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Locals in Ravalli County consider creating co-op to aid business owners, community

When Jim Farley, owner of Small Diameter Logs in Hamilton, wanted to increase his company’s visibility in the Bitterroot, he considered opening a storefront where he could sell his hand-carved furniture.

By DANA GREEN Staff Reporter

http://www.ravallinews.com/articles/2004/07/19/news/news03.txt

But up-front cash was the problem. So Farley thought that forming a cooperative might be the answer.

"There are so many craftsmen in the valley – all of us are struggling little businesses," Farley said. "If you have a cooperative, people get together and figure out how they can benefit each other."

With his idea in mind, Farley approached Julie Foster for advice and assistance. Foster, a Stevensville resident, recently received a grant through the Montana Cooperative Development Center in Great Falls to provide technical assistance to individuals interested in cooperatives in Ravalli County.

Assistance can range from conducting feasibility studies to facilitating meetings, according to Foster. But first, she’s just trying to spread the word about what cooperatives can do for rural communities.

Cooperatives are often a foreign concept to folks used to the dynamics of cut-and-dry for-profit capitalism, Foster said.

"Sometimes it’s hard for people to wrap their minds around it – it’s different," she said.

The idea of cooperatives is not new. In the past, rural communities have created co-ops to provide electricity, food, grain storage, telephone service, and other needed services that were unavailable.

Today, more than two-dozen rural electric cooperatives, including the Ravalli Electric Cooperative, provide electricity to Montana’s sparsely populated and far-flung rural communities. In all, about 40,000 cooperatives are in existence in the United States.

In its simplest form, a cooperative is a group of people who pool their resources to achieve a common goal. Providing a service, rather than making a profit, is at the core of the cooperative, and the people who own it are also its customers. Usually year-end profits are either invested back in the company or redistributed to co-op members.

However, profit is good – it allows a fledgling co-op to grow and provide additional services, according to Foster.

"It just needs to break even, but hopefully it can make a little bit more to strengthen its services and grow," Foster said.

Like a limited liability company (LLC) or other form of incorporation, co-op investors create by-laws that establish the ground rules for membership. Unlike some business forms, however, a co-op is a democratic institution: each share garners one vote.

"It’s a very level playing field," Foster said.

Cooperative doesn’t necessarily mean small: Recreational Equipment, Inc. (REI), Cenex, and Ace Hardware are all examples of national, large-scale cooperatives, according to Foster.

With the economic downturn, some rural residents in Montana have used the cooperative model to provide community services that have either disappeared or been drastically cut back.

In Conrad, Mont., a group of women discovered that their local fitness gym was closing. The women formed a co-op to try to buy the gym and keep it running.

In Libby, when the assisted living center shut down due to financial problems, community members formed a home health care cooperative, allowing senior citizens to buy shares and receive in-home assisted living care.

Health care cooperatives have "become a workable way to keep elderly persons in their homes," Foster said.

While other stores can pack up and leave, co-ops are designed with the community in mind.

For-profit corporations are not always "community oriented," according to Foster, and they can always leave for more lucrative pastures.

"A co-op can be a way to bring that service back," Foster said.

Worker cooperatives are also on the rise, according to Foster. Owned by employees, a worker co-op contracts their labor to an employer. The employer receives a highly skilled workforce, while the employees can often negotiate a higher wage and receive benefits through the cooperative.

"There are some examples back east and it works real well," Foster said. "It offers a stable, trained work poolŠthat’s not turning over every fourth month."

Cooperatives are particularly suited to agriculture, where, say, making french fries out of your potatoes is profitable, but often equipment and labor are cost-intensive.

Working together, ag producers can add value to their goods – and increase production and advertising.

Mission Mountain, a Ronan-based economic development center founded in 1999, provides a processing center, commercial kitchen, marketing and technical assistance to food producers throughout western Montana. Mission Mountain helps farmers and ranchers add value to their product, according to Jan Tusick, Mission Mountain cooperative development specialist.

For example, Flathead Native Agricultural Cooperative has been able to make smoked strips out of their beef using the organization’s processing center, Tusick said.

"It’s the community that makes it happen – they just need support," she said.

Like any business model, a cooperative requires a great deal of forethought and planning. An ag cooperative has to be very focused to be successful, Tusick said.

"You have to be clear: What is the service? Is it of value? That group needs to stay true to the need and stay focused," Tusick said. "It’s a challenge – especially when you have a diverse group of people."

Farley is now weighing the idea of a local artisans cooperative: each member would pitch in to acquire a bricks-and-mortar crafts shop where members could display their work.

"Crafts made in the Bitterroot could be displayed," Farley said. "It would give us more exposure."

In Foster’s view, while a local cooperative may never become the next Wal-mart, it could allow Bitterroot artists, farmers, or ranchers the chance to make their dreams for their small businesses a reality.

"They could take their business to the next level," Foster said. "The point is to make successful businesses happen in Montana."

Individuals interested in more information on cooperatives can call Foster at 777-7185 or visit Mission Mountain Market at http://www.mt-missionmtnmrkt.com.

Reporter Dana Green can be reached at 363-3300 or at [email protected]

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