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Biodiesel Co-op Development
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NW Co-op Development Center
Eastside Chapter – NW Biodiesel Network Feb. 11th, 2009
Eric Bowman; Cooperative Development [email protected]
1063 S Capitol Way # 211Olympia, WA 98501
360.943.4241
Presentation Overview
1. Intro; the Center2. Co-ops 101 & Benefits of Cooperation3. NW Co-ops in biofuels4. Consumer-owned models5. Group dynamics6. Mechanics of Developing a Board7. Q&A
Forming & Running a Successful Biodiesel Co-op
NW Co-op Development Center
The Centera 501(c)3 nonprofit which provides development services for new and existing co-ops
Our mission to foster community economic development through the co-op business model
We’rea team of co-op developers with skills specific to start-up and organizational business development
Co-op 101
A co-op is any corporation, that’s member:◦Owned◦Benefited◦Controlled
Top 100 co-ops’ 2007 revenues = $150 Billion!◦Ag & Grocery◦Energy/Communications◦Finance◦Hardware/Lumber
Ownership
Member-Owners can be◦Consumers◦Producers/Farmers◦Workers◦Other Businesses
Co-ops in NW Biodiesel
Biodiesel◦Production/marketing
Pendleton Grain Growers◦Joint-ventures
Inland Empire Oilseeds, LLC (Odessa Union Warehouse Co-op, Reardon Grain Growers, Reardon Seed Company)
◦Consumer-owned Bend Biofuels Co-op
◦On-farm consumption/co-op production
Consumer Co-ops Models
Together consumersBrewDistributePurchase
◦Equipment◦Feedstock◦Wholesale Biodiesel
Bend Biofuels
200 member buying groupDistributor-owned card lockNegotiates w/ wholesalers
COCC Biofuels Club◦educational◦brewing non-ASTM spec
Flower Power – Salem, OR
60 MembersSeQuential B99 at cost plus:
◦OR/Fed Road taxes ◦delivery fee ◦$.05 co-op overhead
Pringle Creek:◦waived rent/utilities◦Building garage
Residents in Eliot, ME
65 homeowners and small businesses
Co-op bulk purchase HHO, “bioheat”
Average savings ~$300locked-in price
◦capped "downside protection" ◦always pay the lowest price
RIP
Many I-5 collectives and co-opsTacoma Biodiesel Co-opOlyBiofuelsGoBiodiesel – Portland
◦Biodiesel Weasel
Why Cooperate?
to access resources not individually achievable
Marketable Co-op Benefits; “Goodwill”Keep profits, ownership and control local AccountableTrusted
Unique Characteristics of Co-ops
Owned/controlled by members, not outside investors Exist solely to serve membersReturn surplus to members based on use, not
investmentPay taxes on income kept for investment/reserves;
surplus revenue returned to members who pay taxesEconomy of scale = valued added
Distributed Energy Production
Distributed Resources = Distributed Opportunity• Many small sources• Diseconomy of scale• Rethinking
infrastructure
Co-op Development Stages
Identify a need a co-op could meet
Form Steering Committee Research Feasibility Review Findings (Go/No Go) Membership Drive Planning and Financing Begin Operations (Go/No Go)
How We Can Help
Facilitate identifying mission and goals
Train founding Board members Market and feasibility research Assist with organizing Professional, 3rd party
perspective General business consulting
Project Lifecycle
Organization
Why all the process?◦Going into business is hard and complicated◦Risking your money and your neighbors
Need an agreed upon roadmap
If you don’t know where you are going, any road will get you there – Wizard of Oz
Why form entity at all?
CreatingSomething bigger and beyond oneselfFormal structure to work together
(governance/conflict resolution)Solid foundation for growthLegitimacyCommitmentLimited liabilityEconomy of scale
Why not LLC?
LLC = tax flexibility of a partnership + limited liability of a corporation
Pros (primarily flexibility)◦ More attractive to capital (if you need a lot)◦ Make quick decisions to respond to market pressures◦ Members can include persons, other LLCs, S-Corporations
Cons◦ Legal costs◦ Power can concentrate with management or Board◦ Model is new; sometimes liability isn’t so limited◦ Governance (Board/operating agreements not always required)
Co-op to Co-op Supply Chain
Relationships and Authority
Management
BusinessBoard
Membership
Elects
HiresOperates
Services
Start-Up Board Development
Shifting functions1. Steering Committee or Exploratory Board2. Founding Board3. Working and/or Managing Board4. Governing Board
◦Post-hire role more strategic
Board’s Circle of Responsibilities
1. Represent members2. Establish policy3. Supervise top management4. Oversee asset development5. Preserve co-op character6. Assess performance7. Inform members
From USDA’s Management Tip Series by James Baarda (CIR6)
Recruitment
OngoingCandidates don’t just appearBe strategic
◦ i.e. PlanPlan for attritionThe future!
The U.S.
The Entire Universe
Co-opBoard
Members
Regional FuelConsumers
BiofuelConsumers Input
Providers
Go
vern
men
tS
take
ho
lder
sNGO
Stakeholders
Group Dynamics
Forming individually focusedStormingopening upNormingbuilding trust Performing interdependent
-----------------------------------
What next?Adjourning, Mourning, re-Norming or Transforming
Forming
Norming
Storming
Performing
Creating a Shared Vision
Strategic PlanningWorld is ever changing Requires sense of where you’re goingVisioning Process:
◦Agree on participants/roles◦Design process◦Conduct process◦Format statements◦Keep it alive!
“Opportunities for improvement”
Dysfunctional group dynamicsDisengaged membersUncertain of rolesFocus on triviaLack follow thru
Solutions
This is a relationship, treat it as such◦Cultivate◦Maintain◦Socialize
Your job = hold each other accountable◦Avoid or move beyond unhealthy
dynamics◦Follow through◦Focus on what works, not what
doesn’t!
More Solutions
Conflict◦Necessary & productive◦= relationship building◦Deal with creatively
Seek out trainingFocus on vision Behave with maturity
Why do it?
Compelling economic interestGuidance exists
◦Everything we just discussedBe a part of a teamExperience challengesOpportunity to serve & build something together:
◦Collective equity, rather than private◦Accountable business
Personal prestige, pride & satisfaction
Thank You!
Eric Bowman
Northwest Cooperative Development Center1063 Capitol Way S # 211 | Olympia, WA 98501
360.943.4241
[email protected] | www.nwcdc.coop
Fostering community economic development through the cooperative business model