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The Ownership of Enterprise in Colorado: Agricultural and Community-Based Cooperatives

The Ownership of Enterprise in Colorado: Agricultural and Community-Based Cooperatives

December 2022

A cooperative is a business that is owned and controlled by the people who use its
In 2020, there were 25 farm cooperatives headquartered in Colorado with 20,000+ Many other types of coops also exist that serve the agricultural, farm, and food communities
Cooperatives represent an important form of business organization in Colorado, both in terms of number of members and net business volumes.

Introduction

A cooperative is a business that is owned and controlled by the people who use its services. The user-owners are called members. Typically, the members form a cooperative to supply products, provide access markets, or offer services that would otherwise be unaffordable, inaccessible, or unavailable. For example, they might unite to purchase supplies, process or market products, deliver services, offer labor or care, or enjoy other mutually beneficial services and activities. In addition to using cooperative services, members also receive a share of the earnings made by the cooperative. These benefits are returned to members in proportion to their use. Nationally, research shows cooperatives can generate over $650 billion in revenue, support over 2 million jobs, and account for over $133 billion in income (Center for Cooperatives, 2009). This report discusses doing business as a cooperative and summarizes agricultural and community-based cooperatives in Colorado.

About Cooperatives

In lots of ways, cooperatives operate similarly to other businesses. They use bylaws to frame their organizational operations, are managed by a board of directors, and are usually incorporated into state law, granting them the ability to do business. Yet, they also represent a distinct form of business organization. The main differences are found in three principles that explain the uniqueness of operating on a cooperative basis (USDA, 2016). They are the user-owner, user-benefits, and user-control principles. First, members own the assets of the cooperative and have an obligation to finance its activities. Second, they benefit directly from using the cooperative’s services and indirectly from sharing in the cooperative’s earnings. Last, they . .

Many cooperatives exist specifically to serve farm and ranch businesses. The U.S. Department of Agriculture distinguishes three main types of farm cooperatives: marketing, supply, and service.

Marketing cooperatives are formed to collectively handle, process, and sell members’ farm There are marketing cooperatives in the United States that handle most farm products, including those produced in Colorado: beans, peas, fruit, vegetables, grains, oilseeds, livestock, poultry, and wool.
Supply cooperatives are formed to help members gain access to affordable and high-quality inputs and supplies. This can include seed, fertilizer, chemicals, crop protectants, feed, animal health products, petroleum, fencing, building materials, machinery, and accessories.
Service cooperatives are formed to provide specific production and marketing services to members, like reproduction assistance for livestock farmers or input application, harvest, drying, processing, handling, storage, trucking, and shipping for crop farmers.

In addition to farm and ranch cooperatives, there are many other types of cooperatives that also exist to serve the agricultural, farm, and food sectors. For example, they can include:

Marketing, supply, and service cooperatives related to grocery, food, arts & crafts, and other retail sectors;
Utility cooperatives related to the generation, transmission, and distribution of services such as electricity, telecommunications, and water;
Financial cooperatives including the Farm Credit System, credit unions, mutual insurance, and cooperative finance organizations; and
Social and public co-ops including health, childcare, labor, housing, transportation, and education

Farm Cooperatives in Colorado

In 2020, there were 25 farm cooperatives headquartered in Colorado with over 20,000 members (Figure 1). This represents an 80% decrease since 1950 when there were over 100 cooperatives operating in the state, and closely mirrors an overall decline in cooperative numbers at the national level during this same period (USDA, 2019). However, during this same period, the average size of cooperatives in the state grew in terms of the average number of members and average net business volume (Figure 2). Within the past decade, however, the number of cooperatives in the state has remained relatively stable and the number of members increased.

The types of farm cooperatives headquartered in Colorado in 2020 were about evenly split between marketing and supply cooperatives (Table 1). The decline over time, however, was greater for marketing cooperatives than for supply cooperatives. There are no primarily service-oriented cooperatives in Colorado, however; the existing marketing and supply cooperatives do offer some farm services to their members. Service cooperatives that support the farm sector also exist, like the farm credit system branches, but are not recorded here.

In 2019, Colorado agricultural cooperatives had net sales (supply and commodity sales) totaling $2.67 billion

U.S. dollars (Figure 3) (USDA, 2019). The majority of these sales were from co-op marketing of milk ($1.19 billion) and grain and oilseeds sales ($0.55 billion). Colorado had $0.74 billion in supply sales with petroleum sales of $0.38 billion. The gross business volume was $2.93 billion in 2019, up $0.2 billion from 2018.

Notably, among financial cooperatives in Colorado, the Farm Credit System is the nation’s oldest and largest financial cooperative. It provides operating loans, real estate and land improvement loans, equipment loans, and many other services through local Farm Credit associations.

Other Agricultural, Food, and Community Cooperatives in Colorado

Other types of cooperatives are seeing a resurgence in Colorado, as producers and service providers look for alternative forms of business organization to share risks and rewards and bring in new members (Barnett, 2019). Many of these new cooperatives are highly innovative and exist to specifically serve the agricultural, farm, and food communities in Colorado. Two selected examples include:

Poudre Valley Community Farms (PVCF) A land cooperative, PVCF was incorporated in 2017 as a multi- stakeholder cooperative. It aims to provide affordable and long-term land access to local food producers that are committed to environmental and social sustainability; increase the availability of locally produced food; foster equitable community ownership of farmland; and create a tangible positive impact on society. Members join by purchasing stock shares. PVCF is governed by a board of directors and holds annual member meetings. To date, the co-op has secured long-term leases for several Larimer County farmers, including on land owned by the city of Fort Collins. PVCF also owns land for agricultural use that is protected with a conservation easement in perpetuity. It is leased to a farmer long-term and includes access to livestock equipment and infrastructure.

High Plains Food Coop (HPFC) This was formed in 2008 to create market access in the Denver metro area for rural farmers and ranchers located east of the city in Nebraska, Colorado and Kansas. HPFC is a producer and consumer owned coop that provides flexible product sourcing, ordering and delivery for its members. By leveraging delivery partners, the coop has been able to expand its area of economic impact and has created backhaul opportunities from the Denver area for rural producers in parts of Colorado and Kansas. Each member has one vote on coop issues and the members elect representatives to its board.

The Ownership of Enterprise in Colorado: Agricultural and Community-Based Cooperatives

Introduction

About Cooperatives

Farm Cooperatives in Colorado

Other Agricultural, Food, and Community Cooperatives in Colorado

Further Reading

An initiative of: