks. Sometimes we can’t. Sooner or later we lose these varieties.

Seed choices are food choices, too. That’s why we think it important not to be totally dependent on the big guys. We have no more influence on Seminis’ line than Buffalo Mountain has on United’s.

Food co-ops are finding out how important it was to have co-op food distributors. Some talk of a possible niche for a co-op distributor who would stock more local and regional brands. We think it is also important to have some control over our seed supply. That’s why we have a network of growers producing some of the seed we offer. And that’s why we think it is important to serve as a retailer and a distributor of the seeds for some of those uncommon varieties. Sure they cost more to produce, but like good food, they are worth it.

What can we learn from Northeast’s passing? First, bigger is not always better, even in competitive industries. Leave the 600-pound gorillas to the World Wrestling Federation! Second, diversity is good not only in eco-systems but also in economic and social systems. Celebrate the local, the quirky, those who tread the less well-beaten paths. Third, don’t let the grass roots shrivel. Water them with your energy and your dollars. Strength comes from the bottom up, not the top down. Most importantly, we must share ideas on how we can reformulate our social and economic paradigms to smash the idol of the Almighty Dollar and replace it with a more ennobling vision.