Photo by Christopher Paquette via Flickr Creative Commons
When businesses are run by the people served by them, the local economy is strengthened. At least, that’s the mentality behind cooperatives, or co-ops, businesses owned collectively by its customers, employees or both.
Philadelphia has several cooperative grocery stores, including two Weavers Way Co-op stores, Mariposa Food Co-op, Creekside Co-op and Swarthmore Co-op. These five stores make up a cohort that will help determine the feasibility of forming a purchasing co-op, which would serve as a product hub for at least these stores as well as for local farmers.
Philadelphia Area Cooperative Alliance was recently awarded a $25,000 grant from the U.S. Department of Agriculture‘s Local Food Promotion program to oversee the feasibility study. The grant will be matched in kind by PACA’s members’ time — a value put at $8,813.
Purchasing co-ops “exist to help keep small businesses strong and independent and able to compete with larger corporations,” said PACA executive director Peter Frank. Having a centralized location for the holding and distribution of products would benefit both buyers and sellers: Food co-ops could save money by buying in bulk, and food distributors could cut down on travel expenses by only needing to visit one place to deliver goods. Distributors could also reach customers they wouldn’t be able to otherwise because of distance and time restrictions.
From our Partners
PACA, which itself is a “co-op of co-ops” of different types in the Philly area according to Frank, will head the study. Cooperative business development center Keystone Development Center will assist in conducting the study, and the involved food co-ops will provide input.
The ultimate goal of the study is to form a business plan that can be used to open and operate the business. If the study does indeed find such a business to be feasible, PACA will immediately set to fundraising via grant applications and asking co-ops to invest. That money will be used to begin buying equipment and hiring staff. Possible warehouse sites will be discussed in the study, too.
PACA’s pre-study estimates are that a purchasing co-op could help each participating food co-op to increase local sales by 10 percent or more, and that eventually, the purchasing co-op will serve 11 area food co-ops with sales up to $65 million.
The existing co-op community within PACA aided the nonprofit’s receipt of the grant, Frank said.
“The thing that made us successful was that we had already been working with the local food co-ops that are going to be supported by the project,” he said. “It’s a tangible project, which is much more attractive” to grantmakers.
If the project were to come to life, the purchasing co-op itself would be owned by both the participating co-ops and the purchasing co-op’s employees (drivers, management, etc.). In other words, it would be “democracy throughout all levels,” Frank said.
Frank sees the greatest benefit of a purchasing co-op to be its potential to increase the viability of all organizations involved.
“We are looking to build infrastructure to support our local co-op movement,” he said. “We have a significant amount of food co-ops in the region, and this is a way to really substantially support them. We consider this a movement that we’re trying to build.”
The study is expected to be completed in mid-summer and, the process of opening the business — if the study finds it to be feasible, that is — would begin soon after.