Amanda:
Sam what is the Co-operative Federation?
Sam:
The Co-operative Federation is a peak body for co-operatives and co-operative enterprise. Co-operatives from all types of industries join us as members and we support them, promote them and represent them. It ranges from practical advice and support with their constitution, their rules, dealing with the regulator and governance training for their boards, through to strategic planning, conflict resolution and everything in between. But we also promote them, the model of business of organisation, and also represent them to government.
Amanda:
For anyone that’s not familiar with the co-operative business model, can you just explain a bit about what that is?
Sam:
So in one sense a co-operative is just a business structure you can make, you can be a company, you can be a partnership and you can be an association. So it’s just a structure, it’s one you can choose, but it’s a unique structure. It’s a structure that has democracy at the base of it, one member one vote, it’s a structure that has a global family, it’s a structure that has principles that no other business or organisation or structure has. So there are seven international principles that co-operatives sign up to, and those principles internationally agree to legislate it in every state and territory in Australia. So they’re in the law and they’re part of what co-ops are about, they talk about autonomy and independence, they talk about democracy, they talk about concern for community, and they talk about cooperating between co-operatives.
Amanda:
So what kind of examples of co-operatives have you seen in terms of helping people think about is a co-operative something that I would be interested in doing, what are some of the different places you’ve seen co-operatives working well?
Sam:
We have a new co-operative in Australia that got set up in Sydney that’s an orchestra, the members of the orchestra are the members of the co-operative, it’s a not-for-profit, and it’s going to seek charity status. One of the other components about co-operatives–one of the other unique features is that members need to be active. Every co-operative has a rule as to what members have to do to maintain their active status, and in the orchestra they need to at least be part of one concert every year to maintain their memberships.
We haven’t seen an orchestral co-operative in Australia as far as I know before so that’s an exciting one, so they are across nearly every industry. Some other forming ones at the moment, there’s a new tugboat co-operative forming in Sydney Harbor, where the crew that work on the tugboat are the members of the co-operative. There has been another tugboat co-operative in Australia and that was in the 1870s in Newcastle, so we have found a previous example. But orchestras and tug boats, they’re united, the co-operative structure, the active membership and the principles that they operate by.
Amanda:
So you talk about the characteristics which will obviously make co-operatives unique. I wonder why [someone] would choose a co-operative over a different business structure?
Sam:
That’s a good question. Really for any entity or any project you’re solving an issue, and that’s the same for co-operatives but there are a number of reasons why people choose the model. The first co-operatives in Australia were dairy co-ops, and that was really solving the problem that individual dairy couldn’t afford to process milk, and pooling that together and marketing their milk was a logical way forward. Co-operatives very much have a long-term outlook so they’re set up with longevity, and not just about the current but [Audio Cut Out 0:04:16.5] about future generations.
So there are a number of co-ops in the agricultural area, but also in childcare that are set up like that. So that the co-operative provides a service to the members, and then as members retire and new members come in the co-operative is there to support them. So it doesn’t have that profit motive, it has a long term community focus. So I guess two reasons, the democracy and also the longevity that you would choose the co-operative model. I think there’s a lot of trust in the co-operative model, and particularly again I’d say more experience with them in rural and regional areas of Australia and across the world, they’re well-known and they’re established there.
And some co-operatives are very [Audio Cut Out 0:05:08.7] holding together towns in Australia, some co-operatives are almost bigger than the town. And they will make the difficult choice to take over the service station if the service station is closing or the hardware store, they know that their community needs that and they will make that sort of investment. Whereas for a purely profit focused organisation they wouldn’t do that.
Amanda:
I was actually interested, and doing some research I found out that of the top 10 performing co-operatives in Australia six of them are connected to farming in some way. That blew my mind really; they’re some of the largest and the oldest businesses in Australia. And you’ve spoken about this with solving the problems and the long-term view to pass on to generations, but I’ve also heard some people say that the co-op model while being really successful in the past is quite old fashioned and no longer relevant. And I was just wondering what you thought about that view?
Sam:
Co-operatives just like other businesses have a lifecycle, and sometimes the market has moved on, the community has moved on and it’s time to close the co-op, same as any other business. Often when a co-operative closes, it’s often the co-operative model that’s blamed for the end of the business, rather than just the reason for the co-operative to exist is gone, the problem is solved or the market has moved on. The co-operative sector in Australia is having a Renaissance since the international year of co-operatives in 2012, the UN declared international year, and we are starting to turn that around.
And there was certainly for the 30 years before that, there was a trend towards demutualisation. The neoliberal economic policies led to a number of Australia’s larger co-ops demutualising and moving into a more company structure, a more remote shareholder structure, there was definitely that sort of movement. Some academics say that the demutualisation process that happened in Australia was at one of the highest rates globally, that we were really quite the leaders in demutualisation over those 30 years before 2012, but I would put 2012 as a real line in the sand.
And since then there has really been a turning around. And I’m mentioning that because I think we really need to promote the fantastic elements of co-operative enterprise. Co-operatives are not the solution for every economic or social or community issue, but they work in many, many scenarios, many, many environments, and they’re certainly the solution for a lot of ways. The important thing to talk about in that framework is the real exponential growth in technology has provided a really good platform for co-operative enterprise to renew itself. And there is a whole movement called Platform Cooperativism globally at the moment, it started in New York in the U.S but it’s spreading.
And these are platforms where the IT platform facilitates that ownership, and to say that they’re old fashioned or backward is rubbish. We’re talking about Uber, that’s owned by the drivers, the drivers own the platform through a co-operative, and they have one vote in how the platforms run. But those sorts of businesses are setting up, we’re talking about Fairbnb rather than Airbnb, where the people who are providing the rooms or their houses have a say, have a stake in that platform and in that enterprise, and the co-operative model fits perfectly for that.
We’re talking about Smart Co-op in Europe, which is a platform for freelance workers where the co-op does all the back office, the invoicing, the insurance, the Workplace Health & Safety, all that support and training, the co-op does all that. And they’re able to go out and be freelance workers and that’s all done through a platform. So I would really challenge anyone, I’d love to talk to anyone anytime, if they’re saying that co-ops are old fashioned, that impression is out in the community, I won’t deny it, but there’s lots of evidence to the contrary.
The other thing I’d say is that the co-operative model is very flexible, and there’s a real impression that it’s inflexible, it’s democracy and there’s extra process. But it’s actually a very flexible model, and you can have a not-for-profit charity set up as a co-operative, you can have a big grain transport and marketing logistics company, like CBH Group, the biggest co-op in Australia. You can have that set up as a co-op, and those co-ops that have survived particularly in rural areas, in regional areas and in agriculture in Australia; they have survived because of the flexibility of the model.
Some of them have started as dairy co-ops, as I was saying before that dairy was the first industry really that used the co-op model. Some of those dairy co-ops are no longer doing dairy, they’re doing hardware and nursery in their towns now or they run the local IGA, the local supermarket, and they’ve adapted for whatever reason, the butter factory, the dairy factory hasn’t been viable anymore, but they’ve seen what their town still needs and have delivered a solution.
Amanda:
So you’ve obviously had the opportunity to work with a number of co-operatives over the last seven or so years, what’s the story that excites you the most about a co-operative that you’ve worked with?
Sam:
Two probably come to mind first, but others will. I’m still excited about the orchestra. When I am talking to directors and managers and members of co-operatives about governance, I do often talk about CBH Group, Australia’s largest co-op. And I think there are a number of interesting lessons out of what they’ve done and what they’ve achieved, the challenges they’ve gone through. So they’re owned by the wheat farmers in WA, they own the silos, the trains, the train tracks, the port, and then warehouses across the world. So they own the whole supply chain to get the wheat from the farms to the port and off overseas.
And they receive regularly takeover offers or de-neutralisation offers from the corporate sector, because everyone knows it’s an amazing business. And the farmers take some benefit from all that supply chain down the line, so they see economic benefit from all the way down, and they can control that supply chain. As well as that there are thousands of staff in the organisation, but the CEO, his focus is to reduce the price per tonne that farmer’s pay to get their wheat to the port. That is his focus, not quarterly shareholder returns, the focus is that price.
That really does make the difference for grain farming in WA, grain farmers in New South Wales pay three times the price per tonne that grain farmers in WA pay, and it really supports their industry. CBH as a co-op and following that principle of concern, the international principle for concern for the community, gives back a lot of money to its communities too. So where its farmers are it’s donating to the local show, donating to the local community group, it really does support its community in that way. And one of the other things they do that I find interesting and is important to mention, is the education of their members and the community about the co-op and how it delivers benefits to them.
So they go out and do member education, when they get a demutualisation offer they go out to their members, they have meetings across the state and explain here’s the offer, yes you might get several hundred thousand dollars now to sell up the co-op, but this is what farmers are paying in other states to move their wheat, and this is likely to be what price you’ll be paying in a few years if you do that. That sort of education and that dialogue is really important; the number one reason why co-ops fail is a failure of member education. It’s about understanding the co-op, but it’s also about understanding the benefits that the co-op delivers for them.
So the last vote they had on a demutualisation they needed 75% support from the farmers and they got 85% opposition, and the vote keeps going higher against demutualisation from those members, so they really understand. And the final point that I liked from CBH is the Board and the Chair who has just finished up Wally Newman, also talks to the farmers a lot about the fact that their predecessors set up this co-operative and set up this structure for grain farming in WA. And selling up the co-op is really [0:14:53.0] your forebears, your predecessors, but also future generations of farmers, because without the co-op there they’ll be a lot worse off on their farms.
So while it’s very tempting, particularly farmers who are at the retirement age and are thinking about succession, it can be very tempting to want to cash up or cash in the co-op. It’s really important to say that it’s there for the long-term and it’s there for future generations to be able to farm. The other one that I do think about is Farming Together supported co-operative that started in Mildura called Food Next Door. And they’ve received a large grant now from the Victorian Government and are doing wonderful things in that part of the world, focused on sustainable farming and focused on sustainable food production and food systems.
So they’re a group of people who couldn’t easily buy locally produced food in their area, so they set out to solve that problem and they’re solving it. They’re sourcing land for people who know how to farm to grow stuff locally; they’re selling fruit and veg in the town through a veggie box system, so it’s much, much easier for people in Mildura to access the food. And they’re focused on looking after the land and regenerating the land as well, and a lot of the farmers are new migrants and new refugees who have not had access to land, but have some great skills in farming who used to farm in the countries they came from.
So that’s a fantastic model, and they chose the co-operative model because it fit with their philosophy and what they’re trying to do. There’s a range of members so they have members who are farmers, they have members who are shoppers, just buying the fruit and veg, they have landowners who are members, and they have volunteers who are members. So they have four types of members and it’s a really inclusive community project, well supported now by the Victorian Government.
Amanda:
Their co-operative is quite an interesting, almost complex, quite a complex model that seems to have worked really well in their community. And it sounds like they’ve done some great things, and they’ve got some really exciting projects on the horizon too.
Sam:
I was with them in January and we did some governance, we did a one day governance training session with their board, so we’ve been involved throughout most of their–well all of their lives, really it’s a great project. And the environmental benefits, the social benefits, the community benefits are just fantastic, and they have two farmers from East Africa on their board, it’s a great project.
Amanda:
So what I’ve heard so far from you with those great examples, is some of the secrets to the long-term success of co-operatives are things like always putting your members and the community in which you are situated as their top priority. Making sure that you communicate and educate your members and the community, in order to bring everyone together and make decisions that are the best for the members in the community. Would that be right?
Sam:
Sounds good to me Amanda, you could go out and promote co-ops now.
Amanda:
[Chuckles] not quite yet. But any other secrets to success that you think you’ve seen in your experience?
Sam:
One idea I’d like to challenge as well is that the burden of democracy inside co-ops, don’t they always fall apart by personality clashes and those sorts of ideas, it’s just not right. When people get involved in a co-op they know it’s about democracy, they come with a framework of cooperation and working together, and I think that’s important to say. But other businesses and other organisations fall apart from personality and personal issues all the time. And it’s again that idea that co-ops get the ‘oh it’s the co-operative model, that was the reason why that fell apart’, no. Well let’s talk about all the other businesses and all the other structures that fall apart due to personal issues or fallings out etcetera.
I think it’s important when people come into a co-op or join a co-op it’s important to educate them. A lot of co-ops have processes, where you might have to go to a session or a seminar or sit through something before you can become a member; I think that’s really good. There are some housing co-ops alternative communities around that have up to a year of process before you can become a member, and actually having that time taken for people to understand and think about joining I think is important. There’s a few pointers as to what I think would lead to a successful co-op, and the first one is really about previous collaboration or that group already know each other.
Perhaps they’re already collaborating in some less formal way, and then moving into being a co-operative is because they need to formalise it for whatever reason. Another Farming Together assisted co-operative was called Greenspace Turf Co-operative. There was a group of turf growers who really had a history of collaborating already, by themselves none of them could fulfil some of the larger contracts, so they were already for years asking each other ‘have you got any grass to be able to fill this larger contract?’, and then the co-op was just really a formalisation of that process.
They’ve had a solid basis of working together already so that’s a good thing; you don’t have to have that. The second point I think I’d say is that like any project, any business, any organisation, any enterprise, it needs a clear idea, what are we trying to do, what are we not doing, what’s the problem we’re solving. Any project of a football club, a business, whatever, needs a good plan and clarity about what they’re actually doing. So co-ops in Australia basically need to have five members, nearly always you can get away with less, sometimes in a transitional way.
It’s good to have a group at the start, sometimes you can see co-ops where it’s someone’s passion and it’s one person’s idea, and they’re trying to drag others into it to get the five or get the 10 and get a co-operative going. You need a group of people who have the same vision to get it going well, and then certainly that education space is keep communicating with your members, and communicating and explaining what the co-op’s doing and how it’s doing it. In some ways we’re not educated at school and we’re not educated in universities about them, and that’s something that we as an organisation are working hard for.
Accountants and lawyers are not required to learn anything about co-operatives in Australia at the moment, and that’s a real problem for our sector. And we are one of the business and organisational structures you can choose for your enterprise, but accountants don’t have to learn anything about them and lawyers don’t either. So the education of members in the community but also the education of the professionalism, the advisors is a real problem, and that can be why they fail. Another point is again while I say they’re unique and beautiful and different co-operatives they’re also the same.
They need to be well-managed, they need to be well-run, they need to be just as well run as any other organisation, just because it’s a co-op doesn’t mean you can forget about it. Maintaining good relationships, having people understand their roles and responsibilities, clear focus on the strategic objectives, all those classic business and organisational frameworks needs to be there for a co-op as well.
Amanda:
Oh Sam you’re amazing, you’re answering the questions before I even ask them. Fantastic, it makes my job easy [Chuckles].
Sam:
Yeah, well I’ve got a lot to get off my chest.
Amanda:
Actually it’s making me feel really excited, not that I wasn’t before about the co-operative model, because I’ve seen some amazing co-operatives that have been working with Farming Together over the last few years. But in fact the opportunity that’s there to embrace technology, to look at new and innovative ways to bring the co-operative to life. The gap that’s missing in that education, as you say both potential members, community, but as well as the professionals who are there to assist co-operatives, imagine if we could build up that space, how powerful and strong these new co-operatives could be with that kind of expert advice and support.
Sam:
Very often I hear people say oh well I spoke to my accountant; we wanted to do a co-op because that was what we as a group thought was the best model. But I spoke to my accountant and the accountant said ‘oh look don’t worry with that, just be a company’. I mean I don’t blame the accountants, it’s what they’re familiar with, its structures they know and they’re managing a lot, and there are 1,700 co-operatives in Australia and hundreds of thousands of companies. So you can set up a company in a day in Australia and co-ops will take a little bit longer, because when it’s democratic you need to get some of the basic parameters right and have those discussions, so it can take a little longer to establish.
Amanda:
You touched earlier on some of the reasons why co-operatives might fail, and I know no one likes talking about failure, but talking about failure can be a really helpful learning opportunity for others. You’ve said things like if it’s one person’s idea and they drag people into it, or the lack of expert advice, or not running the co-operative like a business. What are some of the other reasons that you’ve seen co-operatives fail?
Sam:
Look I think all entities can benefit from support in the early stages. And yeah some of the new co-operatives that were set up with the support of Farming Together have struggled without that bit of further support. I think you can really learn a lot from what co-ops are doing in other industries, so I think an agricultural co-op can learn a lot from a childcare co-op, and just how they engage with their members, how they keep the co-operative running is really valuable. I believe a lot in cross-pollination, we run governance training, people come from all different industries from their co-ops, and I think that can be really inspiring for people to hear how other co-operatives have faced challenges, similar challenges that they face. Of course the industries are different, they might be a ski lodge, they might be a fishing co-op, they might be game development, whatever industry they’re in. But there are some basic things about–and remembering the principles of co-operatives and remembering the members, it’s a member-focused organisation, the members need to be front and centre, all those things are important.
Amanda:
At those events where the different industry co-operatives can come together and share their stories, what are some of the challenges that you’ve heard groups talk about in sharing their experiences?
Sam:
The first one that comes to mind and maybe I’m banging on about it too much, is just that member education, member engagement area. Some co-ops will have thousands of members, so a consumer co-op where the members of the co-op are the shoppers, they might get a 10% discount if they come and shop, and they have to shop regularly to maintain their membership. But it can be hard to keep those members feeling part of something as distinct from an agricultural co-op, a dairy co-op say, where every day the farmers are providing milk into the co-op, they’re living the co-op.
So those discussions about how you communicate with members, the social aspect, having social events, really working on people understanding the benefits the co-op’s giving by making them feel a part of it, and then how you engage them in the decision-making. You can just send them an email once in a while and they can click and vote yes or no, or you can actually have fantastic meetings with speakers and events and that sort of engagement. Everyone is challenged with technology; it’s not just for co-ops it’s for everybody. But banks are just IT companies that move money around now, every business is almost an IT business that does something, IT is just so central now. Innovative ways that co-ops are using IT are certainly part of the discussions.
Amanda:
What’s something that people don’t know about co-operatives?
Sam:
There was a study done saying that 80% of Australians were members of a co-operative but only 20% realised that they were. Most people are members of a co-operative and may not realise and are probably members of two or three. Unfortunately we’ve lost the University Bookstore Co-operative recently which had 2 million members, and nearly everyone who’d been to university in the last 50 years was a member of that co-operative. So most were members of that and may have forgotten that lifetime membership for $20.
Amanda:
What is it that you love most about working in the co-operative sector?
Sam:
Number one thing I love about the job is the people, so people have got involved in the co-operative, got active in their co-operative for a community based reason or a group based reason. And it’s very rare to find people who aren’t thinking in that way and aren’t focused in that way, and so they’re just great people to work with. And if there are people who have got another agenda, most of the time they’re only there for a short period and then they depart. So no it’s great, they’re absolutely great people. I mean my particular role, the diversity is fantastic, so one day I’m talking fishing and the next day I’m talking childcare, skiing, so it is really diverse that way, so that’s fantastic.
The new co-operatives and forming new ones and helping people to do that, so that excitement of people, they’ve got something they want to do, they’ve looked into it and they’ve chosen to do it in a co-operative way, and that’s really exciting. At the moment I’m helping some pecan farmers with a new co-operative, I’m helping some smash repairers with a new co-operative, and I’m helping some bilingual aged care workers with a co-operative. So you can see that those are three of the new co-operatives I’m working with at the moment, you can see the diversity but it’s also really exciting, all the projects are disruptive, they’re going to shake up their industries.
That’s just really exciting the aged care workers, so they’re looking at being a workers co-operative. They’re not very well paid and agencies take a large amount of money out of their pay, so they’re looking at cutting out the agency and being the agency themselves and owning the agency. A great solution, the co-operative is going to be focused on that they have a great workplace and focused on the care for their clients, and we don’t need an agency sitting in the middle there. They can run it themselves and have much better lives and a much higher pay rate for the important work that they do.
In the smash repair industry it’s extremely dominated by insurance companies and this co-operative is looking at challenging that. So if you’re a smash repairer the key relationship you have is with the insurance companies, because customers are sent to you by the insurance company and they don’t really have a relationship with their customers anymore, it’s very hard to build a connection with customers. So they’re looking at challenging that and that sort of disruptive nature of the project, focus on cutting out third parties and delivering benefits directly to the people doing the work or growing the fruit or whatever, is what I really like about it.
Amanda:
Yeah, it sounds like a really exciting place to work. And I do love the way you talk about the co-operatives, they start by solving a community problem, which obviously has to have a profit based business model to it, but it’s definitely not just about making profit. It’s also about making it better for the people involved directly in the broader community as well.
Sam:
Yeah, in one way we describe it as commerce with a conscience, another ways it’s described as balancing your business and your social purpose, and that’s really what’s at the core of co-ops. And they’re required under those principles that are legislated, they’re required to take those matters into mind, and directors when they make decisions on the boards of co-ops are required to keep those principles in mind. So yeah I think that’s what’s great about it, it’s enterprise with a purpose with principle.
Amanda:
And of course I have to ask you Sam, are you a member of any co-operative?
Sam:
[Chuckles] of course. I do get asked to join or go on the board of many and I have to say no, but I mean every person in the co-operative movement has a home co-op or their first co-op that they joined. So mine was a community store in inner Sydney and I joined in the mid-90s, I love the fact that I was a part owner of effectively my corner store. That was where I started, and I’m still a member of Alfalfa House, it’s had its ups and downs and we’ve had all sorts of challenges, but we’re still going strong, so that’s my home co-op. I am a member of a fairly new co-operative called Hopsters Co-operative Brewery, so we are a beer brewing co-operative and just opened a bar just up the road from Alfalfa House, my other co-operative in Enmore in Sydney, we just opened the bar then the pandemic hit.
So that’s a really dynamic co-op, it’s got 600 members who’ve put in $250 dollars each as a minimum shareholding. There’s home brewers, there’s drinkers, which is where I sit in, and there’s marketing people and professional brewers involved and it is producing beer. Now I’m the part owner of a bar up the road so that’s fantastic, but there’s a great energy, and that’s the first co-operative brewery in Australia, and those are just some of the new projects that are around. I was a member of the Co-op Bookstore so that’s three co-ops, there’s undoubtedly others, and of course my organisation is a co-operative as well.
Amanda:
Thank goodness, I was going to ask that too [Laughs].
Sam:
We’re a not-for-profit co-operative. Our rules are that co-operatives or co-operative minded entities can join us, so you can’t join us as an individual, but if you’re a co-op or you’re a support body for co-ops or have that co-operative ethos then you can join us.
Amanda:
One last question. And this is sort of framed in terms of when you’re thinking about farmers working together in a co-operative. So your experience through Farming Together, what have you learnt that has surprised you most about Farming Together?
Sam:
It’s absolutely unifying in a farming context. I mean Farming Together in a local area there’s something very unifying about that and there’s something very co-operative about that. So there’s no surprise that agricultural co-ops still have a large percentage of our largest co-ops and of our co-operative enterprise in Australia, and that’s common across the world. In many countries there’s a real harmony or a real nexus, there’s a real connection between the co-operative model on that and agriculture. I’m a city boy, I struggle to grow parsley, so I’ve certainly learnt a lot about farming in the last few years with all the work with co-operatives I’ve done there and Farming Together.
As a city boy who struggles to grow parsley I think it’s been very inspiring for me to see that level of support and faith in the co-operative model and experience of belief. I’ve really got in touch with that again through working with farming groups on setting up co-operatives. I guess an example was when Waratah Alpaca Fibre Co-operative–so it was one of the Farming Together supported new initiatives. Alpaca farmers had a co-operative 20 years ago in their industry, for whatever reason it didn’t go that well or wasn’t run well. They sold it to overseas interests and then they were absolutely destroyed on the price by that overseas entity, which didn’t have their interests at heart and was focused on their own interests, and the prices they were getting were absolutely terrible.
And to hear an alpaca farmer say that ‘yeah I’ve been putting my fleece into the shed for 10 years and it’s filled up now, and rather than sell it to that company for the price they’ll give it I just burnt it’. They could not sell their product for that low price; it was just abhorrent to them. And then to see their passion about setting up a new organisation to market their fleece internationally, that they had a say and it was driven by them and had their interests at heart, yeah that’s inspiring. And it just showed to me the benefit of the model, where it’s driven by the farmers and controlled by the farmers and has their interests right at heart. And we can run these co-ops as well as outside entities, as these third parties, these middlemen, we can run them as well and we can deliver much greater benefits for the farmers in Australia.
Amanda:
And if I’m thinking about the same group they ended up getting quite a large order from overseas at a good price.
Sam:
Yeah, the prices are much, much better, they’ve opened up a new market, a new channel to China as far as I know, I haven’t been in touch with them recently. But they’ve opened up a whole new avenue, a whole new channel for our alpaca fleece in Australia. And yeah as far as I know they’re going gangbusters and the prices are much, much better, and that’s the benefit of the model.
Amanda:
Beautiful, thanks.
