Starting a co-op

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Has anyone ever been on the ground floor of starting a co-op ? If so will you share with me ? I am looking into starting a rabbit co-op to better market meat rabbits from the north country .Thanks

-- Patty {NY State} (fodfarms@hotmail.com), March 12, 2002

Answers

Patty,

All you really need to do is establish a membership group and function by parlimentary procedure to establish your governing administration and write your organizational bylaws. A co-op is not just a club,it is also a financial entity.

Once your structure is established, its generally acceptable to require membership fees to finance overhead operations by your elected board officers.

Your local extension office may help you to research all the particulars for your area.

Also if you can get an attorney and corporate officers in your area willing to form a temporary advisory board to assist with establishing your organizational facets, it may be of help for you as a "co-op" is not just a "club", it is also a form of business. There are many advantages to establishing a co-operative. Care has to be taken to make it function as intended and reduce potentials of corruption from within, hence the neccesity of parlimentary procedures and bylaws that require membership vote approval to be changed.

-- Jay Blair in N. AL (jayblair678@yahoo.com), March 12, 2002.


It's likely that you'd have to register a co-operative with some state government registry, and be subject to inspection or at least oversight by them. Check with your state government information services - whoever is responsible could then tell you - probably has advisory brochures or booklets. They tax you - get your money's worth.

-- Don Armstrong (darmst@yahoo.com.au), March 12, 2002.

OK guys a coop seems like a pain in the butt ! what about an association ?What we are looking to do is buy supplies and food in bulk .And to be able to market in a larger group.

-- Patty {NY State} (fodfarms@hotmail.com), March 12, 2002.

I suspect (but remember, I'm in a different country) that the group buying is no problem at all. Problems start with the "market in a larger group" - i.e. generating income. At that stage, you're suddenly in the corporate area. Not nearly as much problem if you have a non profit group.

-- Don Armstrong (darmst@yahoo.com.au), March 12, 2002.

Patty, the ag coop has some very good tax and orginizational oppertunities! You gave up on that _way_ too fast. In the late 1990's some ag coops had some very difficult times, and they are now more closely watched by the govt. But, certainly something you should look into! They have special programs & banks and all to assist ag coops.

Contact the local extension or Farm Services agencies, and they should be able to steer you towards the groups that would help you.

It is not a good idea for a coop to charge it's members dues, that is not how they work. Generally, you sell a share of stock to each member, for $10 or $100 or whatever you want. Then those people owning shares will recieve a part of the profits the coop makes at the end of the year. If their are no profits, the members get nothing. If there are profits, 20% to 100% of these profits are returned to the members as a dividend check. If the coop keeps 80% of the profits, it must reinvest it in the business. At retirement age, each member will get a lump-sum of this money that was not returned right away.

In this way, the coop qualifies as a non-profit. It can do business with anyone who walks in off the street. But only members will get the 'profit-kick-back' at the end of the year and at their retirement. If you don't own stock, you are not a member.... The coop pays very little taxes but does get tax benifits. Each member must pay taxes on their full 100% dividend each year, whether the only got 20 or 30%. The retirement fund you get then tax free, as you paid taxes on it as you went...

There are other ways of doing it - instead of owning stock, you can set up a minimum amount of business per year that qualifies people to be a member each year - $500, or $3000 business in 2002 & you are a member, less than that and you are not...

You will need the members to elect a board of directors, and have a manager, at least yearly meeting, etc. This part must be run like a normal business, and members must have access to the people calling the shots.

But, it does not have to be overly complex. You can run one with 10 members, keep it legal but simple. I would certainly go after this if you are really serious about it.

I'm a member of 4 coops or so, most pretty large ag ones, but a little one would work just the same.

--->Paul

-- paul (ramblerplm@hotmail.com), March 12, 2002.



Patty, I wa sone of the 6 founding members of the Mid-Atlantic meat goat & Lamb marketing Cooperative. If you will e-mail me privately and ask specific questions, etc I will provide for you what help i can. Each state is different. You will ahve to first discuss with the st dept of ag, wouldn't hurt to ask Cornell for help or to join, then you will need to draw up by-laws, operating procedures, and so forth. Depending on your goal will determine what you will need to do next. I ahve 3 dear friends in western NYS who would love to help if they are not too far away.

Bernice

-- Bernice (geminigoats@yahoo.com), March 12, 2002.


Might get some info. from: Co-op Starting, http://www.cooplife.com/startcoop.htm, There are two paths to becoming a co-op: Incorporate under a co-op statute in any state or Incorporate as a corporation and adopt cooperative by-laws.

-- BC (desertdweller44@yahoo.com), March 12, 2002.

Associations and co-ops quite often are reconized in the same fashion by local government. As you are dealing with agricultural products for sale ultimately, you are regulated by govt agencies whenever grouping for economic benifit. Its not a pain in the butt, just conditions to be met to realize benifits.

-- Jay Blair in N. AL (jayblair678@yahoo.com), March 13, 2002.

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