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February 19, 2010

Co-ops: for Farmers What's Old is New
I love my food co-op. It's not a secret. Heck, I blog for it. And what works for consumers works for farmers like Sam Simon of upstate New York, too (via the NYT):

He began his dairy operation in 1999, more as a labor of love than a business venture. But he soon realized that the economics were unsustainable: Farmers couldn't survive being paid roughly the same price for milk that they were in the 1970s. "This is nuts," he thought.

So he looked for an alternative in which a farm could produce premium milk, process it and sell it on its own label. The farms he looked at that had tried it weren’t succeeding, so he came up with the idea of a nonprofit co-op selling premium-quality milk, without artificial hormones, traveling 80 or so miles instead of 1,200, to customers in the Northeast. The hope was that people would pay more for locally produced, higher-quality milk, and that the extra cost would be passed on directly to the farmers.

He signed up eight family farms in Dutchess and Columbia Counties that produce 1.6 million pounds of milk a month, 200,000 of it sold through Hudson Valley Fresh. So far it's working. The farmers get paid a price, now $21 per hundredweight of milk, based on their cost of production, not on the fixed commodity price, now about $16, up from as low as $11 last year. That can be the difference between breaking even and not. Hudson Valley Fresh sells a third of it in New York City, in places like Whole Foods, and the rest in the Hudson Valley and Connecticut and on Long Island.

Milk is a troubled commodity, of course, but much of that trouble comes from the fact that, thanks to Ronald Reagan, its price is set on the Chicago Mercantile Exchange, where large speculators can (and have) manipulated the price. Even though fluid milk is a perishable commodity, for some reason commodity traders get to determine the wholesale cost, which now has no relation to the actual cost of production. That's capitalism for you!

Meanwhile, the Philly area also has a great example of another kind of successful farmer co-op in Lancaster Farm Fresh, which joins fifty farmers into an entity that can efficiently distribute tons of produce into urban markets from New York City to Washington, DC.

And small scale co-ops may even provide the way forward for ethanol as well -- not as a means to produce fuel for cars on a massive scale, but as an alternative to diesel fuel for farm equipment.

Co-ops have a long history in agriculture but have struggled since corporate consolidation became the watchword in Washington DC and state capitals nationwide. To this day, the USDA remains far more interested in low retail prices of commodities, irrespective of the impact it has on farmers themselves or rural communities. But with its new Know Your Farmer, Know Your Food initiative, there seems to be a bit more momentum coming from the USDA for helping farmers establish co-ops. Hoping corporations behave benevolently is not a plan. Giving farmers the ability to act as a countervailing force to corporate control of agricultural markets? Now that's a plan.

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