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
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
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
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.